The Troubled Past of Healthcare.gov's Lead Contractor
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By Jerry Markon and
ALICE CRITES,
The Washington Post
November 17, 2013

The lead contractor on the dysfunctional website for the Affordable Care Act is filled with executives from a company that mishandled at least 20 other government IT projects, including a flawed effort to automate retirement benefits for millions of federal workers, documents and interviews show.

CGI Federal, the main website 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.

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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. “Anyone at CGI who came from AMS would not be able to find any similarities in how they work today to how they worked a decade ago,’’ Gorber said.

He said that CGI’s overall government contracting work remains high quality and that the company “delivers 95 percent of its projects on time and on budget.’’

A year before CGI Group acquired AMS in 2004, AMS settled a lawsuit brought by the head of the Federal Retirement Thrift Investment Board, which had hired the company to upgrade the agency’s computer system. AMS had gone $60 million over budget and virtually all of the computer code it wrote turned out to be useless, according to a report by a U.S. Senate committee.

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The thrift board work was only one in a series of troubled projects involving AMS at the federal level and in at least 12 states, according to government audit reports, interviews and press accounts. AMS-built computer systems sent Philadelphia school district paychecks to dead people, shipped military parts to the wrong places for the Defense Logistics Agency and made 380,000 programming errors for the Wisconsin revenue department, forcing counties to repay millions of dollars in incorrectly calculated sales taxes.

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 the years since the purchase, CGI has grown rapidly in the U.S., 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.

Earl Devaney, who chaired the board that oversaw President Obama’s economic stimulus program, praised CGI Federal’s 2009 work on a website that collected information about how recipients used the federal money. “The system worked when it was supposed to work,’’ Devaney said.

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But the years since the acquisition have also brought concerns about the quality of some of CGI’s work. The Centers for Medicare and Medicaid Services (CMS) — the government agency that awarded the Affordable Care Act contract to CGI Federal — previously rejected the company’s bid in 2010 to perform work on four health IT systems in part because of “performance issues” in carrying out an earlier contract, according to a Government Accountability Office ruling. CGI Federal protested the CMS decision, but the GAO upheld it. Neither agency has publicly detailed what the “performance issues” involved.

Meanwhile, state auditors in Hawaii in 2010 partially faulted another CGI subsidiary, CGI Technologies and Solutions, for years of delay on a computer system for the state tax department. The project had been marred by slow response time and numerous system failures. That CGI company also grew out of AMS, which had been the original contractor on the project. CGI officials said the system enabled the state to collect hundreds of millions of dollars in delinquent taxes.

More recently, three of the new state health-care exchanges that CGI Technologies and Solutions helped develop — in Hawaii, Vermont and Colorado — have also encountered major glitches and delays. Asked about the problems, CGI officials said all three exchanges are now up and running.

Potential ‘Red Flags’
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.

 Administration officials have faulted CGI Federal’s performance on the health-care initiative. CMS administrator Marilyn Tavenner, for instance, told a congressional committee that the firm sometimes missed deadlines. The government also grew frustrated with CGI Federal because the firm said on repeated occasions that features of the exchange were ready when they were not, several officials have said.

As the lead contractor for HealthCare.gov, CGI Federal was responsible for building the website for the health insurance exchange covering the 36 states that do not have their own exchanges. Fifty-four other contractors worked on various parts of the federal exchange.  

In response to questions about CGI’s record, CMS spokeswoman Tasha Bradley said: “Unfortunately, the experience on HealthCare.gov has been frustrating for many Americans. HealthCare.gov can and will be fixed, and we have called in additional technical help from across the country to solve some of the more complex technical issues.”