Feds Investigate Collapse Of Pilot IT System At Florida VA Hospital

Veterans Affairs shut down the financial and logistics system, intended for use by VA hospitals nationwide, after it failed a nine-month trial this summer. Taxpayers paid about $278 million for the system.
Civil and criminal investigations by two federal agencies will look into the collapse of a $472 million prototype computer system at Bay Pines VA Medical Center in St. Petersburg, Fla., officials say.

The Core Financial and Logistics System failed a nine-month trial this summer and was shut down by the Veterans Affairs Department. Taxpayers paid about $278 million for the system, which was intended for use by VA hospitals nationwide.

Federal prosecutors have issued two subpoenas to technology giant BearingPoint, which built the system.

The Justice Department and the Veterans Affairs' office of inspector general both declined to discuss details of the separate investigations. "One deals with allegations involving criminal activity, the other one involves matters of civil litigation, basically involving money," said Jon Wooditch, spokesman for the VA inspector general.

BearingPoint stressed in a statement Tuesday that "the government has neither identified nor made any allegations or claims of criminal conduct pertaining to BearingPoint."

The U.S. Attorney's Office in Tampa declined comment.

The latest developments were in a BearingPoint filing last week with the Securities and Exchange Commission. BearingPoint said it had been issued two subpoenas by federal prosecutors seeking "documents relating to the CoreFLS project," and that it had fully complied.

In an E-mail to the St. Petersburg Times, BearingPoint spokesman John Schneidawind said the investigation was in the early stages. "We've also been advised that this is a review of the entire project and it doesn't single out BearingPoint," he said.

U.S. Sen. Bill Nelson (D-Fla.)has called on Secretary of Veterans Affairs Anthony Principi to place BearingPoint on a list of suspended vendors. Nelson questioned why the company recently was awarded a $229 million contract by the Department of Homeland Security to install a new computer system given questions about BearingPoint's performance with the VA.

BearingPoint was formerly known as KPMG Consulting.

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