- The Washington Times - Wednesday, December 16, 2009

Work on a high-priority project to integrate the Pentagon and Department of Veterans Affairs health care systems has been delayed by up to two years because of a “potentially unethical” relationship between a government staffer and a contractor, according to an internal Pentagon report obtained by The Washington Times.

The 16-page report says a staffer in the military health care system gave California-based Adara Networks a “potentially unfair advantage” in securing a contract to work on the program. That advantage could have led to other multimillion-dollar contracts for Adara.

The Pentagon halted that particular attempt to integrate the systems in September, one month after the review was concluded.

President Obama and Congress have made combining the medical records systems a priority, citing immediate benefits for military veterans and the project’s potential to pioneer electronic systems for civilian medical records nationwide.

“I can’t tell you how many stories that I heard during the course of the last several years, first as a United States senator and then as a candidate, about veterans who were finding it almost impossible to get the benefits that they had earned despite the fact that their disabilities or their needs were evident for all to see,” Mr. Obama said in April.

But the mishandling of the project has delayed the military’s effort by “a minimum of one year up to two year [sic]” and could leave the military with nothing to show for the $13 million it has already spent, the internal report says.

In their report, the Pentagon reviewers focused on the relationship between a military health care system manager, Tommy Morris, and Eric Johnson, the chief executive officer of Adara Networks.

“The inappropriate and potentially unethical relationship between Mr. Johnson, Mr. Morris and possibly others within [the military health system] gives Adara Networks a potentially unfair advantage that could endanger any future competitive contracting award and subject such award to protests that would most likely be sustained,” wrote Michael P. Fischetti, a contracting specialist for the military health care system and the author of the report.

The report was completed in August and was given to The Washington Times this month. The report was also forwarded to Congress, according to lawmakers and a congressional aide. Pentagon spokeswoman Cynthia O. Smith said it is the subject of an ongoing inspector general’s investigation.

Mr. Fischetti said in an interview Tuesday that he could not talk about Mr. Morris or the contents of the report because of the inspector general’s investigation. He said improvements are already being made to the contracting process and new contracting safeguards have been established.

Mr. Morris did not return repeated phone calls to his home and work numbers over the past four months, nor did he return requests for comment sent to his work e-mail address.

Ms. Smith declined to answer questions about the report except to say that Defense Secretary Robert M. Gates would be reviewing the document.

Adara spokesman Mark Corallo said the company did nothing improper or wrong and that the company has been told by the Pentagon’s inspector general that it is not under investigation.

In a lengthy written statement, Mr. Corallo said the statements that it has seen in the report that involve the company are “false,” that the allegations are a “smear” designed to damage Adara and that the report was prepared by a unit of the Pentagon that itself is under investigation by the inspector general.

“Adara and its executives have no relationships with any officials at Military Health Systems that are not strictly professional business relationships,” Mr. Corallo said in the statement. “Any contention to the contrary would be false and defamatory.”

A spokesman for the Pentagon’s inspector general’s office would not confirm or deny the existence of any investigation in the contracting matter.

Mr. Fischetti’s inquiry was initiated after another contracting officer charged favoritism in an e-mail circulated inside the Pentagon, the Pentagon spokeswoman said.

Mr. Morris had convened a group of high-powered military contractors in mid- to late 2008 to develop a “way forward” for integrating the medical records systems and placed Adara at the center of the operation, the reviewers said in the report.

Adara’s work with the team Mr. Morris assembled - which included top military contractors such as Northrop Grumman, Hewlett-Packard and Intel - was to prepare the way for more work on integrating the health care records systems, the Pentagon review said.

The reviewers noted that the military had already budgeted $500 million through fiscal 2011 to integrate the records systems.

Members of the team of contractors set up by Mr. Morris told the Pentagon reviewers that it was their understanding that working with Adara was essential to securing any future work on integrating the health care records systems.

Besides examining Mr. Morris’ handling of his relations with Adara, Mr. Fischetti was asked to assess what effect the mishandling of that relationship had on the overall record integration project.

“Events discussed in this report may have delayed development from a minimum of one year up to two [years], with [the] immediate consequence of potentially misspending the $13 million,” Mr. Fischetti wrote.

The Pentagon halted the project shortly after Mr. Fischetti filed his report.

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