States Refuse to Pay Obamacare Contractors
Policy + Politics

States Refuse to Pay Obamacare Contractors

REUTERS/The Fiscal Times

Two states are fed up with their shoddily built Obamacare websites and are refusing to pay the contractors until they are fixed.

CGI Federal, the same contractor responsible for the disastrous federal website,, won’t be receiving any more payments from Massachusetts or Vermont until each state's online health exchange is working properly and people are able to successfully enroll in an insurance policy, the Boston Globe first reported.

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Vermont is withholding a $5.1 million payment to CGI because the company missed deadlines and had not resolved issues that plagued the state's website. It also plans to further dispute another $1 million in payments.

“I’ve lost confidence in the contractors that were supposed to deliver a fully functioning website on Oct. 1,” Vermont Gov. Peter Shumlin told the Globe. “I’m going to continue to hold their feet to the fire until they get it right.

Likewise, Massachusetts said it won’t be paying another cent of the $69 million contract with CGI until the site is fully functioning. It has already paid $11 million to the contractor.

CGI was the main contractor responsible for building, which was riddled with massive technical glitches that prevented millions of people from signing up for health insurance ahead of the New Year. Indeed, just six people in the entire country were able to sign up for coverage on the first day the website went live on Oct 1. Officials say the website has largely improved since, and experienced a surge in enrollment in late November and early December.

Related: Low Obamacare Enrollment More Proof of a “Disaster”

So far, the federal government has spent at least $319 million on the website, and Health and Human Services Secretary Kathleen Sebelius estimates the final cost will be about $677 million. CGI has already been awarded a $94 million contract, according to the Globe.

Although administration officials have blamed CGI and other contractors for the website’s failures, they are not planning to take action with regard to contract payments, though a review process is underway, according to Talking Points Memo.

Health and Human Services Secretary Kathleen Sebelius has instructed that the department’s inspector general probe into the website’s development. The investigation will include everything from the performance of the contractors as well as the payments made throughout the process.

Related: Federal IT Flaws Go Well Beyond Obamacare

“I believe strongly in the need for accountability and in the importance of being good stewards of taxpayer dollars,” Sebelius wrote in a blog post. "We will take action to address the Inspector General’s findings."

CGI was also the lead contractor on Hawaii’s online exchange, which was plagued with so many problems that its launch was delayed by two weeks. The company also has Obamacare contracts with California, Colorado, Kentucky and New Mexico, which have reported very few problems with their websites.

-Follow Brianna Ehley on Twitter @BriannaEhley

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