As reported last week by Bloomberg, healthcare IT giant and local business Epic Systems is teaming with IBM to compete for an $11 billion Pentagon contract. The project would use Epic's software and IBM's hardware.
There will likely be competition for the contract as other companies put in rival bids. However, IBM seems serious about this; Bloomberg reports that the company has more than 100 employees working on the proposal.
If this contract is awarded to the IBM/Epic team, it will have a major impact on Epic and Dane County. Epic had $1.33 billion in sales in 2013; even if they only get a small cut of the contract, it will be a significant funding source for the company. The Pentagon contract combined with Epic's growing international business would keep the company developing and implementing new IT systems for years while they continue to get business from maintaining and upgrading existing systems.
Epic's continued growth is a key component of the city of Madison's plans to redevelop East Washington as a high-tech corridor. Madison's attempt to diversify its economy away from dependence on government funding from the state and UW-Madison may itself be reliant upon government funding.
The Pentagon contract would also bring greater attention to privately-held, media shy Epic. Epic may be well known in Dane County and in health care circles but it is far from a household name to the general public. The company has quietly made huge contracts with the titans of the health care industry while profiles in publications like Forbes have been few and far between.
Following the troubled launch of healthcare.gov and the massive backlogs created by the Department of Veteran's Affairs outdated healthcare scheduling system, development of any new federal healthcare IT system will attract a great deal of scrutiny from Congress and the media. One particular directive of the contract will be closely examined -- the new Pentagon electronic records system is supposed to help reduce the backlogs in VA disability claims by directly interacting with the agency's VistA electronic records system. Even if IBMâ€™s team fields the majority of questions, Epic would start getting a lot more calls from reporters and legislators.
There is still little information out there on the IBM/Epic bid. More specifics on this bid, and competing bids, will emerge once the Defense Department formally announces the competition. That will give a greater idea on the impact this contract could have on Epic and the regional economy.