Sebelius orders probe of website contracting

Kathleen Sebelius

Health and Human Services Secretary Kathleen Sebelius announced Dec. 11 that the department’s inspector general would investigate the performance of contractors in the wake of the botched rollout of the insurance exchange website.

She announced the probe in a blog post ahead of a House hearing on implementation of the 2010 health care law. Sebelius is also calling for the creation of a chief risk officer position at the Centers for Medicare and Medicaid Services, a full time executive tasked with reducing risks associated with major policy initiatives. 

“The Chief Risk Officer’s first assignment will be to review risk management practices when it comes to IT acquisition and contracting, starting with identifying the risk factors that impeded the successful launch of the website,” Sebelius wrote.

Sebelius told the House Energy and Commerce Health Subcommittee that CMS will “expedite the search and hiring” of a chief risk officer, and that the individual will be responsible for producing an initial report on IT contracting and the rollout within 60 days of taking the job.

CMS will also update its manual and training for procurement and managing contractors. The sub-agency spent $5.3 billion on contractors in fiscal 2013, although there are no firm figures on how much was spent on According to Sebelius, $677 million had been obligated to the site through the end of October, and $319 million was actually spent.

An analysis of federal contracting data by the government market analytics firm Govini indicates that more than $713 million has been obligated to Different criteria can be used for what counts as an expense for the program, making it difficult to have an apples-to-apples comparison. A Govini analyst told FCW that it was “frustrating they make it so difficult to pull this type of analysis together.”

Spending on the tech surge being conducted to fix the site is also hard to track. A Bloomberg analysis found that CMS has awarded at least $19.4 million to United Health and Verizon since Oct. 1. Verizon is the parent company of data center firm Terremark, which will host the site through March 2014.  United Health owns Quality Software Services Inc., the general contractor on the site since late October. Sebelius indicated that some of the obligated funding covers post-launch repairs, but she did not supply a number.

Republicans on the committee were unimpressed with the new risk management efforts.

Fred Upton (R-Mich.), chairman of the full committee, asked Sebelius if she wished she had launched the IG probe while development of the site was ongoing over the summer. Sebelius said she had no cause to involve the IG at that time, though she did allow that if she knew then what she knew now, she would have considered modifying the Oct. 1 rollout of to launch slowly and gradually, with a beta test involving fewer users.

“I don’t think there’s any question that the flawed launch of the website put a damper on people’s enthusiasm about early signup. We had a lot of visitors early on who got very frustrated and have not re-engaged,” Sebelius said, in response to questioning from another committee member.

HHS announced that through November, 364,000 individuals have enrolled in exchange-based plans. That’s well short of the target of 3.3 million by Jan. 1, 2014. Individuals have until Dec. 23 to sign up for coverage to take effect at the start of the New Year. The enrollment data covers users who have selected plans – coverage isn’t finalized until insurance carriers receive payment.

“Our concern is that 364,000 number is fraudulent because it’s not those who have purchased plans yet,” said Rep. John Shimkus (R-Ill.)

Actual enrollment could also be skewed by continuing problems with the transmission of enrollment data from to carriers. CMS has estimated that there are errors on 10 percent of these forms, called 834s in the insurance industry. Sebelius indicated that carriers and contractors are “hand matching” enrollment forms with enrollees.

“There’s a manual workaround I would say for virtually everything that isn’t fully automated,” Sebelius said.

About the Author

Adam Mazmanian is executive editor of FCW.

Before joining the editing team, Mazmanian was an FCW staff writer covering Congress, government-wide technology policy and the Department of Veterans Affairs. Prior to joining FCW, Mazmanian was technology correspondent for National Journal and served in a variety of editorial roles at B2B news service SmartBrief. Mazmanian has contributed reviews and articles to the Washington Post, the Washington City Paper, Newsday, New York Press, Architect Magazine and other publications.

Click here for previous articles by Mazmanian. Connect with him on Twitter at @thisismaz.

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Reader comments

Wed, Dec 18, 2013 OccupyIT

Sometimes you're the witch; sometimes you're they hunt. When you find yourself the witch, call the IG and sick them on the contractors. Since IG reports never come back with empty pages we'll hang failure on them. In matters of management, the Secretary is the authority responsible for taking action after the very risks that appear to still be a mystery to her were clearly spelled out in the March, 2013 program review by McKinsey & Co. The shear audacity of a manager that can say out of one side of her mouth that she has no idea what she spent on the largest new social program since the new deal and out the other say she is competent and capable of correcting the ship she wrecked ascends to new levels of assumed gullibility. We really must be the new fools born every day. Shame on us all.

Thu, Dec 12, 2013

What a joke. The whole rollout is Applications Development 101". Get good solid requirements that are not in a state of flux - HHS failed here probably because the administration was constantly adding/deleting requirements. This part shoud have taken 2-3 years JUST to get good requirements. Then build a prototype and present to the customer HHS/Administration) to allow them the opportunity to see if it delivers what they want (I suspect here the real problem was HHS/Administration did not really know what they wanted). Build the initial capability and put into about a year long testing program on a suitable pilot group. Then go live. Beginning to end should have taken 3-5 years, from the final passage and Supreme Court upholding of the new law. So realistically, this should have been advertised to be ready in approx the 2017 timeframe. BUT NO, the politicians (i.e. the Administration) said, "it shall be so" by Oct 1 and had no clue whatsoever what they were asking the IT folks to do. Total breakdown in how to manage a major project. This is case in point why all federal workers get tainted by what their untested or unexperienced managers and politicians mess up. Now the president has the gall to blame the IT community or shift to the "rpocurement process". This is on him and his army of rabid supporters trying to prove they are better than the previous administration and Republicans in general. If you want an answer real bad, you get a real bad answer. Slow down and do it right and maybe federal employees will stop bearing the brunt of your poor decisions.

Thu, Dec 12, 2013 Stunned

"We must find the horse we saw runaway when the gate was left open three days ago!!!" A contract was written (I presume) for a website that doesn't do what it was supposed to do, we don't know the budgetary breakdwn for what we alloted for the project (even though we have had THREE years to do so) nor do we know how much hte duct tape and bailing wire cost us to fix it. If this was ANYWHERE but the U.S. Government, the executives involved all the way down to the project managers would be on the street looking for new jobs. We, the tax paying public, were sold on the fact that this was a grand workable project and would be the wonder of all that used it once it rolled out. Well the Emperor has walked out among the people and it has been discovered, the Emperor wears no clothes. This investigation as well as hiring a Risk Manager (Which should have been done YEAR ONE) is merely a smoke screen. Someone will undoubtedly be transferred to another department, or placed on paid administrative leave (to eventually quietly "retire") Or heaven forbid, is actually PROMOTED (This has happened in the past if memory serves me correctly). Government's track record on projects such as this is less than stellar. While there have been minor successes, the last major projects run by the government with rolling requirements have been disappointments.

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