Tools and Tactics … To Do Better Deals – HealthCare.gov

Tools and Tactics … To Do Better Deals                        

HealthCare.gov

It may be months before all the problems facing the HealthCare.gov website rollout become known, but already the pundits seem to have figured out the bigger pieces of the puzzle.  The two primary culprits seem to be lots of bad code that managed to skate through a virtually nonexistent beta test process and a paucity of bandwidth and computing power that led to huge scalability issues. 

There is no doubt that these were two very critical flaws in the rollout, but another key part of the puzzle that cannot be overlooked is that maybe this was just simply a poorly designed contract.  The scrutiny under this scenario should be not when the government website fell down (October 2013), but when it took a big stumble (September 2011).  That was the month it awarded a cost-reimbursement task order contract to CGI Federal.

According to the Washington Post, CGI Federal actually secured its winning bid in 2007, when it was one of 16 companies to get certified on a $4 billion Indefinite Delivery, Indefinite Quantity (IDIQ) contract for upgrading systems within Health and Human Services (HHS).  These types of contracts, often intentionally vague in their requirements, allow agencies to issue task orders to pre-vetted companies and sidestep the full, oftentimes cumbersome procurement process.  From these 16 companies, four were selected to compete for the healthcare website and of the four, CGI was selected.  According to USASpending.gov, CGI Federal got a total of $678 million for various services under the IDIQ contract — including the $93.7 million HealthCare.gov job.

These types of contracts serve their purpose and have their fan base, but was this the best way to ensure success in the largest and most visible technology rollout in recent times?  When the vendors involved in the rollout testified in front of the House Energy & Commerce Committee on October 24, we had our answer.  To a person, they all claimed they had performed admirably but that any questions concerning overall performance of the website needed to be redirected back to the government, specifically the Center for Medicare & Medicaid Services (CMS). 

The thing about IDIQ contracts, and by extension cost-reimbursement task order contracts, is that they’re great for acquiring resources but not so great for acquiring results.  This is the crux of the problem and a topic that ICN founder Joe Auer wrote about in a Computerworld article back in February 2002.  “The results-or-resources question establishes which side will bear responsibility for the results you’re expecting from the deal,” wrote Auer.  “In a results deal the vendor is responsible, while in a resources deal it’s the customer.”  Put a different way – in a resources deal, when problems arise the customer bears the risk and the vendor gets to sell more resources.  

We’ll never know if a results deal would have yielded a different outcome with the healthcare rollout, but chances are pretty good that there would have been a whole lot more accountability on display at the October 24 Congressional hearings, and the problems plaguing the site would have surfaced a lot earlier than October 2013.  The one thing to know about large-scale technology rollouts is that bad news delivered early is good news.      

 

Steve Gutzman is a senior advisor at ICN and a 34-year veteran of the high-tech industry.  You may contact him at sgutzman@dobetterdeals.com.

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