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.


  • Workforce
    Shutterstock image 1658927440 By Deliris masks in office coronavirus covid19

    White House orders federal contractors vaccinated by Dec. 8

    New COVID-19 guidance directs federal contractors and subcontractors to make sure their employees are vaccinated — the latest in a series of new vaccine requirements the White House has been rolling out in recent weeks.

  • FCW Perspectives
    remote workers (elenabsl/

    Post-pandemic IT leadership

    The rush to maximum telework did more than showcase the importance of IT -- it also forced them to rethink their own operations.

Stay Connected