$292 Million Down The Drain: White House Fires Main Obamacare IT Contractor

Tyler Durden's picture


Proving once again that if you want something done wrong, and preferably at massive cost overruns, then just leave it to the government, moments ago news broke that the main IT contractor behind the embarrassment that is healthcare.gov - CGI Federal - has been fired. Who could possibly foresee this? Well, anyone who had actually done some diligence on the clusterfuck that is CGI Federal, and which as WaPo profiled some time ago, "is filled with executives from a company that mishandled at least 20 other government IT projects, including a flawed effort to automate retirement benefits for millions of federal workers, documents and interviews show." Make that 21. "A year before CGI Group acquired AMS in 2004, AMS settled a lawsuit brought by the head of the Federal Retirement Thrift Investment Board, which had hired the company to upgrade the agency’s computer system. AMS had gone $60 million over budget and virtually all of the computer code it wrote turned out to be useless, according to a report by a U.S. Senate committee." Sounds like the perfect people to hire in order to make a complete disaster out of the Obamacare portal - almost as if by design.

But the best news? Obama's little tryst with CGI Federal cost US taxpayers only $292 million. As Vanity Fair revealed recently, "According to congressional testimony, CGI stands to be paid $292 million for its work on healthcare.gov." And since the CGI replacement will eventually redo everything from scratch, this is $292 million that Obama may have as well burned.

We jest, but the incest between the Obama administration and CGI will one day be probed. According to recent revelations the ties run deep:

That lack of expertise explains why in building healthcare.gov, the government turned to industry contractors; in particular, to CGI Federal, a subsidiary of CGI Group, a Canadian company. To those uninitiated in the dark art of government contracting, it seems scandalous that CGI, a company most Americans had never heard of, a company that is not located in Silicon Valley (where President Obama has plenty of Internet superstar friends who could have formed a dazzling brain trust to implement his signature legislation) but rather in Montreal, could be chosen as the lead contractor for the administration’s most important initiative. While right-wing news outlets have focused on the possible relationship between Toni Townes-Whitley, senior vice president for civilian-agency programs at CGI Federal, and Michelle Obama, both of whom were 1985 Princeton graduates, CGI’s selection is probably more an example of a dysfunctional system than it is a scandal. “A lot of the companies in Silicon Valley don’t do business with the government at that level [the level required for federal contracting],” explains Soloway. “It is very burdensome, and the rules make it very unattractive.” Indeed, government contractors have to meet a whole host of requirements contained in a foot-thick book, including cost accounting and excessive auditing, to prove that they are not profiting too much off the American taxpayer. Hence, there tends to be a relatively small, specialized group of companies that compete for this work, even on such critical matters as healthcare.gov.

Actually it is a scandal. And it is a bigger scandal that at least $292 million in taxpayer cash was literally flushed down the drain and all we have to show for it is a website that crashes when the seemingly impossible happens, and more than a few hundred people try to log in at the same time. Then again perhaps, since it's no longer 1993, someone in the administration should take responsibility for this? Or maybe it was just Bush's fault again (and it snowed in December).

Keep in mind, CGI's coding disaster was so epic, there actually is a flowchart indicating just how many errors in healthcare.gov there are.

So with CGI out of the picture, who will take over administration of the Obamacare portal? WaPo has the answer: "Federal health officials are preparing to sign a 12-month contract worth roughly $90 million, probably early next week, with a different company, Accenture, after concluding that CGI has not been effective enough in fixing the intricate computer system underpinning the federal Web site, HealthCare.gov, the individual said."

And this pearl: "Because of time constraints, CMS is awarding the Accenture contract on a sole-source basis, according to the person familiar with the decision."

So is that what kickbacks to Michelle Obama are called now?

We can be sure of one thing: this replacement will be an even more epic disaster and will ultimately result in over a billion taxpayer dollars being spent on a program that was doomed to failure from the beginnin regardless.

Accenture, which is one of the world’s largest consulting firms, has extensive experience with computer systems on the state level, and it built California’s new health insurance exchange. But it has not done substantial work on any federal health-care program.

There is a small chance Accenture won't be as much of a debacle as CGI. Keep in mind that the government is very familiar with the consulting company's skill se: after all the DOJ itself sued it!

The decision to turn to Accenture puts the project in the hands of a government contractor that has significant technological expertise but also signed a high-profile legal settlement with the Justice Department less than three years ago over its contracting practices.  Accenture had one contracting dispute with the federal government that ended up in court, agreeing in September 2011 to pay $63 million to settle a Justice Department lawsuit alleging that it improperly benefitted from recommending specific hardware and software as part of government contracts, as well as inflating prices on contracts and distorting the federal bidding process.

