By Dow Jones Business News,
July 30, 2014, 04:33:00 PM EDT
By Louise Radnofsky
The federal agency in charge of building the HealthCare.gov insurance website suffered from poor management and
skimpy scrutiny of its contracts, a congressional watchdog is set to tell lawmakers Thursday.
The Centers for Medicare and Medicaid Services "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," said William T. Woods, director of acquisition and sourcing management
for the Government Accountability Office, in testimony planned to be delivered before a House panel Thursday. The office
is also releasing a report with its findings.
The federal government had committed around $840 million to the building of the site and its systems as of March
2014, the watchdog reported.
Mr. Woods warned in the prepared remarks that if the agency doesn't improve its contract management and governances
process, "significant risks remain that upcoming open enrollment periods could encounter challenges."
The problems of HealthCare.gov have been extensively reported since the federal government opened the website in
October to sell insurance plans under the Affordable Care Act. Still, the official conclusions are likely to further
fuel debate ahead of November's midterm elections, and as the Obama administration scrambles to finish and revamp the
site in time for the next enrollment season.
"CMS incurred significant cost increases, schedule slips, and delayed system functionality for the [site] and data
hub systems due primarily to changing requirements that were exacerbated by inconsistent oversight, " according to the
The $840 million includes funds for CGI Federal Inc., the first contractor tasked with developing the main parts of
the site, and some of the money that will go to Accenture Federal Services Inc., which was given the contract to take
over in January.
"Accenture is delivering all of our work for CMS on time and on budget. As the GAO noted, the increase in contract
value is a result of CMS assigning Accenture additional work," said Accenture spokeswoman Joanne Veto.
A spokeswoman for CGI Federal Inc. didn't immediately respond to a request for comment.
The watchdog said the Obama administration wanted to withhold payments to CGI in August 2013 but ultimately decided
to work with the contractor to try to get the site ready for its fall launch. The GAO also said the initial contract
with Accenture had been for $91 million but had already grown to $175 million by June 2014 due to additional
requirements--and key components, including a financial-management model, were still not ready.
Senior CMS officials who had seen a draft copy of GAO's full report on HealthCare.gov's woes said they agreed with
most of the watchdog's recommendations. They said the agency is taking several steps to improve, including offering
training in areas such as strategic planning, reorganizing its management structure and hiring private-sector
Among the newcomers is Andy Slavitt. He is the former group executive vice president at Optum, a business unit of
UnitedHealth Group and the parent company of Quality Software Services Inc., the contractor picked to lead the cleanup
effort for HealthCare.gov. He is now a deputy principal administrator at CMS.
That isn't likely to appease congressional Republicans running the hearing tomorrow, where the GAO testimony will
be delivered. Mr. Slavitt is also due to appear.
"The Obama administration was not up to the job, and American taxpayers are now paying the price," said Tim Murphy
(R., Pa.), chairman of the House Energy and Commerce Committee's oversight panel. "Despite repeated assurances to our
committee that everything was 'on track,' it turns out it was on track to disaster."
Write to Louise Radnofsky at email@example.com
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