HealthCare.gov gets new contractor

WASHINGTON — The Obama administration has decided to jettison from HealthCare.gov the IT contractor, CGI Federal, that has been mainly responsible for building the defect-ridden online health insurance marketplace and has been immersed in the work of repairing it.

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 website, according to a person familiar with the decision who spoke on the condition of anonymity in order to discuss private negotiations.

Accenture, one of the world’s largest consulting firms, has extensive experience with computer systems on the state level and built California’s large new health-insurance exchange. But it has not done substantial work on any Health and Human Services Department program.

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.

The government is able to sever its relationship with CGI readily because the company’s contract to work on the exchange is to run out at the end of February. Federal officials had the option of extending it for another year and possibly two more times, or of not renewing it. While rejecting a year’s extension, federal officials are discussing with company executives ways to try to ensure a smooth transition, according to individuals familiar with the conversations.

Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services (CMS), the agency that oversees the new online marketplace, did not confirm the decision to switch IT contractors but said, “We continually evaluate our needs and remain focused on ensuring consumers have access to affordable, quality coverage.”

A CGI spokeswoman, Linda Odorisio, acknowledged Friday that the company’s work on HealthCare.gov was ending but said in a statement: “We are proud that more than 400 CGI employees worked around the clock from October through December to deliver a consumer experience that works for a vast majority of Americans.” She noted that the company will continue to perform other work for CMS, including nearly $37 million in contracts that the company has been given during the past few months.

Accenture declined to comment. “We are in discussions with potential clients all the time, but it is not appropriate to discuss with the media contracts we may or may not be discussing,” Accenture spokeswoman Joanne Veto said in a brief telephone interview.

At the beginning of December, administration officials announced that the website was largely working for consumers who wanted to enroll in health plans. But the site continues to malfunction in other ways. For instance, it is not yet able to automatically enroll people eligible for Medicaid in states’ programs, compute exact amounts to be sent to insurers for their customers’ federal subsidies or tabulate precisely how many consumers have paid their insurance premiums and are therefore covered.

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 website 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 Sept. 30, 2011, as the main contractor to build one of the most complex computer systems the federal government has ever attempted to create. The company’s failure to deliver on key aspects of the project was a main reason behind the site’s botched Oct. 1 launch, when error messages were generated when many consumers tried to shop for and select health plans online. President Barack Obama described the launch as one of his “fumbles,” while Health and Human Services Secretary Kathleen Sebelius called it a “debacle.”

Late last summer, as federal health officials were worrying that construction of the website was running far behind schedule, CGI executives promised CMS that they could deliver a functioning marketplace by the Oct. 1 start date. But by the week before the launch, the company had failed to deliver on 45 percent of the components for which it was responsible, according to documents obtained by The Washington Post.

The fact that there is now a transition period of less than two months before Accenture takes over – significantly shorter than ideal for major IT projects – presents its own challenges for the federal officials and contractors and requires coordination between the outgoing and incoming firms.

Because of time constraints, CMS is awarding the Accenture contract on a sole-source basis, according to the person familiar with the decision.

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 administration replaced the contractor that maintains the computer servers handling the data generated by HealthCare.gov, switching from Verizon’s Terremark to Hewlett-Packard. And it is preparing to sign a contract affirming that Quality Software Services, which took over as the project’s general contractor in late October, will stay on for at least another year to coordinate the system’s operation.

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.

The decision to switch contractors for HealthCare.gov is unlikely to tamp down persistent Republican criticism of the Affordable Care Act, the 2010 statute that created the new marketplace. “A change in contractors does not change the sad state of this law,” said Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee.

In turning to Accenture, CMS is placing the project in the hands of a government contractor that has significant technological expertise but that also signed a high-profile legal settlement with the Justice Department less than three years ago over its contracting practices. The global management consulting, technology services and outsourcing firm lately has worked extensively to upgrade and modernize some states’ social services systems, several in anticipation of the health-care law’s rollout.

Accenture was hired by the Internal Revenue Service in 2009 to work on the temporary expansion of a health-care tax credit that was part of federal policy to stimulate the economy.

In June 2012, California entered into a $359 million contract with the company to build the state’s health-care marketplace and operate it for 3 1/2 years. Accenture developed the marketplace, called Covered California, along with CGI , which served as one of its subcontractors.

Covered California is the largest of 14 state-run insurance exchanges, and it has worked relatively smoothly since it was launched at the same time as the federal marketplace. By late December, more than 400,000 Californians had enrolled.

In other instances, Accenture has sparred with CGI as the firms have competed for technology projects.

