VA Warns Contractors: Incumbency No Longer Guarantees Renewal

The Department of Veterans Affairs is putting contractors on notice: past performance no longer guarantees future work. The agency is fundamentally reshaping how it evaluates and retains technology vendors, with artificial intelligence adoption and modernization speed now central to every procurement decision.

Zack Schwartz, principal deputy assistant secretary in the VA's Office of Information and Technology, delivered the message bluntly following an industry briefing Wednesday. "Incumbency is not a guarantee, incumbency is not an advantage," he told FedScoop. "We will not settle just because you've supported the VA in the past."

Continuous review replaces set-and-forget contracts

The shift extends beyond initial contract awards. Even vendors with multi-year agreements will face ongoing scrutiny as the VA assesses whether they're keeping pace with the agency's evolving requirements—particularly around AI integration.

"At all points in the contract, we will review whether or not the contract is performing to what the VA needs because time changes what the VA needs," Schwartz explained. He emphasized this represents a "massive mindset shift" where contracts may be reconsidered not due to poor performance, but because agency requirements have advanced beyond the original scope.

The VA completed its second wave of electronic health record modernization earlier this month and currently has multiple EHRM-related contracting opportunities open nationwide, many posted within recent weeks.

Why it matters

As the fourth-largest federal spender at $177.7 billion this fiscal year, the VA's procurement philosophy shift will ripple across the government technology market. Schwartz noted the VA is "the largest customer for nearly all of our technology vendors," giving the agency significant leverage to demand cutting-edge capabilities. This approach could establish a new standard for how federal agencies manage long-term IT contracts in an era of rapid technological change, particularly as AI capabilities evolve faster than traditional procurement cycles.

AI adoption becomes non-negotiable

Schwartz credited new leadership under Secretary Doug Collins, who he said recognizes technology as the "backbone" of veteran services. The rapid evolution of AI has partly driven this contracting overhaul.

"AI is becoming an expectation for use of the VA," Schwartz said. "We will not be scared of risks associated with AI to our detriment. Our adoption, our focus on it in every procurement and in every action that we take is paramount."

The aggressive modernization push is attracting talent from across government agencies to the VA, according to Schwartz, who described the influx as "unbelievable."

Industry skepticism meets agency determination

Schwartz acknowledged that some contractors doubt whether the VA will follow through on rapid modernization and truly open competition. The agency intends to prove skeptics wrong.

"We are going to show that the message of us moving forward and moving fast has trickled down to every layer of staff within OIT," he said. "You'll clearly be able to see that AI is a part of what the solutioning is in support of VA, and that is a major piece for putting our money where our mouth is."

The VA is working closely with the General Services Administration on contracting vehicles and using "nearly all of their vehicles that make sense from an IT standpoint," Schwartz noted.

These details were first reported by FedScoop following Wednesday's private IT Advanced Planning Brief to Industry.