In retrospect who are we kidding: Accenture is certainly the best replacement to CGI...  if the intention is to keep bleeding the government's taxpayer funded coffers dry. And why not: if said coffers run out of money, the Fed can just print some moar. Which, as it turns out, is the endgame: as we reported earlier, Jeffrey Lacker explicitly said that the Fed is now looking at the impact on the economy from Obamacare... or else QE5.

Not to be confused with Q.E.D.

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Fri, 01/10/2014 - 14:18 | 4320258 HedgeAccordingly
HedgeAccordingly's picture

a job lost that is Bullish. actually. http://hedge.ly/1dk9zCP

Fri, 01/10/2014 - 14:19 | 4320262 VD
VD's picture


Fri, 01/10/2014 - 14:23 | 4320281 ACP
ACP's picture

Somebody actually got fired? Holy shit!

I guess being a friend of Moochelle isn't as good as being a friend of Barry.

Fri, 01/10/2014 - 14:28 | 4320304 666
666's picture

How about providing a list of the new multimillionaires created with the taxpayer dollars wasted on this clusterfuck where no one is accountable or imprisoned.

Fri, 01/10/2014 - 14:58 | 4320425 Handful of Dust
Handful of Dust's picture

"Dear Valued Client,

Sorry you are dissatisifed with our software. Your $239 Million refund check is in the mail.

Please feel free to hand us another multimillion dollar contract when The Hoi Poloi are not looking.


Your Fat Cat Wealthy Gubmint Contractor"



Fri, 01/10/2014 - 14:58 | 4320452 Keyser
Keyser's picture

The kicker is the SalesForce.com, one of the largest IT CRM firms on the planet, offered to build the ACA for FREE... That's right, FREE... This included building the site, hosting it, performing maintenance and updates for FIVE FUCKING YEARS, FOR FREE!!!!

The Obama administration declined... Draw your own conclusions... 


Fri, 01/10/2014 - 15:10 | 4320493 MarsInScorpio
MarsInScorpio's picture

Isn't this the company that had Moooochele's sorority sister as the contact to close the deal?


The First Wookie strikes again.


Fri, 01/10/2014 - 16:54 | 4320866 Manthong
Manthong's picture

Obamacare and its broke-dick web site is a two cycle engine that has been run on straight gas until seizure.

But then that’s what they wanted all along because the traitors in con-gress just want the insurance companies out of the way so that they can torture the nation, prolong the pain and become as successful as the UK’s NHS.

Fri, 01/10/2014 - 17:09 | 4320909 lakecity55
lakecity55's picture

Clearly a job for Vandelay Enterprises.

George? Pick up the phone.

Fri, 01/10/2014 - 20:16 | 4321379 Richard Chesler
Richard Chesler's picture

Nobody ever said Obozo was a savvy businessman.

Fri, 01/10/2014 - 15:32 | 4320573 malek
malek's picture

What a bunch of amateurs.
If they had offered the same for $500 million plus $100 million annual maintenance costs, the administration would have fallen over itself to give them the contract!

Fri, 01/10/2014 - 16:46 | 4320831 czardas
czardas's picture

Playing the Devil's Advocate, I know one of the consultants in the early stages (he resigned in frustration and got another job - he was American) and what he describes is sheer chaos - hourly changes from DC, interference from the feds, inabilty to get answers.  Just interpreting the law - converting the writing to software - took months since no one had any idea how to translate the legal gibberish. Some things were never explained or decided.   Then there was the inability to communicate between groups, the lack of a central coordinator, the refusal to volume test in order to get good results, connections between Group A who supplied the answer to Group B (who accepted it unquestioningly), the "back end" that was always going to be written "soon", the rush to put the crap in production despite objections from seasoned analysts, then (as he relates from colleagues) the wild scramble to "fix" the thing....did I leave out anything? 

Professionally, it will be difficult to step in and take over.  It will take time to understand system architecture and all the problems.  It's a job I would not relish. 

Fri, 01/10/2014 - 21:29 | 4321534 malek
malek's picture

I first thought you were talking about a SFDC consultant, then it became clear you were not.

I do ETL Development for a living and I wouldn't touch that mess with a ten foot pole, neither in new nor existing status. The biggest part of one's time invested only in CYA from day one, thanks but no thanks.

