Pharmaceutical wholesaler and healthcare IT systems developer McKesson Corp. and defense contractor General Dynamics Corp. plan to team up in hopes of winning business from the Defense Department's Military Health System.

According to a news release, General Dynamics Information Technology, a Fairfax, Va.-based arm of General Dynamics, has entered into a letter of intent with McKesson Provider Technologies, a division of San Francisco-based McKesson, to "collaborate in offering an electronic health-record product known as the 'Way Ahead' " to the Defense Department.

Currently, the military is served by multiple electronic health-record systems, including the troubled $4 billion AHLTA system for outpatient care as well as the much older Composite Health Care System used in many of its hospitals. The CHCS is a $1.1 billion derivative of the IT system, now called VistA, developed by the Veterans Affairs Department.

"As the largest provider of healthcare services and IT, McKesson has deep expertise in what's required to deploy clinical systems, drive adoption and improve outcomes, and we believe our knowledge can benefit the military health community," James Walsh, a senior vice president at McKesson, said in a news release announcing the agreement. "Through the proposed relationship with General Dynamics, we are excited about the opportunity to offer a single solution with the capability to modernize how the Defense Department provides care to its millions of beneficiaries."

General Dynamics is well-entrenched as a vendor of health IT services to the military and other government agencies, including HHS. In August, it won an HHS contract worth up to $80 million to develop applications and payment systems for a reinsurance program under the Patient Protection and Affordable Care Act.

In October, the U.S. Army Corps of Engineers awarded General Dynamics Information Technology a four-year, $409 million contract to provide the Army Medical Department a variety of equipment and employee services for construction projects worldwide.

The Defense Department and the VA have worked for more than a decade on achieving interoperability between their disparate health IT systems. According to a recent Government Accountability Office report, the two departments need to better plan for improved connections between their two healthcare organizations and information technology systems. Roger Baker, the VA's assistant secretary for information and technology is a former chief information officer at General Dynamics Information Technology.