- The Washington Times - Tuesday, August 26, 2014

At least a third of the contracts the administration inked to help implement Obamacare are over budget, an inspector general’s audit reported Tuesday, highlighting the health program’s potential to inflate costs.

Seven of the contracts already have cost twice as much as initially anticipated, the Health and Human Services Department’s inspector general said.

“There is a disturbing lack of accountability and responsibility with taxpayer funds that is highlighted by this report,” Rep. Diane Black, Tennessee Republican, said.

The inspector general’s investigators looked at 60 contracts related to HealthCare.gov, the online portal for the federal health exchanges, which serve the three dozen states that declined to set up their own marketplaces under the Affordable Care Act.

Investigators said the 20 contracts pinpointed as already over budget were estimated to cost about $345 million in total, but a review of committed funds so far shows they’ve exceeded projections by more than $283 million.

The original value of the 60 contracts audited was predicted to be $1.7 billion, and about $1.4 billion has already been obligated, including $800 million specifically for HealthCare.gov. Auditors looked at contracts with varying payment structures and start dates between 2009 and 2014. Some may already have been terminated, while others may continue for years to come.


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HealthCare.gov and its associated systems launched last fall to great fanfare, but severe capacity issues and software glitches threatened to kill off the program in its infancy. A rescue team of tech gurus were able to stabilize the system by December.

“The troubled launch of the federal marketplace on October 1, 2013, raised serious concerns about the department’s management and oversight of the project, including the selection and oversight of the many contractors that played a role in the development and operation of the federal marketplace,” the inspector general said of its review, which will be regularly updated.

On Tuesday, the Obama administration said it was bringing on Kevin Counihan to run the federal health care exchange.

Mr. Counihan oversaw Connecticut’s relatively smooth implementation of the health care law.

HHS Secretary Sylvia Mathews Burwell said Mr. Counihan brings “additional operational and technological expertise to the position and will be a clear, single point of contact for streamlined decision-making.”

Several of the contracts where obligations have outstripped initial estimates were traced back to CGI Federal, the initial lead contractor on the HealthCare.gov project. Company officials sparred with government representatives during congressional hearings last fall, when each side blamed the other for lapses in the project.

CGI Federal was ousted as lead contractor early this year.

The sole 2014 contract reviewed in the IG report is a deal with Accenture, the company that took over after the administration dropped CGI in January.
The Obama administration said ousting CGI is part of the changes officials have made as they try to correct flaws.

“[The Centers for Medicare and Medicaid Services] takes its responsibility for contracting oversight seriously and has moved aggressively to implement extensive contracting reforms, including setting up a new task force to develop a program-wide view of the cost of the marketplace, bringing in new leadership to oversee marketplace operations, hiring a systems integrator, and ending our largest contract with CGI and moving to a new type of contract with Accenture that rewards performance,” HHS spokesman Kevin Griffis said.

The administration also said many of the seven contracts that were more than twice their initial estimates covered tasks beyond just the Obamacare exchanges.

Other contracts that have ballooned beyond their initial cost estimates include a deal inked in 2011 — at $1.9 million, having risen to $2.8 million — to develop cloud computing systems used by agencies involved in verifying Obamacare customers, and a 2012 deal to conduct consumer research that started at $1.4 million that reached $4.2 million.

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