DOD taps two vendors for technology advice

The Defense Department's Health Affairs office early this month tapped two small businesses to replace the department's home-grown computer systems with off-the-shelf products under a potential $500 million program.

The awards to Planned Systems International Inc. and Puma Systems Inc. are part of DOD Health Affairs' $4 billion Defense Medical Information Management/Systems Integration, Design, Development, Operations and Maintenance Services (D/SIDDOMS) II program.

DOD has split D/SIDDOMS II into four parts, or lots. The contracts for PSI and Puma comprise Lot IV, which focuses on identifying and evaluating technologies that may prove useful to DOD Health Affairs.

Last year, DOD awarded Lot III contracts, valued at $2.5 billion, to supply systems and services to replace or enhance aging DOD medical computer systems, such as DOD medical logistics systems. DOD last year also awarded Lot II, which has an estimated value of $400 million, for technical analysis and support, including the integration of systems and subsystems as well as software integration engineering. DOD likely will award Lot I—for business process engineering, data engineering and data standardization support—after the close of fiscal 1999.

Under the Lot IV contracts, which had been set aside for small businesses, PSI and Puma will search for commercial off-the-shelf products that DOD health care agencies can use to update, replace or create computer systems. DOD's Health Affairs arm uses computer systems for numerous functions, including tracking medical supplies and managing military patients' records.

Eric Christoph, vice president of Puma, said his company will focus on products offered by small businesses. "There are a lot of really good technologies coming from small companies," he said. But he added that small companies often put together "horrible" bids when chasing federal work.

Puma bid close to $194 million on the five-year project, and PSI bid $181 million, according to sources familiar with D/SIDDOMS II.

Randy Koran, director of DOD Health Affairs' acquisition management office in the Washington, D.C., area, said the agency has budgeted $500 million for Lot IV.

Nasser Basir, president and chief executive officer of PSI, said the contract will allow his company to put together pilot projects so that DOD health care agencies can test new IT solutions. But he said the contract also provides a vehicle for agencies to buy those solutions on a large scale if they choose.

"This one really gives us an opportunity to bring in some of the new technologies for the customer," Basir said. He also said his company will look particularly for new telemedicine solutions, which are information products and services that make it easier for a medic at one location to diagnose or treat a patient located elsewhere.

One of the primary goals of D/SIDDOMS II is to make it easier to share information. Koran and other DOD officials described the program as one that will help the military's health network move toward greater interoperability, allowing for quicker sharing of more information, including systems that store patient records and systems that produce administrative reports. Managed care facilities have begun to adopt the same approach to help control health care costs by better utilizing information to examine health care trends and monitor expenses.