Obamacare Tech Firm Messed Up 20 Other Gov’t Projects
Policy + Politics

Obamacare Tech Firm Messed Up 20 Other Gov’t Projects

REUTERS/Jason Reed

CGI Federal, the company responsible for building the problem-plagued Web site for the Affordable Care Act, won the job because of what federal officials deemed a “technically superior” proposal, according to government documents and people familiar with the decision.

Not considered in the 2011 selection process was the history of numerous executives at CGI Federal, who had come from another company that had mishandled at least 20 other government ­information technology projects more than a decade ago. But federal officials were not required to examine that long-term track record, which included a highly publicized failure to automate retirement benefits for millions of federal workers.

By 2011, CGI Federal already had been cleared to do government work at the Centers for Medicare and Medicaid Services (CMS), the agency overseeing the rollout of the new health-care law.

The company had been included in a pool of pre-screened, approved contractors in 2007, during the George W. Bush administration, and only firms in that pool were later allowed to bid for the Affordable Care Act work. It was at that earlier time that the problems at American Management Systems, the Fairfax County IT contractor acquired by CGI, would have figured into the assessment of CGI Federal, contracting experts say.

In hindsight, one former CMS official said, the AMS record “could well have knocked [CGI Federal] out of the competition, and probably should have.”

In light of the bungled launch of the health-care Web site, critics have repeatedly asked how CGI Federal got the contract, and there has been widespread speculation on online news sites and blogs that the firm was selected because of political ties to the Obama administration.

But a review of internal documents and interviews with former and current federal officials show that the selection process was walled off from politics.

Career officials at CMS, working out of an obscure Baltimore-based contracting office, focused in 2011 on the proposals submitted by four bidders, examining technical competency and cost while giving relatively little attention to past performance. Since 2007, CGI Federal had won 17 other CMS jobs under the pre-screened contract, worth several hundred million dollars.

The review of CGI Federal concluded there was “no evidence of performance risk,” according to a CMS document, portions of which were read to The Washington Post by a person familiar with the contracting process.

CGI Federal won the $93 million contract, now worth $293 million, in September 2011.

At the time of the earlier selection process in 2007, CGI Federal was still relatively new to federal contracting. It had grown out of CGI Group’s acquisition in 2004 of AMS, which had a recent history of troubled projects, including a Philadelphia school computer system that sent paychecks to dead people and a Mississippi tax system so dysfunctional that a jury awarded a $474 million verdict against the firm.

Three former CMS officials said in recent interviews that the AMS problems should have raised red flags.

“Should CMS have recognized that ‘Okay, here’s CGI Federal. It’s a new company, but, oh, my God, it looks a lot like the AMS from yesterday’?” asked one former CMS official familiar with the contracting process who like others interviewed for this article spoke on the condition of anonymity to discuss internal procedures. “Yes. I would consider that dropping the ball.’’

Tasha Bradley, a CMS spokeswoman, said in a statement that the agency “adheres by a long-
established contracting process where expert, career contracting officials evaluate and award contracts based on criteria outlined in the contract solicitation, including past performance, technical expertise and proposed contract value.”

CMS declined to comment on specific questions about how closely CGI Federal’s past performance was evaluated and whether that review looked at AMS.

Former AMS executives have defended that company’s performance, and CGI officials have rejected any comparison with AMS’s earlier failures.

CGI Federal has also defended its work on HealthCare.gov, despite an October launch that White House officials have acknowledged was disastrous. Federal officials have faulted the company’s performance, saying it missed deadlines, understaffed the job and overstated its progress.

People familiar with the project have said it was also hampered by administration mismanagement, fierce Republican opposition and political sensitivities that delayed policy and regulatory decisions.

The federal online marketplace that is selling health plans in 36 states under the 2010 health-care law has been functioning better in recent weeks, but officials are still working to fix lingering problems, including errors in enrollment records sent to insurance companies. CGI Federal remains intimately involved in the project, writing computer code in attempts to fix various aspects of the system.

Linda Odorisio, CGI’s vice president for global communications, said the company “continues to work closely with CMS and all of its vendor partners to deliver continuous enhancements in system performance and the user experience” on the Web site.

