January 13 2014

You’re (Belatedly) Fired!

Patrice J. Lee

CGI Federal, the lead IT contractor behind the malfunctioning healthcare.gov website, will no longer be in business with ObamaCare. According to published reports relying on anonymous sources, the government has decided that once its contract with the company expires in February, it will not extend the contract but transfer management of the website to one of the other contractors, Accenture.

Can we say finally!

The Washington Post reports:

Federal health officials are preparing to sign early next week a 12-month contract worth roughly $90 million with a different company, Accenture, after concluding that CGI has not been effective enough in fixing the intricate computer system underpinning the federal Web site, according to a person familiar with the decision who spoke on the condition of anonymity in order to discuss private negotiations.

The administration’s decision to end the contract with CGI reflects lingering unease over the performance of HealthCare.gov even as officials have touted recent improvements and the rising numbers of Americans who have used the marketplace to sign up for health coverage that took effect Jan. 1.

According to officials familiar with the matter, who spoke on the condition of anonymity because the decision is not yet public, leaders of CMS became frustrated with the pace and quality of CGI’s work on the repairs. As federal officials and contractors have been trying to fix various aspects of the Web site in the past few months, about half the new software code the company has written failed when it was first used, according to internal federal information.

CGI Federal was hired back in September 2011 as the main contractor. It ran behind schedule, consistently failed to deliver in key aspects of the project, and –by the launch- had not delivered 45 percent of the components it was responsible for. CGI federal failed miserably, but this was the norm for the IT contractor.

Last fall we reported on the stormy relationship between CGI Federal and various levels of government. A pattern of cost-overruns, software failures, and woeful performance on projects emerged. Yet CGI’s growth accelerated on federal and states contracts and it landed the holy grail of IT contracts with the ObamaCare website.

It’s fair to be hard on CGI Federal, but the federal officials who hired and managed CGI should be held responsible as well. Hadn’t they done their homework and researched CGI’s track record on other projects? In Mississippi, state officials won a $474 million jury verdict against CGI Federal’s predecessor in 2000 for failing to deliver a new tax software system.

Senior Administration officials also escaped unscathed in the botched rollout of the healthcare.gov website and that’s a problem.

Allowing the contract to expire is not the same as ending the contract. In some ways, CGI Federal is being let off the hook. Why wasn’t the contract ended sooner? Why hasn’t the transition from CGI to another vendor started sooner? What penalties will they suffer? Has anyone reviewed the actual contract to understand what penalties CGI will pay or discounts the government will received for the missed deadlines, incomplete work, and system failures?

These all speak to issues with government contracting, a system that needs to be reformed. Interestingly, the White House claims it wants to tackle this issue:

The switch in contractors for the online marketplace reflects the administration’s broader effort to reassess how it handles its $80 billion-a-year IT contracting operations, now that HealthCare.gov’s performance is improving and more than 1 million Americans have selected plans on the exchange…

The White House is also debating how it can change the way it handles technology projects government-wide, officials said, including proposals to establish an office that oversees IT ventures across agencies. Other changes include allowing agencies to circumvent the Office of Personnel Management’s hiring process by directly retaining software experts and rotating government technologists through stints in the private sector.

That last idea stands out. The White House wants to circumvent OPM and hire directly as well as rotate software experts in and out of the private sector. It’s an interesting way of recruiting new, fresh talent, but at first blush it reads like a reward to friendly companies that fall in line with the Administration’s agenda.

Healthcare.gov appears to be running better than it did in October and November –although serious system problems still exist that affect enrollees. Even if it recovers to full health, that still doesn’t fix the inherent problems with the UnAffordable Care Act and what it means for Americans.

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