GAO report details flaws behind $840M O-Care website rollout

A series of management failures at the Centers for Medicare and Medicaid Services led to the botched rollout of and $840 million in costs, according to a new report from the Government Accountability Office.

“CMS undertook the development of and its related systems without effective planning or oversight practices,” wrote William Woods, GAO director of acquisition and sourcing management, in testimony prepared for a Thursday hearing before the House Energy and Commerce Committee.


Woods added that officials failed to prepare for the rollout “despite facing a number of challenges that increased both the level of risk and the need for effective oversight.”

The GAO report prepared for the committee will be released Wednesday afternoon and comes after a long probe into last year’s rollout of ObamaCare’s online enrollment system. was plagued by technical problems, leading to low initial enrollment figures, and left the administration scrambling to repair the site and reach their sign up targets.

In his testimony, Woods said that pressure to have the site up led CMS to turn to outside contractors. Officials and contractors, though, never developed an understanding of what the website would need to function properly, leading to cost increases and constant changes.

“New and changing requirements drove cost increases during the first year of development, while the complexity of the system and rework resulting from changing CMS decisions added to FFM [federally facilitated marketplace] costs in the second year,” added Woods.

CMS officials also failed to closely monitor the development of the website.

“CMS delayed key governance reviews, moving an assessment of FFM readiness from March to September 2013 — just weeks before the launch — and CMS did not receive required governance approvals,” Woods said.

“As a result, CMS launched without verification that it met performance requirements.”

The GAO also noted that there was confusion over who had power to allow the contractor, CGI Federal, to spend additional money to repair the site. According to the report, as of March, the total cost for the website was estimated at $840 million.

Republicans were quick to seize on Woods’s testimony, criticizing CMS officials for mismanagement.

"As the cost of the exchange closes in on a billion dollars, even to this day the system is not fully built,” said Energy and Commerce Committee Chairman Fred Upton (R-Mich.).

“The disastrous implementation of the president’s healthcare law has already led to canceled plans, lost access to doctors and higher premiums. Now add to that hundreds of millions of taxpayer dollars wasted on an exchange that is still not ready for prime time,” he added.

The GAO is also calling on CMS officials to review the remaining issues with and growing repair costs. The office also said the CMS needs to issue guidance on who can authorize extra funding to contractors, instruct staff on acquisition strategies, and ensure better management of new projects for the website.

Obama administration officials said they agreed with most of the report’s recommendations and had already implemented many of them.

“CMS takes its responsibility for contracting oversight seriously and has already implemented contracting reforms that are more extensive than the recommendations in the report, including ending its contract with CGI and moving to a new type of contract with Accenture that rewards performance,” said Kevin Griffis, a spokesman for the Department of Health and Human Services.

—This story was updated at 4:49 p.m.