--- title: "Pentagon pays Leidos $318 million to hand over the military's health record" description: "The Pentagon's October 13 digest gave Leidos a $317.9 million sole-source bridge to keep MHS Genesis, the U.S. military's electronic health record, running through January 2028 while the Defense Health Agency signs the system's actual owners to direct contracts. DHA's own language shrinks the work toward that end date." publisher: "The Inference" section: "Health" published: 2026-10-15T20:42:39.696Z modified: 2026-10-15T20:42:39.696Z canonical: https://theinference.org/article/pentagon-pays-leidos-318-million-to-hand-over-the-military-s-health-record language: en keywords: "Leidos, Defense Health Agency, MHS Genesis, Government Contracting, Electronic Health Records" --- # Pentagon pays Leidos $318 million to hand over the military's health record > The Pentagon's October 13 digest gave Leidos a $317.9 million sole-source bridge to keep MHS Genesis, the U.S. military's electronic health record, running through January 2028 while the Defense Health Agency signs the system's actual owners to direct contracts. DHA's own language shrinks the work toward that end date. The Pentagon's October 13 awards digest handed [Leidos](https://theinference.org/markets/companies/leidos) (NYSE: LDOS), the software and IT-services contractor whose clients include the Defense Department, [a $317.9 million contract for MHS Genesis](https://www.washingtontechnology.com/contracts/2026/10/dha-leidos-finalize-bridge-contract-health-record-transition/416584/), the electronic health record the U.S. military runs on [1][2]. It is sole-source: the Defense Health Agency (DHA) picked one company, without a competition [2]. The money, from fiscal 2026 operations and maintenance funds, pays for system reintegration, software licensing and hosting through the end of January 2028 [1][2]. One trade headline booked it as revenue: "[Leidos Books $318M DHA MHS GENESIS Bridge Contract](https://www.govconwire.com/articles/leidos-318m-dha-mhs-genesis-bridge-contract-award)" [3]. The award's own language points the other way. DHA says the contract will "gradually reduce in scope until the end date," and exists to move work to other service providers and to establish direct relationships with the system's technology owners [1]. ## DHA will buy directly from Oracle Health and four other vendors Leidos has run Genesis as lead systems integrator, the prime contractor that assembles other companies' products into one working system, since 2015 under [a $4.3 billion Pentagon contract](https://federalnewsnetwork.com/defense-news/2018/04/coast-guard-says-it-will-adopt-dods-4-3-billion-electronic-health-record/) [4][5]. The record itself was built by Cerner, the original software maker; [Oracle Cerner](https://theinference.org/markets/companies/oracle) supplies the baseline system today [4][5]. In June, DHA laid out its [plan to drop the middleman role](https://www.washingtontechnology.com/companies/2026/08/how-leidos-looking-militarys-electronic-health-record-plan/415199/) and contract directly with the technology owners, targeting summer 2027 for completion [1][4]. Those owners, with tickers as identifiers: Oracle Health (ORCL), [Philips North America](https://theinference.org/markets/companies/philips) (PHG), [American Well](https://theinference.org/markets/companies/american-well) (AMWL), [Henry Schein](https://theinference.org/markets/companies/henry-schein) (HSIC) and [Solventum Health Information Systems](https://theinference.org/markets/companies/solventum) (SOLV) [1][4]. ## The bridge is under 2% of a year's revenue, and the exit is the story The ceiling equals about 7% of Leidos' latest-quarter revenue of $4.56 billion, and under 2% of the $17.6 billion booked over the past four quarters [6]. GuruFocus puts the stock at [11.16 times trailing earnings against an 18.27 times five-year median](https://www.gurufocus.com/news/9121834/leidos-ldos-secures-318m-solesource-contract-for-mhs-genesis-system-support), on a $15.02 billion market cap [2]. The discount predates the award, which suggests the market began repricing the government-integrator model before this bridge appeared in print. *Chart: **The entire bridge is worth about 7% of one Leidos quarter** Line chart of Leidos quarterly revenue from 3.92 billion dollars in Q3 2023 to 4.56 billion in Q2 2026, with the bridge ceiling annotated at 0.3 billion* *Leidos quarterly revenue, USD billions, Q3 2023 through Q2 2026, from its SEC filings [6]; the $0.3B annotation is the $317.9 million bridge ceiling from the October 13 award [1]. [1][6]* ## Leidos argues the in-sourcing has limits Chief executive Tom Bell told investors the administration wants to in-source systems integration and buy commercial technology directly, adding: "We see that trend continuing across many agencies" [4]. He also said it is "difficult to see that they can in-source it all and have the manpower necessary to do the whole work" [4]. Leidos kept a foothold on July 31, when DHA picked it among 12 companies, from 29 offers, for [a five-year, $300 million product-deployment contract](https://www.washingtontechnology.com/contracts/2026/08/dha-picks-12-300m-product-deployment-contract/415175/) spanning the agency's health IT, Genesis included [4][7]. ## The first direct award is the tell Watch the Pentagon digest for DHA's first direct award to one of the five owners, against the summer 2027 target [1]. The bridge runs out at the end of January 2028 [1]. The Pentagon is paying Leidos $317.9 million to make itself unnecessary, on a schedule DHA published. ## Takeaway The $317.9 million award is a managed exit, not a win: DHA's contract language shrinks Leidos' Genesis work toward a January 2028 end date while the agency prepares to buy directly from the five technology owners. ## Sources 1. [Washington Technology, Ross Wilkers, DHA, Leidos finalize bridge contract for health record transition, October 2026](https://www.washingtontechnology.com/contracts/2026/10/dha-leidos-finalize-bridge-contract-health-record-transition/416584/) 2. [GuruFocus, Leidos (LDOS) Secures $318M Sole-Source Contract for MHS Genesis System Support, 13 October 2026](https://www.gurufocus.com/news/9121834/leidos-ldos-secures-318m-solesource-contract-for-mhs-genesis-system-support) 3. [GovCon Wire, Leidos Books $318M DHA MHS GENESIS Bridge Contract, 14 October 2026](https://www.govconwire.com/articles/leidos-318m-dha-mhs-genesis-bridge-contract-award) 4. [Washington Technology, Ross Wilkers, How Leidos looks at the military's electronic health record plan, 4 August 2026](https://www.washingtontechnology.com/companies/2026/08/how-leidos-looking-militarys-electronic-health-record-plan/415199/) 5. [Federal News Network, Jared Serbu, Coast Guard says it will adopt DoD's $4.3 billion electronic health record, 10 April 2018](https://federalnewsnetwork.com/defense-news/2018/04/coast-guard-says-it-will-adopt-dods-4-3-billion-electronic-health-record/) 6. [Leidos, quarterly figures from its SEC filings, retrieved 15 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001336920) 7. [Washington Technology, Ross Wilkers, DHA picks 12 for $300M product deployment contract, 3 August 2026](https://www.washingtontechnology.com/contracts/2026/08/dha-picks-12-300m-product-deployment-contract/415175/) --- Pentagon pays Leidos $318 million to hand over the military's health record — The Inference. Canonical: https://theinference.org/article/pentagon-pays-leidos-318-million-to-hand-over-the-military-s-health-record