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By Steve Kelman

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IT procurement and HealthCare.gov: Searching for scapegoats?

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President Barack Obama has now raised the allegedly backward nature of the federal procurement system as a presidential concern. Speaking to a business audience about the failures of HealthCare.gov, he stated that what the government needed to do is to "blow up how we procure for IT." FCW has just asked on its cover, "Can IT Procurement Be Saved?"

I'm not sure we yet completely know the whole story of the problems with HealthCare.gov, but to me at this point it looks like there were two big problems with the system's development. One was the constantly changing requirements, a bane in federal IT development. In this case, new regulations were regularly coming down the pike as the system was being developed, creating an ever-moving target that receded each time code writers tried to catch up. The second was the failure to assign a systems integrator to be in charge of all of the many moving parts of this very complex system. That reflects a philosophy that began to spread in reaction to problems with giving systems integrators too much power in projects such as the Coast Guard's Deepwater boat development.

Perhaps the biggest problem was a political one. Not unusually for federal IT (and, to be fair much of commercial IT systems development as well), the system was behind schedule.  But this system had a deadline, the Oct. 1 launch of the new healthcare insurance marketplaces. A decision was made -- to my knowledge, we don't exactly know how or by whom -- to go ahead with the launch. How much those making the decision knew about how far from ready it was is, to me at any rate, unclear.

None of this, however, sounds very much like problems with the procurement system.

I am willing to believe that problems with the procurement system itself bear some significant responsibility for the failure of HealthCare.gov. I promise to join with anyone making a good case that the procurement system bears a notable part of the blame in working for good suggestions to fix problems.

But I have not heard many specifics.

For example, I don't think it has been claimed that delays in awarding the task orders to develop the system were of any consequence in the system's unreadiness on Oct. 1.

FCW's recent cover story is generally a balanced piece of work, and it uses the phrase "procurement system" broadly to include poorly developed requirements, technical difficulties merging legacy systems, and a lot of other general features of government IT.

The one element of the procurement system proper the story criticizes, however -- doing the contract using task orders rather than an integrated contract -- doesn't warrant the criticism, I don't think. Task orders are not inconsistent with having an integrator, or even with having only one contractor rather than several. They would be the appropriate contract form to do agile development. (I was surprised to see Trey Hodgkins, whom I respect, quoted as stating that the system should have been developed as a single contract using full and open competition -- a "back to the future" approach that harks back to the 1980s.)

As a general matter, it is probably true that many of the special social requirements the government puts on contractors (which do not exist for companies not doing business with the government) discourage commercial firms from bidding for government work, especially small firms. However, Obama has often supported expansion of such requirements. 

The reputational risk that a mistake on a government contract can cause for a commercial company is also a problem, but that reputational risk is caused by media coverage, and it's hard to see a solution. (Overzealous auditors might increase the risk by turning small mistakes into apparent crimes.) These issues are likely not relevant to HealthCare.gov, however.

Furthermore, the government's past performance system is too kludgy and riddled with excessive "due process" to be the kind of sharp weapon it often is in commercial IT procurement.

But some of the comments, frankly, have an air of looking for scapegoats for the HealthCare.gov failure.

Again, I by no means see myself as somebody with a stake in defending the procurement system status quo. I have constantly promoted innovative procurement methods, such as contests and share-in-savings contracting -- which are both allowed by the current system. If readers want to make some specific suggestions about problems in the procurement system that bear a noticeable responsibility for the HealthCare.gov fiasco, please put them in the "Comment" section of this blog. I'm all ears.

 

Posted by Steve Kelman on Nov 22, 2013 at 7:21 AM


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Reader comments

Mon, Dec 2, 2013 John P Rehberger DC

Having seen this issue for 20+ years in a variety of fed locations I assert that procurement is part of the problem. The reason is that for most feds getting a contract in place is the END of the negotiations, but for most contractors it is the BEGINNING of the negotiations. After going thru the typical procurement process (i.e., evaluating competitive bids, getting stakeholder buy-in, awaiting protests) they are exhausted and happy when the contract is signed. However, upon signature the leverage switches to the vendor. In IT there are inevitable changes to the requirements and the vendors will “get well” by correctly pointing out these are not in the original contract. The fed is faced with going thru the process again or paying up. The fed invariably pays up. If the vendor is smart they will parlay the original contract into enough maintenance contracts until they are viewed as the incumbent (a “partner” in fed-speak). Thus anything that increases the length of time or difficulty in getting a contract in place increases the chances of a contractor lock-in. That is what is wrong with the procurement process.

Mon, Dec 2, 2013

I agree it is not really a "procurement" issue it is a PROCESS issue. From my 35 years of experience I have seen this too many times both in govt and the private sector. Too often the Idea side of a project is totally removed and isolated from both the procurement and technical and design sides. Someone with no idea of what is involved jumps in and sets a deadline with no idea of what is needed to reach that deadline and then someone in business development who also has no idea what is involved says "we can do that" and viola we end up here...... I have actually been involved in projects where hardware/software and installation was procured but infrastructure had not been installed or even speced.... after all who needs power and cabling....

Fri, Nov 29, 2013 CB IL

I just completed my master's thesis on issues within the DOD procurement system. Had I foreseen what would happen with the roll-out of Healthcare.gov, I might have written about a different topic indeed. Good blog post, good summary of the complex issues. Thanks for adding to the conversation.

Thu, Nov 28, 2013 Michael DeKort

Commercial IT is not even remotely up to such a complex task. And the complex part being scope,design and test integration. The gov't should have hired a large defense contractor to handle PM and integration. And if this was Agile it would have been way worse.

Wed, Nov 27, 2013 steve meltzer

After working within the federal IT procurement system for 35 years first as a Federal Procurement official and now as an industry consultant I say it is not the System. It is the mind set of those working the system. The number one issue is always poor requirements. Never defined properly. There are many good tools out there today but very few take the time to do it right the first time . The VA did a very good job with My healthy Vet.com.

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