Auditors Accuse Feds of Mismanaging $600 Million in Obamacare Contracts
Policy + Politics

Auditors Accuse Feds of Mismanaging $600 Million in Obamacare Contracts


Last July, as the price tag for the Obamacare enrollment system climbed to $2.1 billion, a scathing report by the Government Accountability Office accused the Centers for Medicare and Medicaid Services (CMS) of negligent management practices and lack of oversight of contractors hired to create and fix—the primary portal to enroll Americans in Obamacare.  

Today, the Inspector General for the Department of Health and Human Services went further. They reviewed 20 of the 62 contracts that were awarded to create the federal marketplace for Obamacare—worth a cool $600 million—and found that CMS failed to manage each contract properly. 

Related: States Band Together to Keep Obamacare Afloat 

The audit accuses the public employees responsible for these contracts of flaunting federal oversight procedures, not indicating when contract deliverables were met, and not keeping accurate records of each project. 

As a result, the IG report concludes:

(1) Contractor delays and performance issues were not always identified.
(2) A contractor incurred unauthorized costs that increased the cost of the contract.
(3) Contracting officers in all Government agencies did not have access to contractor past performance evaluations when making contract awards.
(4) Critical deliverables and management decisions were not properly documented. 

Last year’s GAO report put the original cost overruns at $150 million but then added $175 million to that number to include the cost of fixing the original website, which was a disaster. That disaster cost President Obama a major failure, the head of HHS lost her job and taxpayers got soaked. 

Related: Obamacare Gap Traps Millions with Coverage Who Can’t Afford Care 

It should not surprise anyone that a government agency that’s actually running a health services business would foul up so completely. But the obvious is true—the federal government is horrible at developing technology.     

A study by the Standish Group, which spanned 2003-2012, showed that only 6 percent of federal IT projects costing more than $10 million were successful. Slightly more than half had cost overruns, and 42 percent were total failures. 

During the early stages of the launch, Luke Chung, a software developer in Virginia, told The Fiscal Times, “As I got more involved with the fiasco, my views changed from basic programmer incompetence to purposeful, systemic problems in the procurement system, which incentivizes large government contractors to make the mess they’ve made. As we saw with CGI Federal, they got paid extra for delivering a failed product.”