CGI Federal and its parent company, which have become famous after the debacle that is, defy the laws of economics. Instead of going out of business following decades of cost-overruns, software failures and woeful performance on projects, their growth accelerated from federal and state contracts.  I guess it goes to show that the government hires the best – the best connected that is.

An investigation by the Washington Post yesterday, gives us some sight into the debacle that is and has been CGI Federal, the company behind the error-ridden, structurally flawed ObamaCare website,, and its parent company.

Apparently, CGI Federal is filled with executives (and staff) from the a predecessor which badly handled over 20 government IT projects across the country:

CGI Federal, the main Web site developer, entered the U.S. government market a decade ago when its parent company purchased American Management Systems, a Fairfax County contractor that was coming off a series of troubled projects. CGI moved into AMS’s custom-made building off Interstate 66, changed the sign outside and kept the core of employees, who now populate the upper ranks of CGI Federal.

They include CGI Federal’s current and past presidents, the company’s chief technology officer, its vice president for federal health care and its health IT leader, according to company and other records. More than 100 former AMS employees are now senior executives or consultants working for CGI in the Washington area.

A top CGI official said this week that the company is “extremely proud” of its acquisition of AMS. Lorne Gorber, CGI’s senior vice president for global communications, said CGI had been aware of the AMS “trip-ups” but has transformed the AMS culture over the past decade.

In the years since the purchase, CGI has grown rapidly in the United States, dramatically expanding its role as a federal and state contractor. Agencies that tapped CGI Federal often rehired the company and, in the past two years alone, the company has been awarded contracts with at least 25 federal agencies worth $2.3 billion.

The Post goes on to describe incident after incident of cost overruns and faulty products with security issues and delays in delivery.

What did their satisfied clients have to say?

Lawrence Stiffler, who was director of automated systems for the thrift board at the time and a 25-year veteran of IT contracting for the federal government, said AMS was highly unreliable. “You couldn’t count on them to deliver anything,’’ he said.

In Mississippi, state officials won a $474 million jury verdict against AMS in 2000 for failing to deliver a new tax software system.

“They did not provide us one working piece of software after almost six years,’’ recalled Ed Buelow Jr., [Mississippi’s] former revenue commissioner. “There were hundreds of errors. Nothing worked.’’ Mississippi and AMS ultimately agreed on a $185 million settlement.

Are we unfairly targeting CGI federal, experts say no:

Government contracting experts said it’s not uncommon for IT vendors to run into software problems and cost overruns. But the experts added that the number of high-profile AMS projects that went awry before it was acquired, over such a relatively short period, was unusually high for a large and experienced company.

“These should all have been red flags for contract officers,” said Daniel I. Gordon, who was in charge of government procurement policy earlier in the Obama administration and is now associate dean for government procurement studies at George Washington University Law School. Gordon was not involved in awarding the contract to CGI Federal.

The failure of CGI Federal reveals a hidden problem with government contracting. It appears that once you’re in the door as a vendor, it is easy to get new contracts with little or no regard to actual past performance. Once the ball gets rolling on your work, it just snowballs.

In the private sector, CGI and its parent company would not have gotten so many chances to continue to bungle their IT projects. With government, their reward for a bad job: more business.