In the fall of 2012, Accenture finished an online human-services eligibility project for Iowa, modernizing a nearly 20-year-old system in less than a year. In February, it won a $230 million grant to overhaul the technology behind Ohio’s Medicaid program and to create a streamlined online application process for several state aid programs.

The company’s contracting dispute with the federal government ended with Accenture agreeing in September 2011 to pay $63 million to settle a Justice Department lawsuit alleging that it improperly benefited from recommending specific hardware and software as part of government contracts, as well as by inflating prices on contracts and distorting the federal bidding process. The firm, one of several contractors targeted by federal authorities, denied any wrongdoing as part of the settlement.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

A firefighter stands in silence before a panel bearing the names of L. John Regelbrugge and Kris Regelbrugge during the ten-year remembrance of the Oso landslide on Friday, March 22, 2024, at the Oso Landslide Memorial in Oso, Washington. (Ryan Berry / The Herald)
‘Flood of emotions’ as Oso Landslide Memorial opens on 10th anniversary

Friends, family and first responders held a moment of silence at 10:37 a.m. at the new 2-acre memorial off Highway 530.

Julie Petersen poses for a photo with images of her sister Christina Jefferds and Jefferds’ grand daughter Sanoah Violet Huestis next to a memorial for Sanoah at her home on March 20, 2024 in Arlington, Washington. Peterson wears her sister’s favorite color and one of her bangles. (Annie Barker / The Herald)
‘It just all came down’: An oral history of the Oso mudslide

Ten years later, The Daily Herald spoke with dozens of people — first responders, family, survivors — touched by the deadliest slide in U.S. history.

Victims of the Oso mudslide on March 22, 2014. (Courtesy photos)
Remembering the 43 lives lost in the Oso mudslide

The slide wiped out a neighborhood along Highway 530 in 2014. “Even though you feel like you’re alone in your grief, you’re really not.”

Director Lucia Schmit, right, and Deputy Director Dara Salmon inside the Snohomish County Department of Emergency Management on Friday, March 8, 2024, in Everett, Washington. (Ryan Berry / The Herald)
How Oso slide changed local emergency response ‘on virtually every level’

“In a decade, we have just really, really advanced,” through hard-earned lessons applied to the pandemic, floods and opioids.

Ron and Gail Thompson at their home on Monday, March 4, 2024 in Oso, Washington. (Olivia Vanni / The Herald)
In shadow of scarred Oso hillside, mudslide’s wounds still feel fresh

Locals reflected on living with grief and finding meaning in the wake of a catastrophe “nothing like you can ever imagine” in 2014.

Everett mall renderings from Brixton Capital. (Photo provided by the City of Everett)
Topgolf at the Everett Mall? Mayor’s hint still unconfirmed

After Cassie Franklin’s annual address, rumors circled about what “top” entertainment tenant could be landing at Everett Mall.

Everett
Everett man sentenced to 3 years of probation for mutilating animals

In 2022, neighbors reported Blayne Perez, 35, was shooting and torturing wildlife in north Everett.

The Washington State University Snohomish County Extension building at McCollum Park is located in an area Snohomish County is considering for the location of the Farm and Food Center on Thursday, March 28, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Year-round indoor farmers market inches closer to reality near Mill Creek

The Snohomish County Farm and Food Center received $5 million in federal funding. The county hopes to begin building in 2026.

Dorothy Crossman rides up on her bike to turn in her ballot  on Tuesday, Aug. 1, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
Everett leaders plan to ask voters for property tax increase

City officials will spend weeks hammering out details of a ballot measure, as Everett faces a $12.6 million deficit.

Starbucks employee Zach Gabelein outside of the Mill Creek location where he works on Friday, Feb. 23, 2024 in Mill Creek, Washington. (Olivia Vanni / The Herald)
Mill Creek Starbucks votes 21-1 to form union

“We obviously are kind of on the high of that win,” store bargaining delegate Zach Gabelein said.

Lynnwood police respond to a collision on highway 99 at 176 street SW. (Photo provided by Lynnwood Police)
Police: Teen in stolen car flees cops, causes crash in Lynnwood

The crash blocked traffic for over an hour at 176th Street SW. The boy, 16, was arrested on felony warrants.

The view of Mountain Loop Mine out the window of a second floor classroom at Fairmount Elementary on Wednesday, Jan. 10, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
County: Everett mining yard violated order to halt work next to school

At least 10 reports accused OMA Construction of violating a stop-work order next to Fairmount Elementary. A judge will hear the case.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.