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GAO report: New price tag for Obamacare website up to $840 million

GAO testifies before Congress
GAO testifies before Congress
Photo by Win McNamee/Getty Images

Yesterday, the nonpartisan Government Accountability Office released the latest report on contract planning and oversight practices of, citing the new dollar amount associated with the project of $840 million as of March 2014. That is $840 million of taxpayer money, as the GAO’s report finds, that was mostly mismanaged, potentially wasted, and probably not the total amount to get running properly.

The Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS) was in charge of designing, developing, and implementing the information technology systems needed to support the federal marketplace. CMS mainly relied on contractors, such as CGI Federal Inc. and QSSI, Inc., to develop, build, and operate the necessary information technology systems. CMS’s role includes procurement planning, contract management, and oversight of the contractors.

The GAO report summarizes their findings with the following statement: “…we found that CMS undertook the development of and its related systems without effective planning or oversight practices, despite facing a number of challenges that increased both the level of risk and the need for effective oversight.”

Tasks that the GAO report sites as mismanaged:

  • Development a first-of- its-kind federal marketplace
  • Compressed time frames
  • Changing requirements
  • CMS issued task orders to develop the FFM and the data hub systems when key technical requirements were still unknown—including the number and composition of states to be supported and, importantly, the number of potential enrollees
  • This cost reimbursement contract, known as cost-plus-fixed-fee contract, is considered high risk for the government because of the potential for cost escalation and because the government pays a contractor’s allowable cost of performance regardless of whether the work is completed

“CMS incurred significant cost increases, schedule slips, and delayed system functionality for the FFM and data hub systems due primarily to changing requirements that were exacerbated by inconsistent oversight. From September 2011 to February 2014, estimated costs for developing the FFM increased from an initial obligation of $56 million to more than $209 million; similarly, data hub costs increased from an obligation of $30 million to almost $85 million. 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 costs in the second year. Moreover, 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. As a result, CMS launched without verification that it met performance requirements. Furthermore, because of inconsistent contractor oversight within the program office and unclear roles and responsibilities, there was confusion about who had the authority to approve contractor requests to expend funds for additional work. Our review identified approximately 40 instances during FFM development in which CMS program staff inappropriately authorized contractors to expend funds, totaling over $30 million.”

So let’s put this in context. In 2013, the average amount of food stamps received per person, per month, in Ohio was $133. Depending on the state, the amount of money per person ranges from $115 in New Hampshire to just over $217 per person in Hawaii. If we use the $133 number, for the same expenditure of $840 million, we could have fed over 6.3 million people. While there are over 47 million people on food stamps each month, this may seem like only a drop in the bucket, however, the comparison is a tangible outcome of how we could have helped people in our country. As it is, the unpopular policy and obvious failed implementation, which is still plagued with issues, does not seem to have provided much benefit to anyone for the $840 million, except maybe for the consulting companies that were awarded the contracts.

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