$292 Million Down The Drain: White House Fires Main Obamacare IT Contractor

Zero Hedge – by Tyler Durden

Proving once again that if you want something done wrong, and preferably at massive cost overruns, then just leave it to the government, moments ago news broke that the main IT contractor behind the embarrassment that is healthcare.gov – CGI Federal – has been fired. Who could possibly foresee this? Well, anyone who had actually done some diligence on the clusterf#@k that is CGI Federal, and which as WaPo profiled some time ago, “is filled with executives from a company that mishandled at least 20 other government IT projects, including a flawed effort to automate retirement benefits for millions of federal workers, documents and interviews show.” Make that 21. “A year before CGI Group acquired AMS in 2004, AMS settled a lawsuit brought by the head of the Federal Retirement Thrift Investment Board, which had hired the company to upgrade the agency’s computer system. AMS had gone $60 million over budget and virtually all of the computer code it wrote turned out to be useless, according to a report by a U.S. Senate committee.” Sounds like the perfect people to hire in order to make a complete disaster out of the Obamacare portal – almost as if by design.  

But the best news? Obama’s little tryst with CGI Federal cost US taxpayers only $292 million. As Vanity Fair revealed recently, “According to congressional testimony, CGI stands to be paid $292 million for its work on healthcare.gov.” And since the CGI replacement will eventually redo everything from scratch, this is $292 million that Obama may have as well burned.

We jest, but the incest between the Obama administration and CGI will one day be probed. According to recent revelations the ties run deep:

That lack of expertise explains why in building healthcare.gov, the government turned to industry contractors; in particular, to CGI Federal, a subsidiary of CGI Group, a Canadian company. To those uninitiated in the dark art of government contracting, it seems scandalous that CGI, a company most Americans had never heard of, a company that is not located in Silicon Valley (where President Obama has plenty of Internet superstar friends who could have formed a dazzling brain trust to implement his signature legislation) but rather in Montreal, could be chosen as the lead contractor for the administration’s most important initiative. While right-wing news outlets have focused on the possible relationship between Toni Townes-Whitley, senior vice president for civilian-agency programs at CGI Federal, and Michelle Obama, both of whom were 1985 Princeton graduates, CGI’s selection is probably more an example of a dysfunctional system than it is a scandal. “A lot of the companies in Silicon Valley don’t do business with the government at that level [the level required for federal contracting],” explains Soloway. “It is very burdensome, and the rules make it very unattractive.” Indeed, government contractors have to meet a whole host of requirements contained in a foot-thick book, including cost accounting and excessive auditing, to prove that they are not profiting too much off the American taxpayer. Hence, there tends to be a relatively small, specialized group of companies that compete for this work, even on such critical matters as healthcare.gov.

Actually it is a scandal. And it is a bigger scandal that at least $292 million in taxpayer cash was literally flushed down the drain and all we have to show for it is a website that crashes when the seemingly impossible happens, and more than a few hundred people try to log in at the same time. Then again perhaps, since it’s no longer 1993, someone in the administration should take responsibility for this? Or maybe it was just Bush’s fault again (and it snowed in December).

Keep in mind, CGI’s coding disaster was so epic, there actually is a flowchart indicating just how many errors in healthcare.gov there are.

So with CGI out of the picture, who will take over administration of the Obamacare portal? WaPo has the answer: “Federal health officials are preparing to sign a 12-month contract worth roughly $90 million, probably early next week, with a different company, Accenture, after concluding that CGI has not been effective enough in fixing the intricate computer system underpinning the federal Web site, HealthCare.gov, the individual said.”

And this pearl: “Because of time constraints, CMS is awarding the Accenture contract on a sole-source basis, according to the person familiar with the decision.”

So is that what kickbacks to Michelle Obama are called now?

We can be sure of one thing: this replacement will be an even more epic disaster and will ultimately result in over a billion taxpayer dollars being spent on a program that was doomed to failure from the beginnin regardless.

Accenture, which is one of the world’s largest consulting firms, has extensive experience with computer systems on the state level, and it built California’s new health insurance exchange. But it has not done substantial work on any federal health-care program.

There is a small chance Accenture won’t be as much of a debacle as CGI. Keep in mind that the government is very familiar with the consulting company’s skill se: after all the DOJ itself sued it!

The decision to turn to Accenture puts the project in the hands of a government contractor that has significant technological expertise but also signed a high-profile legal settlement with the Justice Department less than three years ago over its contracting practices.  Accenture had one contracting dispute with the federal government that ended up in court, agreeing in September 2011 to pay $63 million to settle a Justice Department lawsuit alleging that it improperly benefitted from recommending specific hardware and software as part of government contracts, as well as inflating prices on contracts and distorting the federal bidding process.

In retrospect who are we kidding: Accenture is certainly the best replacement to CGI…  if the intention is to keep bleeding the government’s taxpayer funded coffers dry. And why not: if said coffers run out of money, the Fed can just print some moar. Which, as it turns out, is the endgame: as we reported earlier, Jeffrey Lacker explicitly said that the Fed is now looking at the impact on the economy from Obamacare… or else QE5.

Not to be confused with Q.E.D.

http://www.zerohedge.com/news/2014-01-10/292-million-down-drain-white-house-fires-main-obamacare-it-contractor