Report rips state officials, Oracle over Oregon's troubled healthcare site

The report finds both Oracle's consulting team and state officials are culpable for problems with the site

A newly released, independent audit of Oregon's disastrous Obamacare website implementation takes both state officials and site contractor Oracle to task, saying each side contributed to problems that have generated a political firestorm in recent months.

The report by First Data was commissioned by Gov. John Kitzhaber. It involved 67 interviews and a review of more than 3,200 documents, according to Kitzhaber's announcement late Thursday.

Cover Oregon, as the site is named, launched Oct. 1 along with the federal healthcare exchange, but like the federal program,  it immediately suffered serious performance and stability problems. Unlike the national site,, Cover Oregon is still experiencing significant issues with no clear end in sight.

"Oregonians deserve accountability for the public investment made in this technology," Kitzhaber said in a statement. "It is critical that we learn from this project and adopt whatever changes are necessary to improve project management and safeguard public investments."

One way Kitzhaber is trying to deliver such accountability is through the removal of Oregon Health Authority Director Bruce Goldberg, who has resigned. However, Goldberg will continue serving as acting director of Cover Oregon until a new director is hired. Kitzhaber has also asked Cover Oregon's board to remove the site's CIO and chief operating officer.

First Data's findings echo another report done recently by the federal Centers for Medicare and Medicaid Services, concluding that state officials failed to provide proper levels of oversight on the project, as well as accountability for Oracle.

Cover Oregon hired Oracle consulting on a "time-and-materials" basis, with the state acting as the primary systems integrator and Oracle staff working under its direction.

This decision "contributed to a lack of scope control, a delay in requirements definition, and unrealistic delivery expectations," First Data said. "A system integrator with a stronger financial incentive for ensuring performance most likely would have pushed harder in those areas and been more realistic about delivery dates."

Meanwhile, the First Data report chronicles a long list of negative comments regarding Oracle staffers' performance on the project.

The website, which was built with Oracle software, also required far more customization than Oracle indicated it would. In addition, state officials interviewed for the report said they remained confident the project was on track due to constant assurances from Oracle.

First Data requested interviews with six Oracle employees, but that request was denied, Kitzhaber said during a press conference. Instead, Oracle sent its chief corporate architect, Edward Screven, he said.

Screven is a longtime Oracle employee who reports directly to CEO Larry Ellison. But despite Screven's high-level status, he was not actively involved with the project until November 2013. As a result, "we probably did not get some information that would have been useful," Kitzhaber said.

The governor said he also spoke on several occasions with Oracle President and CFO Safra Catz, the last time in a meeting with lawyers representing both the state and Oracle, which declined to comment for this article.

First Data's report is thorough and "you really have the feeling it was independent," said analyst Michael Krigsman, CEO of consulting firm Asuret and an expert on the roots of IT project failure.

Cover Oregon appears to have been "a project managed by committee," he said. "The goal of that is to get multiple points of view. The negative, what usually happens, is that there's no one who's actually responsible."

The state's decision to hire Oracle consulting on a time-and-materials basis was also a bad move, Krigsman said. "In the long run it's the worst way to go about it because it means the systems integrator does not have sufficient accountability." When consulting hours aren't connected to a concrete plan, "then it's a consultant's dream."

That said, "there's no one who looks good in this," Krigsman added.

Even if the website is stabilized relatively quickly, the Cover Oregon controversy could remain in the headlines for some time.

Oregon is withholding $25.6 million in payments to Oracle, out of some $69.5 million the vendor says it is owed. It has also reserved the right to sue Oracle, an option Kitzhaber alluded to during the press conference.

The state is "very disappointed with the quality of [Oracle's] work and the product they've given us," he said. "We are prepared to pursue whatever legal means might be necessary." However, that matter is now under review by the state attorney general, Kitzhaber added.

The state agreed to pay Oracle a majority of the $69.5 million in order to ensure a smooth handoff of the project to the state, Kitzhaber said.

Cover Oregon's woes have political implications for Kitzhaber, who faces re-election in November. "The taxpayers should hold me accountable for, obviously, the problems with Cover Oregon," he said during the press conference. "This happened on my watch and the buck stops here."

However, voters should also take into consideration the fact that nearly 300,000 residents have managed to sign up for health care through a combination of the website and other means, as well as steps Kitzhaber is taking to "move us toward a better, more functional system."

These measures include a review of the state's IT procurement practices, as well as a task force including CIOs from Legacy Health and Kaiser Permanente that will "advise Cover Oregon on IT options going forward," according to a statement.

He's also asking for the U.S. Government Accountability Office, which is reviewing the Cover Oregon situation, to "include a thorough appraisal of Oracle's inability to properly estimate the amount of work necessary to complete the project, to deliver on key deadlines, and to adhere to industry standards."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is

Copyright © 2014 IDG Communications, Inc.

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