Outdated IT contracting rules may have added to HealthCare.gov woes

A reform of US government IT procurement could lead to fewer failed projects, critics say

Critics of the U.S. Department of Health and Human Services' botched deployment of HealthCare.gov can point to a series of management mistakes, but many observers point to a more systematic problem with government IT contracts.

The U.S. government IT procurement process is broken, critics say, giving agencies little flexibility to make changes in projects and little incentive to look beyond the lowest bids. In some cases, including Healthcare.gov, a long period of time elapses between the contract award and work starting.

The problem isn't new, with dozens of failed government IT projects in the rear-view mirror and several IT groups calling for reforms going back years. But the problems with HealthCare.gov have prompted renewed calls for IT contracting reform.

"The current process of managing and acquiring federal IT is largely broken and the failure of [HealthCare.gov] is simply the newest reminder of that dysfunction," Robert Atkinson, president of the Information Technology and Innovation Foundation, wrote in a November blog post.

The list of U.S. government IT project failures is a long one. Fixing the problem, however, won't be easy because there's far from universal agreement about the direction going forward.

One of the problems, according to many critics, is that U.S. agencies get locked into inflexible contracts, sometimes years before the actual work is done. In the case of HealthCare.gov, the HHS Centers for Medicare and Medicaid Services awarded the contract to Canada-based firm CGI Federal in late 2011.

While Web development hasn't changed significantly since 2011, developers may have been able to use some newer interfaces not named in the original contract, said Michael Hettinger, vice president of the Public Sector Innovation Group at the Software and Information Industry Association.

"The government's great at buying yesterday's technology today," he said, voicing a common criticism of government contracting.

In many cases, the contracts are too focused on what technologies should be deployed and not on what problem needs to be solved, added ITIF's Atkinson. "The process has become so bureaucratic, and the agencies have so little flexibility," he said in an interview.

Procurement officers are often most concerned with awarding the lowest-cost bids, and not on the vendor that could do the best job, critics said. Add in a lack of training for procurement officers and that's a recipe for problems, Atkinson said.

Procurement officers "may be good at buying pencils, but they're not always that good at buying complex IT systems," he added.

Procurement officers often make the decision about IT contracts, not agency CIOs, he added. Too many CIOs are "down in the boiler room of the operation, making sure the emails run on time," Atkinson said.

Compounding the problem are the legacy IT systems, some decades old, still run by many U.S. agencies, added Jim Williams, chairman of the industry side of the American Council for Technology and the Industry Advisory Council (ACT-IAC), a nonprofit group focused on improving collaboration between the U.S. government and private companies.

Integration between legacy systems and newer technology is a major challenge for many agencies, critics of the contracting process said.

In addition, current federal IT contracting rules favor large, slow-moving IT vendors, said Bobby Koritala, chief product officer at Infogix, a data integrity firm that works with health-care insurers.

HealthCare.gov's main contractors came from a pre-approved list of longtime vendors, not from small, "technologically savvy, innovative, fast-moving" IT companies, he said. "We just don't have the time to schmooze and ... spend all this time and money to get on the list," Koritala said.

Instead of selecting IT vendors based on large companies that have the resources to get on pre-approved lists, federal agencies should work to identify a small number of the best vendors in each technology area and select from that group, Koritala recommended. "Use those companies, instead of these behemoth, slow-moving elephants who think they can do anything, but can't do anything well," he added.

The furor about the botched HealthCare.gov launch may die down in the new year, but a push for IT contracting reform will continue. Back in March, Representative Darrell Issa, a California Republican and outspoken critic of the HealthCare.gov rollout, introduced the Federal IT Acquisition Reform Act, which would give agency CIOs more control over their budgets.

The bill, awaiting action in the House of Representatives, would also limit agencies to one CIO each, instead of having multiple CIOs at sub-agencies, as is the case now, and it would require the U.S. government to release more information about blanket purchase agreements and IT investments. The bill also establishes centers of excellence where agencies can establish expertise in types of IT acquisition.

The bill would go a long way toward fixing IT contracting problems, Issa has said. In a Dec. 4 hearing, Issa suggested the problem with HealthCare.gov is related to an additional layer of rules and technology on top of the U.S. private insurance industry.

HealthCare.gov was "not a disaster of the making of one man or any one person," he said then. "In fact, in many ways it is a sign of a failed system that is often seen in the federal government."

Atkinson agreed that giving agency CIOs more power over procurement could cut down on the number of failed IT projects. With HealthCare.gov, the HHS CIO didn't have control over the project, because it was run by sub-agency CMS, he said. Atkinson, in his November blog post, also proposed that Congress should launch a trial allowing one agency to be exempt from old civil service and procurement rules, including preferences to bidders owned by veterans or minority groups.

ACT-IAC's Williams questioned whether giving CIOs more power will fix the IT contracting problem. Backers of the proposal see it as an "everything-will-be-solved panacea," he said, but CIOs will still need to remember that the IT department exists to support an agency's mission and is "not a mission unto itself."

As much as possible, agencies should look to common IT infrastructures and focus on training procurement officers, Williams recommended. He endorsed proposals that would establish centers of excellence for IT acquisition, in combination with common infrastructures.

"Let's not keep buying the same thing over and over again," he said. "Leverage the expertise of the people who know how to buy and manage that infrastructure."

It's unclear if proposed reforms would have saved HealthCare.gov. The project was a complex one, not a simple e-commerce website, said SIIA's Hettinger. "The project was such a big bite," he said.

It's important to remember that big IT failures are not the sole domain of the U.S. government, he said. "They say 50 percent of big IT projects fail in the federal government," Hettinger said. "[Something like] 48 percent fail in the private sector."

Some government IT observers aren't convinced that IT contracting issues were a significant factor in HealthCare.gov's problems. Most of the website's performance issues in its first weeks appear to trace back to a series of poor management decisions, including a compressed testing schedule and an immovable launch date, said Shawn McCarthy, research director of IDC Government Insights.

While some critics have called for agencies to use prescreened vendors for large IT projects, that's just what happened with HealthCare.gov, McCarthy noted. CGI Federal was a contractor that CMS had worked with in the past.

There have been calls for government contracting reform dating back at least 20 years, and it's difficult to reform the system to allow more competition or new technologies, McCarthy added. "Exactly how that's done, and how you do it without inadvertently pushing someone else to the side, is the hard part," he said.

The U.S. government in recent years has moved toward more standardized IT products and services and has given procurement officers more flexibility to chose vendors from a preselected list, McCarthy said. "Is [reform] needed?" he said. "Yes, but every time something changes, somebody finds a way to work the system in a new way. It's a never-ending battle."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

Copyright © 2013 IDG Communications, Inc.

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