OIG: Lax Vetting of HealthCare.gov Contactors Led to System Errors

January 21, 2015 in News

The federal government failed to take key steps in the process of hiring contractors to build HealthCare.gov, which resulted in preventable site errors, according to a report from the HHS Office of Inspector General released Tuesday, The Hill reports.

According to The Hill, the HHS OIG report examined six contracts. It found that CMS, the agency charged with overseeing the rollout, only vetted two of the contracts properly before approving them (Ferris, The Hill, 1/20). For example, contracting officials asked other CMS employees just three questions about the contractors’ past performance two days before awarding contracts, and site officials did not search government databases for comprehensive records about the companies’ performances, including CGI Federal (Radnofsky, Wall Street Journal, 1/20).

In January 2014, CGI Federal — which was the lead contractor on the federal health insurance exchange website — said its three-year contract would not be renewed when it expired in February (iHealthBeat, 4/22/14).

The report also found that CMS frequently selected contracts that made the government responsible for the amount it would cost contractors to finish the project. According to the Wall Street Journal, many major contracts doubled or tripled their estimated cost, including CGI’s, whose $58 million initial contract ultimately cost $207 million. Overall, the government as of February 2014 had agreed to pay $800 million for HealthCare.gov contracts, the Journal reports (Wall Street Journal, 1/20).

Further, the report found that many of the contracts did not include cost estimates and approval signatures from CMS officials (The Hill, 1/20).

According to the Journal, the report also raised questions about the project’s management, noting that no single company initially was responsible for coordinating activities among the 33 companies holding the 60 contracts. Specifically, HHS OIG found that CMS employees said they thought CGI was in charge, while CGI officials indicated they had a different understanding of their role (Wall Street Journal, 1/20). 

According to The Hill, management issues could have discouraged contractors from applying, as only five out of the 60 contracts were new (The Hill, 1/20). The report found that CMS officials’ rush to begin site construction limited the number of companies that could bid for certain contracts, and in some instances CMS received proposals from only one company (Wall Street Journal, 1/20).

Reaction

CMS and HHS said they were “using the audit as an opportunity to make change.” However, they noted that “a vast majority of the contracts and task orders did not have performance issues” (The Hill, 1/20).

HHS spokesperson Meaghan Smith added, “CMS didn’t wait for the [OIG] report to make changes.” She noted that the agency “has already implemented acquisition reforms that eclipse the recommendations in the report, including ending the CGI Marketplace contract and moving to a new type of contract with Accenture that rewards performance” (Wall Street Journal, 1/20).

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