VA Describes IT Modernization as Limited and Controlled in FY 2025 Budget Request

After a sequence of increasing discretionary budget numbers in the last several years, the VA is requesting $129.3B in base discretionary funding, a 6.3% decrease from the $137.9B FY 2024 CR level. Note that remaining comparisons will be to FY 2024 budget amounts from VA estimates of continuing resolution amounts.  The FY 2025 figure does not include Medical Care Collections and the Recurring Expenses Transformational Fund which bring VA’s FY 2025 discretionary request total to $134B. The department is also requesting $131.4B in advance discretionary budget authority for VA medical programs in FY 2026.

The majority of VA’s FY 2025 discretionary budget is allocated to medical care which totals $112.6B and includes medical services, facilities, and community care. Additional key investments from the department’s budget include $4.4B to the Veterans Benefits Administration (VBA) to continue providing veterans, dependents, and survivors a variety of benefits. Of that, $4.0B represents the VBA’s General Operating Expenses (GOE) fund, an increase of $136M over FY 2024. Moreover, the VA requests $2.8B for construction, particularly $2.1B for major construction and $380M for minor construction, to expand critical medical infrastructure and facilities across the department.

The department’s FY 2025 request for the Information Technology Systems Account is $6.2B, $169M below FY 2024 to support CIO key priorities in IT modernization, cybersecurity, the IT workforce, digital-first customer experience, and data as a strategic asset. Of those priorities, IT modernization faces the brunt of the decrease in the IT systems account. Specifically, the request for Development, Enhancement and Modernization (DME) in FY 2025 is $960K (-$125M), $45M (-$318M) and $267M (-$531M), respectively. Budget documents describe the department’s FY 2025 approach to modernization as supporting a “limited, controlled investment in IT modernization,” while focusing funds on the operation and maintenance of legacy IT systems.

Other notable IT-related funding highlights from VA’s discretionary budget include:

• $1.1B for IT Operations, including $82M in application services.
• $894M for the VA Electronic Health Record (EHR), a 52% decrease from the FY 2024 budget request, which acknowledges the EHR Modernization Reset announced in April 2023 to defer future EHR deployments.
• $872M for VA’s Corporate Services portfolio for back-office operations.
• $670M for cybersecurity, a 21% increase above FY 2024, with an emphasis on increasing the number of Security Control Assessments in FY 2025 for greater visibility into enterprise cyber security risk.
• $10M in AI research to pilot innovative solutions to transform clinical care.
• $2M under the VBA’s GOE for the use of AI.

VA IT Budget Request

Investments within VA’s IT Budget, found in the Federal IT Dashboard, total $8.8B in FY 2025, a 12% decrease from FY 2024. New to VA’s FY 2025 IT budget request is the recategorization of six IT investments in FY 2024 to sixteen investments in FY 2025:

Notable funding changes among investments within the department’s IT budget request include:

• Enterprise Security Services with $951M in FY 2025, a $295M increase over FY 2024 to provide enterprise cybersecurity and privacy capabilities.
• Electronic Health Record Modernization with $894M in FY 2025, a $1.2B decrease from FY 2024.
• Health Management Platform with $641M in FY 2025, a $127M increase above FY 2024, with plans to implement the proposed Lung-RADS functionality to the Lung Cancer Screening Platform, synchronize applications to the Clinical Decision Support (CDS) console, integrate field developed applications to CDS and enhance reporting functionalities
• Enterprise Data Services with $571M in FY 2025, a $292M increase above FY 2024 to modernize VA data systems to meet Congressionally mandated legislation.
• Other Medical IT Systems with $222M, a $109M increase above FY 2024, to provide development and sustainment activities for many VHA clinical and administrative software applications.
• VA Franchise Fund IT Spending with $93M in FY 2025, a $273M reduction from FY 2024, to provide common administration support services for VA’s IT business segment.

The president’s fiscal year budget request marks the starting point for upcoming VA priorities and initiatives. While the department’s budget may face changes as it advances through the congressional appropriations process, the proposal helps shed light to potential contracting opportunities and direction at the VA in the forthcoming federal fiscal year. For similar insight to other federal agencies’ discretionary and IT budget, refer to Deltek’s newest report, FY 2025 Federal Budget Request: Priorities and Opportunities.