Critical Read

$500 million in HealthCare.gov spending explained

HealthCare.gov homepage

WHAT: An overview of HealthCare.gov contracts from the inspector general of the Department of Health and Human Services.

WHY: In December 2013, as the push to stem the damage of the disastrous launch of HealthCare.gov was beginning to show results, then-HHS Secretary Kathleen Sebelius requested a review of the years of contract work that went into building the site. Specifically, she wanted an explanation of the acquisition process, details on how agency personnel supervised contractors and whether contractors had lived up to the terms of their contracts. Congress appropriated an extra $23 million to the agency IG's office for fiscal 2014 largely to fund the reviews.

The fiscal 2014 work plan for the IG's office includes promised reports on the procurement, planning and implementation of the Federally Facilitated Marketplace, the insurance shopping service that constitutes most of what we think of as HealthCare.gov.

The IG also plans reviews on the criteria for contractor selection, the effectiveness of communication by federal supervisors with contractors, payments to contractors and the use of performance-based contracting, and overall oversight of contractors. The response to HealthCare.gov's launch problems, known as the tech surge, will also be the subject of a review. Most of the work is due to be completed in fiscal 2015.

In the context of this bonanza of spending oversight, the present IG report is something of a prelude. Although it doesn't go into detail on what went wrong with the contacting process, it does identify the players, their roles and how much they were paid.

Sixty contracts, ranging in value from less than $70,000 to more than $200 million, were behind the development of HealthCare.gov. The original lifetime value of those contracts was $1.7 billion, but 20 contracts have already overspent estimates. So far, almost $800 million has been obligated and $500 million paid to contractors as of February 2014.

CGI Federal, which took the most heat for HealthCare.gov's problems from Congress and officials at the Centers for Medicare and Medicaid Services, was paid $220 million as the lead developer of the Federally Facilitated Marketplace.

Quality Software Services Inc. received $98.5 million for developing the data hub that confirms applicant information against a slew of government databases, for creating the enterprise identity management system for users, and for testing and support. After HealthCare.gov's botched launch last October, QSSI was named the prime contractor for the site. Andrew Slavitt, who testified before Congress in the wake of the site's launch as group executive vice president of QSSI parent division Optum, is now CMS' principal deputy administrator with lead responsibility for contracts in support of the Affordable Care Act.

Other top HealthCare.gov participants include Terremark at $35.5 million, HP at $20 million and Booz Allen Hamilton at $8.1 million.

Although this is the most detailed look yet at the checkbook level, it is by no means the last word. The expenditure data only goes through February 2014, while efforts to repair and keep the site functioning are ongoing.

A report from the Government Accountability Office issued last month put the obligations for HealthCare.gov development at $840 million through March 2014, but GAO auditors did not have information on actual expenditures.

FULL REPORT: OIG.HHS.gov

About the Author

Adam Mazmanian is a staff writer covering Congress, the FCC and other key agencies. Connect with him on Twitter: @thisismaz.

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Reader comments

Fri, Aug 29, 2014

This is one of the reasons no one really trusts the govt anymore. 60 contracts??!! $500M??!!!!! When there's this magnitude of govt spending on so many different vendors, the opportunity for mis-management (and downright fraud as they will likely find) absolutely soars. This is MY funds that were mis-managed and thrown away. Healthcare.gov was the last straw in my trust of the govt. I know I am merely one taxpaying voter and therefore not to be taken seriously, but I am not happy with the way the entire rollout was bungled and investigating what went wrong does not impress me in the least. More money to find out what happened to all the money seems to be the govt's way. I mean wow, this was an Executive Branch initiative. Imagine how bad it could have been if Congress were running it. Of course, that really does not make me feel any better. We taxpayers deserve better than this.

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