- The Washington Times - Wednesday, July 30, 2014

Obamacare’s balky federal website was doomed last fall by poor management within the Obama administration, cost overruns and shifting deadlines and requirements, government investigators say in a report for Congress.

The Government Accountability Office will release its findings Thursday, but prepared testimony delves into concerns the administration had with the federal health exchange’s lead contractor and the chain of command leading up to the website’s launch in October.

HealthCare.gov linked residents of 36 states with health coverage options during the Affordable Care Act’s first enrollment period from October to mid-April.

But it nearly choked off Obamacare in its infancy when it succumbed to technical problems last fall, prompting fingerprinting between the administration and lead contractor CGI Federal amid a desperate rescue effort that paid off by December.

The GAO said most of the blame lies with the Centers for Medicare and Medicaid Services’ failure to maintain control of the project.

“We found that CMS undertook the development of Healthcare.gov and its related systems without effective planning or oversight practices, despite facing a number of challenges that increased both the level of risk and the need for effective oversight,” William T. Woods, GAO’s director of acquisition and sourcing management, said in written testimony for the committee.

As of March, CMS had obligated $840 million to develop HealthCare.gov and its supporting systems, according to his testimony.

From September 2011 to February of this year, costs for development the federal exchange increased from an initial obligation of $56 million to more than $209 million, while the data hub’s price tag increase from $30 million to $85 million.

The GAO says CMS used a type of contract that is at high risk of escalating costs “because the government pays a contractor’s allowable cost of performance regardless of whether the work is completed.”

For its part, CMS said it has corrected that issue.

“CMS takes its responsibility for contracting oversight seriously and has already implemented contracting reforms that are more extensive than the recommendations in the report, including ending its contract with CGI and moving to a new type of contract with Accenture that rewards performance,” CMS spokesman Aaron Albright said.

Responding to the GAO’s report, the agency said it has acknowledged HealthCare.gov’s failings and has established clearer lines of authority and requirements for how tasks are to be prioritized and completed.

It also will employ “metric-driven” reviews to monitor contracts and guard against cost overruns.

For its months-long review, GAO investigators examined documents related to the administration’s tasks for CGI Federal, the main contractor on HealthCare.gov, its deal with QSSI, Inc., which developed the federal data hub to verify users identity and information, and the contract awarded to Accenture Federal Services when it took over the federal project from CGI in January. They also interviewed people close to the project.

Mr. Woods’ written testimony outlines CMS’ growing concerns about CGI as the Oct. 1 launch date neared.

“In September 2013, CMS program officials became so concerned about the contractor’s performance that they moved their operations to the [federal exchange] contractor’s offices to provide on-site direction,” the testimony says.

The administration threatened to withhold funds, but CGI insisted it had completed its work correctly and that governmental delays and shifts in CMS’s requirements cut into the time needed to test the system.

CMS ultimately worked with CGI but declined to pay $267,000 in requested fees — about 2 percent of the $12.5 million in fees it paid to the contractor.

The investigators said CMS’ new contract with Accenture has grown from $91 million to $175 million as of June, and strict oversight will be needed to make sure financial management components of the system are built properly.

Unfinished aspects of the system have been a sore spot for the administration and fuel for Republican critics ahead of the law’s second open-enrollment period in October.

“Unless CMS improves contract management and adheres to a structured governance process, significant risks remain that upcoming open enrollment periods could encounter challenges,” Mr. Woods says in his testimony.

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