VA Awards $12M Sole Source Contract for Critical Medical Coding Software Renewal

Contract Overview

Contract Amount: $12,015,799 ($12.0M)

Contractor: Solventum Health Information Systems, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-12-19

End Date: 2026-12-18

Contract Duration: 364 days

Daily Burn Rate: $33.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SOLE SOURCE AWARD FOR RENEWAL OF SOLVENTUM HIS CRS+ ENCODER SOFTWARE LICENSES AND SUPPORT SERVICES FOR VA HICBA, PROVIDING ENTERPRISE MEDICAL CODING, BILLING, AUDITING, AND VIRR INTEGRATION ACROSS VA MEDICAL FACILITIES.

Place of Performance

Location: SALT LAKE CITY, SALT LAKE County, UTAH, 84123

State: Utah Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $12.0 million to SOLVENTUM HEALTH INFORMATION SYSTEMS, INC. for work described as: SOLE SOURCE AWARD FOR RENEWAL OF SOLVENTUM HIS CRS+ ENCODER SOFTWARE LICENSES AND SUPPORT SERVICES FOR VA HICBA, PROVIDING ENTERPRISE MEDICAL CODING, BILLING, AUDITING, AND VIRR INTEGRATION ACROSS VA MEDICAL FACILITIES. Key points: 1. The contract renews essential software for medical coding, billing, auditing, and VIRR integration across VA facilities. 2. This is a sole-source award, raising questions about competition and potential cost savings. 3. The primary risk lies in the lack of competitive bidding, potentially leading to inflated prices. 4. The IT sector, specifically healthcare IT, is the focus of this significant expenditure.

Value Assessment

Rating: questionable

The contract value of $12,015,798.72 for a two-year renewal of specialized software and support is substantial. Without competitive bids, it's difficult to assess if this price is optimal compared to similar enterprise-level medical coding solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This limits price discovery and may prevent the VA from securing the best possible pricing through market competition.

Taxpayer Impact: The lack of competition for this significant contract raises concerns about whether taxpayers are receiving the best value for their investment.

Public Impact

Veterans' healthcare operations rely on this software for accurate billing and coding. Potential for higher costs due to the absence of competitive bidding. Ensures continued integration with VA's VIRR system for medical records.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition
Potential for overpayment without competitive pricing
Reliance on a single vendor for critical software

Positive Signals

Ensures continuity of critical healthcare IT services
Supports enterprise-wide medical coding and billing functions

Sector Analysis

This contract falls within the IT sector, specifically focusing on healthcare information systems. The benchmark for similar enterprise-level medical coding and billing software can vary widely, but significant investments are common for comprehensive solutions.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as it is a sole-source renewal with an established vendor. There is no indication of subcontracting opportunities for small businesses in this award.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure the VA is receiving fair pricing and that the vendor is meeting all contractual obligations for software support and services.

Related Government Programs

Computer Systems Design Services
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Lack of competitive bidding
Potential for inflated pricing
Vendor lock-in
Dependency on a single supplier for critical infrastructure

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $12.0 million to SOLVENTUM HEALTH INFORMATION SYSTEMS, INC.. SOLE SOURCE AWARD FOR RENEWAL OF SOLVENTUM HIS CRS+ ENCODER SOFTWARE LICENSES AND SUPPORT SERVICES FOR VA HICBA, PROVIDING ENTERPRISE MEDICAL CODING, BILLING, AUDITING, AND VIRR INTEGRATION ACROSS VA MEDICAL FACILITIES.

Who is the contractor on this award?

The obligated recipient is SOLVENTUM HEALTH INFORMATION SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $12.0 million.

What is the period of performance?

Start: 2025-12-19. End: 2026-12-18.

What is the justification for the sole-source award, and were alternative solutions or vendors ever considered?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or a lack of viable alternatives. For this contract, the VA would need to demonstrate that Solvents HIS CRS+ Encoder software is the only solution capable of meeting their specific, critical needs, especially concerning VIRR integration. Without this justification, the lack of competition is a significant concern.

How does the per-unit cost of this renewal compare to previous contract periods or industry benchmarks for similar software?

Without access to historical pricing data or detailed industry benchmarks for comparable enterprise medical coding software, it is challenging to definitively assess the value. However, given the sole-source nature, a thorough internal review or independent cost analysis should be conducted by the VA to ensure the $12 million price tag for two years is reasonable and reflects fair market value.

What measures are in place to ensure the continued effectiveness and performance of the Solvents HIS CRS+ Encoder software?

The contract includes support services, which should outline performance standards, uptime guarantees, and issue resolution timelines. The VA's contracting officers and technical points of contact are responsible for monitoring vendor performance against these metrics and ensuring the software effectively supports critical functions like medical coding, billing, and VIRR integration.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 36C10B26R0007

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: 3M Company

Address: 575 W MURRAY BLVD, MURRAY, UT, 84123

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $77,725,046

Exercised Options: $12,015,799

Current Obligation: $12,015,799

Actual Outlays: $12,015,799

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline