The Department of Veterans Affairs is preparing to issue what’s likely to become one of the largest service contracts in government history as it restructures its arrangements, aiming for rigorous management of the department’s role as a health care payer and greater competition among health care management firms.

The massive contract vehicle represents only the second time VA has signed large contracts with health plans to coordinate private sector care for veterans. The first was shortly after the MISSION Act was signed in 2018. Those contracts are now expiring, and in their place, VA is preparing one large indefinite delivery/indefinite quantity contract with a total potential value of $700 billion over the next ten years.

Among the changes the department is aiming for is a much more rigorous approach to program management in its “community care network,” said Richard Topping, VA’s assistant secretary for management and chief financial officer.

“This program has been unmanaged since its inception. None of the tools, none of the controls that we are talking about introducing here have been available,” he told the House Veterans Affairs Committee on Thursday. “VA had no ability to manage this program, to drive quality, to focus on the outcomes for veterans, to focus on cost. We’ve now got the ability to do that in this contract. The way we designed this unmanaged program also made it very difficult for industry to partner with us. It made it very difficult for community providers to serve our veterans, because it didn’t operate like any other payer program.”

The new contract, called Community Care Network Next Generation, is meant to change much of that. VA says the department intends to cast a wide net for vendors — creating an indefinite delivery/indefinite quantity contract that doesn’t only attract large, national health insurers.

“We are very intentionally not limiting it to the large vendors. The intention is to open this up to competition, to non-large vendors, to those who might bring regional capabilities, regional capacity, and that would not be able to operate on a national or semi-national scale,” Topping said. “They will incur a cost to bid and be awarded a spot on the vehicle. But once they do that, the vendors who are on the vehicle with us, large and small, have a seat at the table with VA, with our program management team to design the task orders. There are two initial task orders in the initial award, those look a lot like what we have now. But we are going to immediately partner with the vendors on the vehicle to begin to build the next more regional, more adaptable, more local models in our task orders.”

Value-based payment models and utilization management

VA plans to use the ID/IQ for its purchased health care for up to ten years. The contract includes a three-year base period, followed by three two-year option periods, and a final one-year option period. During that time, the department plans to use on-ramps and off-ramps to bring new vendors onto the contract — and remove ones that aren’t meeting performance standards.

And contract performance will be overseen and measured by VA program officials who plan to start implementing measures that value quality care over numbers of procedures performed, Topping said.

“VA will implement a comprehensive quality program for community care providers based on nationally recognized measures from the Agency for Healthcare Research and Quality. Contractors will track patient safety events, identify veterans at risk of avoidable visits and readmissions through predictive analytics, and while respecting their choice, guide veterans towards higher performing providers,” he said. “Next Gen will modernize how VA pays its contractors for the care furnished to veterans by implementing value-based payment models. We will begin with episode-based payments for lower extremity joint replacements. As we gain the data and the expertise to manage alternative payments, we will introduce at least three additional models over the performance period of the contract to continually improve care. These models will shift payment away from volume and toward outcomes and total cost of care, which aligns contractor incentives with veterans’ health and system sustainability. We will introduce utilization management. This includes active management of inpatient admissions, emergency department use, concurrent hospital reviews, and high cost drugs administered in clinical settings. This will reduce unnecessary hospitalizations and inappropriate care while protecting veterans’ access to medically necessary services.”

Questions from Congressional overseers

But the department faced bipartisan skepticism during the hearing, partly because VA officials have been slow to detail their plans for the CCN Next Gen effort to members of Congress. VA’s overseers on the House Veterans Affairs Committee say they found out the details of the contract at the same time vendors did — when the request for proposals was released a little over a month ago.

“I understand the VA finds it unprecedented to hold a hearing on an active contract solicitation. I appreciate the sensitivity of the contract, but it is also unprecedented to avoid Congress’s oversight of $1 trillion of spending,” said Rep. Mike Bost (R-Ill.), the committee’s chairman. “My staff and the ranking member’s staff have been told that some topics are off limits because of the sensitive nature of the contract and solicitation. We’ve tried to create a venue in which VA would feel comfortable to speak candidly to our members, but unfortunately, VA failed to assure us of such candor.”

Meanwhile, Democrats on the committee also worry that the new contract will serve as a way to further privatize VA health care — pointing out that more than 40% of veterans’ care is already delivered by private providers through the existing contracts.

Rep. Morgan McGarvey (D-Ky.) said he worried that the contract will lead to large, vertically-integrated conglomerates driving veterans into facilities they control, and away from smaller community-based providers.

“I don’t trust big insurance companies to take care of anybody. The sole thing that motivates them is profit. It’s not people, and it’s certainly not our veterans,” he said. “We have the right to be skeptical when we are talking about private insurance companies taking care of people, because right now they don’t.”

But Topping said the department believes it can avoid problems like the ones McGarvey is worried about through strong oversight and program management.

“The vendors, our health plan partners on this, don’t make the clinical referral from the direct care system to community care. VA does that,” he said. “They don’t make the referral to the provider or determine eligibility [for community care], VA determines that. VA drives where and how our veterans receive care, and we want to know what we’re buying. We want to steer our veterans to the highest quality, lowest cost providers. That goal is not unique to VA — it’s new to us, but we’re bringing this into this program.”

Vendors hoping for a spot on the contract have until March 16 to submit their proposals.

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The nation’s newest military service still has a lot of work to do to chart its future. The Space Force had been planning to use a new “Futures Command” to handle that work, and it was supposed to be up and running by last year. That didn’t happen as scheduled, but the idea’s not dead either.

Leaders say they’re still planning a new organization to help shape the service’s future, but they also needed to make sure it aligns with the new administration’s priorities.

The Space Force first unveiled its plans for a new Futures Command almost two years ago. The idea at the time was to combine the existing Space Warfighting Analysis Center and the Concepts and Technologies Center with a new Wargaming Center. Those plans were put on pause late in 2024 when it became apparent new political leadership was on the way.

But Gen. Chance Saltzman, the chief of space operations, said Air Force Secretary Troy Meink is on board with the overall idea.

“Secretary Meink 100% understands what we were trying to accomplish with Futures Command and the importance of it,” he said during the annual Spacepower conference in Orlando, Florida, last month. “How are we looking at the future? How are we categorizing and characterizing the threats we’re going to face, the missions we’re going to be asked to do, and how are we going to respond so that we can put the force in place to meet those challenges? We will look at concepts, we will do the war gaming, we will do the simulations, we will do all the manpower assessment, we will do the military construction surveys to figure out what facilities are needed, and then document that so that everybody can see what we’re progressing towards. It is this idea of establishing a command that’s focused on what is it we’re going to need in the future and making sure all the planning is done, synchronized with the resources so we get that right.”

And while the Space Force certainly isn’t the first military service in recent years to contemplate a new command as part of big organizational changes, it is the first time in modern history that a service is having to do that from scratch.

“In December of 2019, the law said, ‘There is a Space Force,’ and nothing could have been further from the truth,” Saltzman said. “It legally made there be a Space Force, but it was still in work. It was a thought process, it was pulling things together as rapidly as possible. So I think the hardest thing is overcoming this mentality that there’s been a Space Force for decades, that we’ve got all this figured out. These are hard things to do on a government scale with government oversight and government resources. And so convincing people that we had to start from scratch on almost every process we had, on every decision we make, that was unprecedented. Convincing people that we don’t really have anything to fall back on. If I don’t deliver a service dress [uniform], then we’re using an Air Force service dress — there wasn’t something else. We had plenty of uniform changes when we were growing up, but there was always an Air Force uniform before those changes that we were in until we transitioned. Not the case for the Space Force. We had to start from scratch. We’re not just enhancing the Space Force, we’re actually creating one. And that’s been a real challenge.”

New leadership education initiatives

The Space Force traces most of its roots to the Air Force, and until now, it’s leaned heavily on its sister service within the Department of the Air Force for combat support and other functions. But it’s increasingly working to build infrastructure, doctrine and culture of its own.

As one example, Saltzman said just last month, the Space Force launched its own Captains Leadership Course. That initiative is a partnership with Texas A&M University and led by the Space Force’s Space Training and Readiness Command.

“The bottom line is each service brings something unique in terms of what it focuses on for professional military education. I remember General [Jay] Raymond, when he stood up the service, talked about some of the things that services have to do. You have to have your own budget, you have to have your own doctrine, you have to develop your own people. And that’s kind of stuck with me,” he said. “We have to develop our Guardians for the specifics of the Space Force. And this basic understanding at the captain’s level is going to be foundational to what follows in the rest of their career. And so while we need to find ways to give them experience with other services, I wanted to make sure that the service had a core offering at that grade to educate our officers on the Space Force. Now we’re going to include joint doctrine, will include communications and leadership. But they need that foundational understanding of the service first before they start to branch out and figure out how they integrate with the other services.”

First Space Force OTS graduates

And in 2025, the service graduated its first group of newly-minted officers from officer training school. Those first 80 officers, Saltzman said, represent a mentality within the service that seeks to build “multidisciplinary” leaders. The enlisted force, he says, will be tactical experts, while officers will need expertise in “joint integration.”

“Do we need deep expertise? Absolutely. Do we need people that broadly understand how to integrate with a joint force? Absolutely. How do you do both? This is the tough part of the job, you have to get that balance just right,” he said. “If you go down to kind of the micro management side of this and ask how you develop a single Guardian to best perform, then you get caught in that conundrum. I have to think about what I need the entire service to be able to do. Do I need deep experts? Yes. Do I need broad integrators? Yes. So we have to find a way to, across the entire service, create opportunities to maximize what people can do, what they do best, and fill the jobs that are required based on those skills and those competencies. You have to make sure you think about it from an enterprise perspective, and what might apply to any one Guardian doesn’t necessarily have to apply to all Guardians.”

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The Federal Aviation Administration has been working to update its aging air traffic control system, literally, for decades now. But 2026 is looking to be a big year on the FAA modernization front. The One Big Beautiful Bill Congress passed earlier this year puts more than $12 billion toward air traffic control modernization, and the FAA’s new administrator expects to obligate about half of that by the end of this fiscal year.

