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HealthCare.gov Debacle Reveals Flaws in Contractor Screening

Amid the holiday season craziness, The Washington Post published an in-depth account of how a subsidiary of Canadian IT giant CGI Group won the contract to lead the design and testing of the HealthCare.gov website.

The article debunked rumors that cronyism motivated the Centers for Medicare and Medicaid Services’ (CMS) September 2011 decision to award CGI Federal the $93.7 million contract. Instead, the Post found that the main culprit was CMS, which by its own admission “dropped the ball” on evaluating the company’s background.

Specifically, what CMS contracting officials overlooked and/or downplayed was that more than 100 of CGI’s employees came from Virginia-based IT company American Management Systems (AMS), which CGI acquired in 2004. According to the Post, AMS had mishandled at least 20 government IT projects, including one particularly well-publicized fiasco involving the Federal Retirement Thrift Investment Board’s $36 million overhaul of its recordkeeping system.

AMS’s questionable past performance on government contracts should have set off alarms in 2007, when CMS awarded CGI and 15 other companies an umbrella contract allowing them to bid on future CMS projects. In fact, a former CMS official told the Post that AMS’s track record “could well have knocked [CGI Federal] out of the competition, and probably should have.”

The Federal Acquisition Regulation (FAR) requires contracting officials to review bidders’ past performance, including the past performance of their predecessor companies. In the case of HealthCare.gov, however, the Post discovered that CMS assigned past performance very low priority, ranking it fifth in importance out of seven factors, and only reviewing past performance since 2007. CMS selected CGI for the HealthCare.gov project over three other companies (IBM, Computer Sciences Corporation, and Quality Software Services) mainly on the basis of technical competency and cost, although the Post found that the cost of CGI’s bid proposal was not the lowest of the four.

The part of the Post story that really rankled the Project On Government Oversight is contained in this passage:

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.

POGO has long been aware that the government often fails to adequately screen its contractors. This is what inspired POGO to create the Federal Contractor Misconduct Database and to constantly implore the government to improve and publicly disclose contractor past performance and responsibility information. But the admission from those former CMS officials that the government shirks its regulatory duty to screen contractors really surprised us. The government should not have such a blasé attitude regarding the past performance of contractors to which it entrusts billions of dollars for projects and programs that are literally a matter of life and death. We hope the epic embarrassment of the HealthCare.gov rollout—and its troubling backstory—will do for federal contracting what the Edward Snowden revelations are doing for federal surveillance programs: spark a vigorous public debate and get the ball rolling on long-term fixes.

By: Neil Gordon
Investigator, POGO

Neil Gordon, Investigator Neil Gordon is an investigator for the Project On Government Oversight. Neil investigates and maintains POGO's Federal Contractor Misconduct Database.

Topics: Contract Oversight

Related Content: Contractor Accountability, Public Health, Federal Contractor Misconduct, Waste

Authors: Neil Gordon

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