The Social Security Administration expects to award by October a contract potentially worth more than $2 billion for information technology support during the next eight years, agency officials confirmed late Friday.

The huge purchase is an extension of an IT services contract currently held by Lockheed Martin Corp. that has reached its cap of $525 million. The scope of work for this follow-on will extend beyond the previous contract that was primarily for software development and maintenance to include health information technology as well as new management responsibilities. The award may be split between multiple companies.

In June, Social Security officials described the procurement as consisting of many technical areas, including application and business planning; systems administration for the operating systems z/OS, Unix, Windows and IBM WebSphere; and emerging technology applications, such as data mining, cloud computing and voice recognition.

The new contract also will continue the work being performed under SSA’s current agreement with Lockheed, the Agencywide Support Services Contract. That award, announced in November 2004, covers application development, testing and maintenance; document management, and software engineering. Lockheed has provided software support to Social Security since 1989 under various task orders.

The impending contract award comes at a time when SSA is under pressure from lawmakers and applicants to reduce disability hearing backlogs partly through videoconferencing, expedite claims processing and offer more online services. Given the rising tide of baby boomer enrollees and applicants suffering economic hardship, the agency’s infrastructure is strained. Social Security already processes 4.7 million retirement claims annually and pays 60 million beneficiaries a total of more than $700 billion a year.

The contract winners will be responsible for ensuring continuity of citizen services and remote disaster recovery as the agency renovates its 30-year-old database system, according to the request for proposals.

The health IT responsibilities for the program are exhaustive. Social Security manages the largest repository of imaged medical information in the world, according to SSA officials. The agency currently stores more than 250 million medical documents and adds 2 million more per week.

The contractor must create business models for exchanging electronic medical records, expand Internet services for Medicare and supplemental security income applicants, and enable the agency to request and receive medical data automatically through health information exchanges.

Such tasks require expertise in the areas of health IT standards, clinical terminology, multiple formats of electronic health records, patient confidentiality procedures, the medical community’s financial transactions and analysis of health care legislation.

This activity will “set them up for compatibility and interoperability with the pending growth of health IT among commercial providers who will be taking advantage of the HIT incentives that were legislated” in the 2009 Recovery Act, said Ray Bjorklund, chief knowledge officer for FedSources, a market research firm. Starting in 2011, doctors and hospitals that install certified electronic health records systems will be eligible for receiving bonus Medicare and Medicaid payments.

Several federal market specialists presume the government will award the contract to more than one vendor to boost competition, which should drive down prices, for individual task orders. The trade-off might be a lack of consistency in services, but the net benefits should generally outweigh the negatives, Bjorklund said.

He predicted multibillion-dollar contracts like SSA’s project will soon disappear in civilian agencies given tight budgets. In addition, the government is moving toward shared services, through which multiple agencies use a common IT infrastructure. The Obama administration particularly is pushing cloud computing, a type of shared services arrangement that provides IT products and services online and on-demand.

“For the civilian agencies this could be one of the last big ones for a while,” Bjorklund said. “But the pendulum swings.

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