The agency is on an aggressive schedule to completely replace the air traffic control system within the next three years, and the billions of dollars in reconciliation funding targeted for expenditure in fiscal 2026 is meant to lay the foundation for that long-term plan. The agency says it is using the funds to modernize its telecommunications and air surveillance systems, including by replacing aging copper circuits with fiber optics.

“When we talk about modernizing telco, most people think about moving from copper to fiber, going from analog to digital. And that’s all true, but there’s another element of modernization that we aren’t doing today,” Bryan Bedford, the FAA’s administrator, told the Senate Commerce Committee this month. “The second round of funding that we’re asking for will be to re-architect how the fiber is laid. For example, Dallas-Fort Worth recently had a significant outage. There, the system theoretically was modernized, but the architecture of that system had not been modernized. So there’s really a two-step process here. There is still another step that has to happen to get from analog to digital, which will drive the resilience and our capabilities to increase bandwidth in our facilities.”

Bedford told lawmakers the telco modernization work is now about 35% complete, and that portion of the overall project should be finished by the third quarter of fiscal 2027.

New prime integrator

But to finish all the work the agency believes will fully modernize the system, officials say they’ll need another $20 billion on top of the $12.5 billion they refer to as a “down payment.” And to manage the overall project, the FAA earlier this month hired Peraton to serve as the prime integrator for the new system.

In order to meet that three-year target, Bedford said the agency built in specific incentives to reward performance and on-time delivery across 14 areas the FAA has identified as “critical needs.”

“We set up a series of needs packages that clearly articulate what the work streams are and the estimated timeline to completion,” he said. “Peraton’s profit is essentially broken into three different elements. There’s a fixed profit element of 3% and then there’s a variable element of 6%. The variable element is contingent upon completing the plan on budget and on time with our satisfaction, and we will hold back 3% of the potential profits for any potential damages that might happen for failure to comply with our work packages. So it’s a very strenuous agreement, and we have vigilant oversight on it.”

Unsustainable legacy systems

Meanwhile, the agency says it will also need additional funding to keep the current system up and running while the new one is being built. The Government Accountability Office has identified 105 individual components of the overall system that it’s deemed unsustainable as those subsystems, many of them decades old, continue to age.

And so, Bedford said, the $5 billion in annual “modernization” funding Congress is considering as part of the standard appropriations process is more about operating and sustaining those legacy systems than modernizing them.

“As you read many of these audit reports, you learn the same thing that I have, which is 80% of our infrastructure is considered obsolete and/or unsustainable,” he said. “So the vast majority of that $5 billion doesn’t actually go to build new brick and mortar. 85 to 90% of those funds actually go to repairing, painting or replacing elevators and HVAC systems and plumbing and roofs. Frankly, we’re putting lipstick on a pig. So you may think you’re buying brand new infrastructure with the $5 billion but what you’re buying is sustainment of the old system.”

The overall modernization project is broken down into five categories: communications, surveillance, automation, facilities, and broad updates across the state of Alaska.

Workforce concerns

Sen. Tammy Duckworth (D-Ill.), the ranking Democrat on the transportation subcommittee on aviation, space, and innovation, argued there needs to be one more: workforce.

“We must remember that the recent aviation safety crisis was driven by decades of the FAA pouring billions into unproven technologies and costly service contracts as it pursued, in vain, modernization projects with overly ambitious goals and constantly changing requirements,” she said. “These shiny objects lured the FAA into neglecting the health, capabilities and capacity of our system’s most important assets, its people. Under Presidents of both parties and across multiple Congresses, ATC shed critical expertise and experience. And between 2013 and 2023, the FAA only hired two thirds of the controllers that the FAA’s own staffing model called for. So today, we find ourselves short 3,500 air traffic controllers, while air travel rises to record highs and controllers are forced to regularly work 60 hour weeks because well over 90% of airports are understaffed. Placing the lives of our constituents in the hands of civil servants who are overworked and utterly exhausted was and remains unfair, unacceptable and ultimately dangerous.”

Bedford said the agency is taking workforce issues seriously under a separate initiative, called Flight Plan 2026. He said the FAA has plans to hire 8,900 new controllers between now and 2028.

But the recent government shutdown didn’t help matters. An estimated 500 people withdrew from the FAA’s controller training programs while they were waiting for the government to resume normal operations. And for controllers already on the job, staffing shortages caused an unprecedented number of safety-related air traffic slowdowns.

“Staffing triggers reached unprecedented levels, rising from mere single digits prior to the lapse to more than 80 in a single day,” Bedford said. “Applying the hard lessons we’ve learned from the DCA accident, the FAA safety team identified controller workload and system demand as emerging risk factors. And as a response to this increased risk, we temporarily reduced operations at 40 high traffic airports. The connection between controller workload, system demand and operational risk was unmistakable, and it reinforced the need for the FAA to act decisively when the data demanded it, and underscored the importance of stable controller funding.”

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