A new report from the Washington Post reveals how the main contractor for the federal exchange website, CGI Federal, did not deliver on its promise. The question is what went wrong.
CGI blames the administration and its management of the process, including delaying a number of important rules for political purposes. Federal officials lay much of the blame at CGI.
But even there, the blame can be traced back to Centres for Medicare and Medicaid (CMS) officials who selected CGI in the first place.
CMS accepted bids from a group of firms to build Healthcare.gov. They received bids from IBM, Computer Sciences Corp., Quality Software Services and CGI Federal. The agency was to evaluate each bid on seven specific criteria, including proposed cost, security requirements and past performance.
It is on this last evaluation metric that CMS officials reportedly failed.
In 2004, CGI Group, the parent company of CGI Federal, acquired American Management Systems (AMS) for nearly $US900 billion. AMS, which was eventually renamed CGI Federal, already had a number of federal contracts and thus gave the Montreal-based CGI Group its entrance into the market for government contracts.
But AMS did not have a great track record with federal work. It had screwed up a number of projects, including a Philadelphia school computer system and Mississippi tax system. In the latter case, AMS had to pay a $US474 million for its failure.
It also screwed up on a $US60 million contract with the Federal Retirement Thrift Investment Board.
Despite these red flags, CMS selected the firm for the project. In fact, CGI Federal has nearly a trillion dollars in federal contracts, good for the 29th largest federal IT contractor. For the website, CGI Federal received almost $US100 billion.
While CMS officials should have been more careful in selecting the firm for this project, they were not influenced by politics in the process. Had the Washington Post investigation found otherwise, the Obama administration would be dealing with an entirely different story today.
CMS’s failure to adequately vet CGI Federal speaks to an even larger problem with the federal contracting process. This is something that Obama himself has spoken of since healthcare.gov’s launch.
“What is true is that, as I said before, our I.T. systems, how we purchase technology in the federal government is cumbersome, complicated and outdated,” Obama said in a November interview.
“It’s part of the reason why chronically federal I.T. programs are over budget, behind schedule.”
Going forward, it is unclear how much of the contracting process will change. The federal exchange is just one of many federal contracts have technology companies have botched in recent years. In fact, the New York Times reports that by one study, 40% of federal contracts have failed compared to only 4.6% that have succeeded (more than 50% have proved “challenging”).
After health reform calms down a bit (as it will), the administration should take a long look at procurement process and find ways to improve it, either by executive authority or with the help of Congress. The current system isn’t cutting it.
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