She added that CGI Federal “contributed to the significant improvements made to the system over the last two months, resulting in more than half a million Americans enrolling in just the first three weeks of December.”

Umbrella contract
In December 2006, CMS put out a request for proposals. The agency said it was seeking “world-class IT services” to improve and maintain the massive systems that run Medicare and Medicaid, according to contracting documents. Thirty-one bidders responded, including CGI Federal.

CMS used a procurement method that has become increasingly common over the past decade. The agency first awarded an umbrella contract to a group of firms, and those firms were then eligible to bid on future IT work. Experts say this saves the government time because it shortens the subsequent bid process.

In evaluating the bids, CMS was to scrutinize each company’s performance on previous contracts, according to an internal agency document obtained by The Post. The document described a “risk assessment” of cost control, on-time delivery and other factors.

Federal law requires that past performance be considered for all federal contracts worth more than $150,000, with limited exceptions. Federal regulations also say CMS should have considered the record of “predecessor companies,” such as AMS. Several former officials familiar with the 2007 selection said no concerns about CGI Federal were raised inside the agency.

AMS projects had run into trouble at the federal level and in at least 12 states, according to government audit reports, interviews and news accounts. The purchase of AMS was CGI’s entree into the U.S. government market, and AMS executives flocked to CGI Federal. Today, more than 100 former AMS employees are senior executives or consultants working for CGI in the Washington area.

One former CMS official said the agency especially should have examined the most publicized AMS failure, an effort to automate retirement benefits for millions of federal workers. AMS was fired in 2001 by the Federal Retirement Thrift Investment Board after going $60 million over budget, writing computer code that turned out to be useless and never delivering a workable system, according to government reports.

AMS had settled lawsuits arising from the project in 2003. “That should have stood out,’’ the former official said.

CGI Federal was ultimately chosen for an umbrella contract, worth up to $4 billion in future work, along with 15 other firms, including Lockheed Martin and IBM.

While it is unclear whether agency officials examined the AMS track record, former CMS officials said it probably would not have made much difference, because past performance has long been an overlooked component of federal contracting.

Deadline pressure
In the summer of 2011, the Obama administration was racing to figure out who would build the Affordable Care Act’s all-important Web site. “Time is of the essence,” said an internal CMS draft request for proposals, dated June 24, 2011.

With deadlines looming, officials limited the bidders to the winners of the 2007 umbrella contract. “There was very great time pressure,” recalled a former CMS official familiar with the process. “The feeling was we had a lot of big IT powerhouses and they knew our work.’’

Four firms applied: IBM, Computer Sciences Corp., Quality Software Services and CGI Federal.

As is tradition, the selection process was strictly sheltered from political considerations and political appointees at CMS or elsewhere in the administration, according to numerous former and current CMS employees.

“I deliberately stayed out of contracting,’’ said Leslie Norwalk, the agency’s acting administrator under President George W. Bush. “If that had changed, I would have heard rumblings.’’

Agency documents show that a career contracting officer, in the CMS Office of Acquisition and Grants Management, was in charge of awarding the contract for the Web site. The selection process focused on bidders’ business and technical proposals, which described the proposed cost, hardware and software required, proposed infrastructure design, security requirements, and key personnel.

The companies’ past performance was not a priority. The CMS document listed it as the second least important of seven technical evaluation factors. And the review would look only at past work under the 2007 umbrella contract, the document said.

While the review found no performance risk for CGI Federal, agency officials had not always been satisfied with the company’s work. In 2010, CMS rejected CGI Federal’s bid under the umbrella contract to perform work on four health IT systems, in part citing unspecified 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.

And the review did not take into account problems that several other CGI projects had encountered, including years of delay and system failures on a state computer system in Hawaii. State auditors in 2010 partially faulted another CGI subsidiary, CGI Technologies and Solutions, for those issues.

CGI says its overall work is high-quality and nearly always on time and on budget, and the company has also had many successes. In the past two years, CGI Federal has been awarded contracts with at least 25 federal agencies.

Documents and interviews show that CGI Federal was selected because of what was deemed to be the company’s technical prowess, even though the price of the firm’s proposal was higher than that of at least of one competitor.