WASHINGTON — Veterans Affairs officials on Thursday finalized their contract with the Missouri-based Cerner Corp. to bring veterans’ electronic medical records in line with Defense Department systems, a multi-year and multi-billion-dollar effort that could have wide ranging impact on all of American health care.

But the move also comes at a time when the new records system is under increased scrutiny, following the release of a government report that found the military’s program right now is neither operationally effective nor suitable for the department.

Administration leaders had originally announced the VA deal last summer, but the contract’s future has been in doubt since the firing of VA Secretary David Shulkin in March.

Sources with knowledge of the contract negotiations said White House officials had openly questioned whether the ambitious records plan should be scrapped completely, because of concerns about the cost and Cerner’s ability to carry out the deal.

But Thursday’s announcement ended that speculation. In a statement, acting VA Secretary Robert Wilkie called the agreement “one of the largest IT contracts in the federal government” and said it will help “provide seamless care to veterans as they transition from military service” to civilian life.

“When fully deployed, the new system will represent a monumental advance in veterans’ health care, bigger than VA’s initial deployment of electronic health records 40 years ago,” he said.

The deal for the first time puts the two largest federal departments on a path toward using the same medical records system.

The conflicting VA and military electronic health files have been a source of controversy for years, both from lawmakers frustrated at billions spent on incomplete interoperability efforts and veterans who had repeated difficulty accessing medical records from their time in the ranks.

President Donald Trump touted the agreement last summer to bring together the two systems — through a non-competitive contract worth upwards of $10 billion — as a major advance in his promise to reform and modernize VA operations. In recent days, acting VA Secretary Robert Wilkie said the contract remained a top priority for the department.

Work transferring VA records to the same MHS GENESIS records system is expected to take about a decade. The system is currently being installed at a select number of military health facilities.

But a memorandum late last month from the Pentagon’s director for operational test and evaluation, Robert Behler, found the system for now does not “demonstrate enough workable functionality to manage and document patient care.”

Officials also warned of “insufficient training and inadequate help desk support” with the new system.

That has threatened to delay full deployment of the system across the Department of Defense, although officials handling the $4 billion health records rollout have said they expected some difficulties and adjustments in the initial phases of fielding.

Shulkin — who was seen as a driving force behind the VA records modernization before his firing — had told lawmakers the new contract would not only unite military and veterans records, but provide a blueprint for medical records sharing across all of the American health care system.

VA officials said once implemented, the new health records system will allow patient data to be shared by VA, the Defense Department and “community providers through a secure system.”

Wilkie said that means “health care will be much easier to coordinate and deliver, as well as faster and safer.”

Officials expect to spend upcoming years customizing the system to the needs of veterans, VA clinicians, and community-care providers who work with both.

Cerner Chairman and CEO Brent Shafer called the new contract a “privilege” for his company.

“Linking the veteran and military populations through a single health record is critical to provide veterans the high-quality care they deserve and will help advance interoperability across the industry,” he said in a blog post on the company’s web site.

In a statement, House Veterans’ Affairs Committee Chairman Phil Roe, R-Tenn., praised the administration’s handling of the contract thus far.

“This transition should be done right, not fast, and I’m pleased the department took extra time to review the contract before moving forward,” he said. “Oversight of implementation and spending will be critical as this process continues.”

Reporter Jessie Bur contributed to this story.

Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, D.C. since 2004, focusing on military personnel and veterans policies. His work has earned numerous honors, including a 2009 Polk award, a 2010 National Headliner Award, the IAVA Leadership in Journalism award and the VFW News Media award.

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