government IT

VA's Oracle Health Record Costs Near $50 Billion as the Contract Ceiling Nearly Triples and Cleveland and Anchorage Go Next

At a House Veterans’ Affairs Committee hearing on 2 September, VA Deputy Secretary Paul Lawrence put the cost of the department’s new electronic health record at about $48 billion: about $37 billion to finish deploying it through 2031 and about $11 billion to run it. He confirmed the figure isn’t an independent estimate.

The last independent estimate, by the Institute for Defense Analyses in 2022, was $49.8 billion over the system’s life. GAO testified the same day that the estimate needs updating and that VA still hasn’t provided a new cost estimate or a schedule GAO can assess.

The contract

In August VA raised the ceiling on its contract with Oracle, which owns the Cerner system it uses, from about $10 billion to about $27 billion, and added three one-year options to May 2031. VA expects to use up the remaining room under the old ceiling by early fiscal 2027.

Through early fiscal 2025, VA had obligated about $13.8 billion on the programme, $5.85 billion on the Oracle contract and $3.35 billion on IT infrastructure. The fiscal 2027 budget asks for $4.2 billion for the health record, about $800 million more.

Oracle declined to testify. One committee member moved to subpoena Larry Ellison, Oracle’s chairman.

The rollout

VA paused new deployments in April 2023, after problems at the first five sites, mostly in the Pacific Northwest. A sixth, at North Chicago, followed in 2024. VA’s inspector general had counted more than 800 major performance incidents by September 2024. In a GAO survey published in 2025, 58% of staff said the system increased risks to patient safety.

Deployments restarted in 2026, at pace:

  • four Michigan medical centres on one day in April;
  • four sites in Ohio and Kentucky in June;
  • three Indiana medical centres and 16 clinics in August, adding about 102,000 veterans.

That’s 11 hospitals this year. Anchorage and Cleveland are scheduled for October. VA plans about 26 more deployments in 2027 and all of its roughly 170 medical centres by 2031.

At the hearing, members raised about 300 cancelled dermatology referrals at a new site and staff unable to document care for weeks after go-live. VA says the system had no systemwide outages in ten of the past twelve months.

GAO’s view

GAO has made 18 recommendations on the programme; VA has fully carried out four. The main gaps are an up-to-date cost estimate, a reliable schedule and measures of whether the system is working for users. The programme is part of the VA’s place on GAO’s high-risk list.

Why it matters

The health record is meant to put VA on the same system as the Defense Department, so service members’ records follow them into veterans’ care. It’s one of the largest IT projects in government. The faster rollout is a bet that lessons from the first sites have been learned. With 13 hospitals this year and 26 next, problems would surface at more sites at once, and the cost estimate Congress is relying on comes from the department running the project.