By Andy Sullivan
WASHINGTON, Nov 19 (Reuters) – One part of the Obama
administration’s technically flawed HealthCare.gov website is
actually working as promised. Unfortunately, the company that
built it does not intend to seek more government business.
Working out of a garage a few blocks north of the White
House, a 12-person software shop called Development Seed built a
customer interface praised for its elegance and stability, a
bright spot in the rollout of a website that has been an
embarrassment for President Barack Obama.
But chief executive Eric Gundersen said his company will not
seek another slice of the $82 billion the U.S. government will
spend on technology this year because of the paperwork and
regulatory hurdles.
“We don’t have proposal writers and lawyers. We have
developers,” Gundersen said.
The technical problems since the Oct. 1 debut of the website
have cast a harsh light on the federal government’s tangled
procurement process, a system that favors incumbents with long
track records but leaves little room for innovation.
As a result, the government struggles to deliver the
sophisticated digital services that tech-savvy consumers have
come to expect.
Obama has apologized repeatedly for the performance of the
website that is central to his healthcare overhaul. But he and
other officials also have pointed fingers at the project’s
contractors, who have been paid at least $174 million for their
work so far. Contractors say the administration is ultimately to
blame.
The site has been plagued by timeouts, errors and slow
responses, although an emergency effort to get the site running
smoothly for most visitors has resulted in some improvements.
Fewer than 27,000 people signed up for private health
insurance plans through the federal marketplace in October, a
tiny fraction of the millions ultimately needed to make it
financially viable.
Technology projects have never been easy for the federal
government. One problem, say former administration officials, is
that agencies too often rely on established contractors. Those
contractors feel little pressure to innovate because there is no
competition from cutting edge companies, which are deterred by
government red tape.
More nimble tech firms such as Development Seed find it hard
to overcome hurdles that surround competitive bidding or dealing
with risk-averse bureaucrats. All but one of the 47 companies
that worked on HealthCare.gov had done previous government work,
according to the Sunlight Foundation, a watchdog group.
Obama himself says government too often gets it wrong.
“How we purchase technology in the federal government is
cumbersome, complicated and outdated,” he said last week.
“We might have done more to make sure that we were breaking
the mold on how we were gonna be setting this up,” he said. “But
that doesn’t help us now.”
POOR RECORD
Government has a poor track record in tackling large
technology projects. The Standish Group, a research firm, found
that 40 percent of large federal, state and local tech projects
are canceled or abandoned, while only 5 percent are completed on
time and on budget. The research firm did not provide reasons.
Perhaps the only thing that makes HealthCare.gov exceptional
is its high visibility.
“It’s not an unusual screw-up,” said Charlene Frizzera, a
former acting head of the Centers for Medicare and Medicaid
Services (CMS), the agency overseeing implementation of the
Patient Protection and Affordable Care Act, which passed in
2010.
Even an effort to streamline the way the government buys
goods and services came in years late, at twice the anticipated
cost. That website, SAM.gov, crashed shortly after going live in
2012 and is still riddled with glitches.
The HealthCare.gov site illustrates the divide between
companies specializing in government work and the freewheeling
start-up culture that flourishes in Silicon Valley and other
tech hubs.
Development Seed did not bid on the healthcare project. It
was brought in as a subcontractor by a top official at the
Department of Health and Human Services (HHS) who admired its
emphasis on simplicity and “open source” design, the practice of
releasing software code to the public so outsiders can spot
flaws and suggest fixes.
“This is cutting edge, sort of where things are going,” HHS
chief technical officer Bryan Sivak said of Development Seed at
a conference in March.
Development Seed reduced the number of computer servers
involved in its part of the website from 32 to two, minimizing
potential failure points, and finished work in June.
Gundersen said officials like Sivak, a former tech officer
for the state of Maryland and the District of Columbia,
ultimately had limited control.
“We’ve probably got one of the most visionary guys, that
actually gets code, from a tech background, being the chief
technology officer,” Gundersen said of Sivak. “And still he
can’t turn the battleship?”
INSIDE TRACK
As Development Seed finished its work on the front page of
HealthCare.gov this spring, a much larger company called CGI
Federal scrambled to assemble the back end.
CGI Federal is a division of Montreal-based tech services
provider CGI Group Inc, which globally employs 68,000
people. Roughly a quarter of its $1.3 billion revenue last
fiscal year came from the U.S. government.
Like many large federal contractors, CGI spends handsomely
to influence Washington. It spent $200,000 on lobbying last
year, and its employees donated $128,500 in last year’s election
to federal candidates from both parties.
CGI ultimately could earn as much as $292 million under the
HealthCare.gov contract, which it won over three other companies
in 2011.
Even if it had wanted to, a small company like Development
Seed would have been unable to bid on the main HealthCare.gov
contract – CMS limited the competition to 16 companies already
selected as primary technology providers under an open-ended
contract in 2007.
CMS shaved months off the bidding process by limiting
competition to those pre-screened companies. The website needed
to be up and running by Oct. 1, 2013.
A large company like CGI handles other complex projects for
CMS, and it had the resources to build the site’s complicated
health exchange, said several people familiar with the process.
The company declined to comment for this story.
“Companies that compete for government business every day
have to use the latest technologies to be successful,” said
contracting expert Larry Allen, who said CMS had ensured an
adequate level of competition when awarding the contract.
But companies with the ability to bid for big government
projects often rely on technology that is years out of date,
several former Obama administration officials said.
“This is a stagnant community – they do not have to keep up
with the latest technology,” said Clay Johnson, a onetime
Presidential Innovation Fellow who developed a tool that made it
easier for small technology firms to bid on government work.
Merici Vinton, a former assistant to the chief information
officer at the Consumer Financial Protection Bureau, said agency
employees were better informed about technology than some
vendors who competed to build its ConsumerFinance.gov site in
2010.
“I was shocked at the quality of the projects they were
promising,” Vinton said in an email.
COMPLEX TASK
With HealthCare.gov, CGI took on a task of enormous
complexity.
An insurance applicant’s identity and income must be
verified through computer systems at the Social Security
Administration, the Internal Revenue Service and the Department
of Homeland Security. Then, the system checks databases from
more than 170 insurance carriers to find the best plans.
The Obama administration has acknowledged it did not leave
CGI and other contractors enough time to test the system before
it went live.
But administration officials also have said CGI failed to
meet certain development goals. A top CMS official, Henry Chao,
worried three months before the site’s launch that quality
problems could “crash the plane at take-off,” according to
government documents obtained by Reuters.
CGI has blamed other contractors for site problems and the
administration for last-minute design changes.
It is unclear whether the government would have gotten a
better result if it had recruited more companies like
Development Seed, rather than relying on established contractors
like CGI.
Gundersen said his company lacks the scale to tackle such
complex projects, and other contracting experts say it is often
more cost-effective to go with a larger company that already has
the engineers and other resources needed to tackle the job.
But the administration may have ended up with a better
website if it had gone with a company that used some of the more
current techniques now commonplace in companies that serve the
private sector, former Obama administration officials say. Open
source development, for example, could have enabled engineers to
spot possible flaws sooner and keep the complexity of the site
to a minimum.
“Government could benefit from that dynamic, but it has
saddled itself with a procurement and contracting model that
makes it off-limits,” said Andrew McLaughlin, a former White
House deputy chief technology officer.
(Editing by David Lindsey, Ross Colvin and Grant McCool)