Fri, 01/10/2014 - 15:58 | 4320680 overexposed
overexposed's picture

I'm usually all for blaming Obama for everything, but in this particular case, the Federal government is forbidden BY LAW from accepting pro-bono work.  The logic behind that theory is, unless a monetary value changes hands for work done, the Federal government wouldn't have grounds to sue in the event that something goes wrong.  I'm sure at a certain level, that makes sense -- but DC's been way past whatever "certain" level that was for years now.

Sun, 01/12/2014 - 19:38 | 4325616 Rafferty
Rafferty's picture

I worked for many years as a consultant specialising in trying to rescue major IT projects gone bad.  God, how I loved Accidenture, sorry, Accenture!  I could have worked for ever cleaning up after them.  The amazing thing is, no matter how badly they screwed up they continued to win government business regardless.  I could never figure out why (cough).

Fri, 01/10/2014 - 16:22 | 4320743 trader1
trader1's picture

Keyser, just for amusement purposes...

are you a digital marketing intern for SalesForce.com or just another cog in the machine?

Fri, 01/10/2014 - 15:11 | 4320498 insanelysane
insanelysane's picture

The didn't get fire so much as they made $292 mill on the initial contract and it wasn't renewed.  They still walk away with a shit ton of money and delivered something worth about 10 grand.  

Fri, 01/10/2014 - 15:57 | 4320674 Harbanger
Harbanger's picture

$292 million.  That's almost a million dollars they could have given to every person in America.

Fri, 01/10/2014 - 16:36 | 4320791 czardas
czardas's picture

Only if the US has 292 people.  LOL

Fri, 01/10/2014 - 19:38 | 4321247 dark pools of soros
dark pools of soros's picture

that's the goal..remove the goyim!

Fri, 01/10/2014 - 20:17 | 4321381 JLee2027
JLee2027's picture

He must have been one of the website designers. No wonder it could only handle 10 people at a time. 

Fri, 01/10/2014 - 16:36 | 4320793 Apocalicious
Apocalicious's picture

um, think your math's a little off there...

Fri, 01/10/2014 - 16:59 | 4320877 Harbanger
Harbanger's picture


Fri, 01/10/2014 - 16:43 | 4320817 Wannabee
Wannabee's picture

You're on to something. Give everyone $1m in HSA account. Only can be used for healthcare. Use it or lose it. Get fat, need rascal scooter, countless MRI's, smoke cigs, draw down the $1M before end of life, your loss.

In the long run, much cheaper for taxpayers than the cluster we have now.

Fri, 01/10/2014 - 19:40 | 4321253 dark pools of soros
dark pools of soros's picture

only if you curb it over say 30 years...  cause if everyone is able to spend $1million the first doctors visit will be $900,000 since just cuz  (see also tuition)

Fri, 01/10/2014 - 15:38 | 4320593 Uncle Sugar
Uncle Sugar's picture

They will follow the ACORN model.  Change their name to ICG and Obomber will hire them on to write the new federal voter tabulation application.  Winning.

Fri, 01/10/2014 - 15:50 | 4320651 Handful of Dust
Handful of Dust's picture
"More Millionaires in Congress Than Ever Before"



Fri, 01/10/2014 - 21:15 | 4321510 Buck Johnson
Buck Johnson's picture

Moochelle the Wookie just couldn't keep her "friends".

Fri, 01/10/2014 - 15:19 | 4320518 Hippocratic Oaf
Hippocratic Oaf's picture


Shit, man, that's just Arod numbers.

Nothing to see here.......move along.

Fri, 01/10/2014 - 16:23 | 4320747 Kirk2NCC1701
Kirk2NCC1701's picture

They've gone from bad-ass (Breaking Bad) to smelly-ass (Breaking Wind).  Get Heisenberg!

Seriously though, what passes for Program Management and Project Management is a joke in many cases.  It's not so much of "What you know", but "Who you know and who you blow" that counts: It's one big Circle Jerk, one big Cluster-Fuck.

Sat, 01/11/2014 - 00:23 | 4321980 StychoKiller
StychoKiller's picture

Captain, can't you just like fire a salvo of photon torpedoes into Washington DC?  We'll make it worth your while!

Fri, 01/10/2014 - 14:33 | 4320340 Jannn
Jannn's picture

Dutch Central Bank Tight-lipped About Gold Policy



Fri, 01/10/2014 - 14:59 | 4320453 USA USA
USA USA's picture

I can't write code either, but I'll do it for free!

Fri, 01/10/2014 - 15:01 | 4320466 y3maxx
y3maxx's picture

...Why not just hire out an Israeli IT outfit?
Israel already controls most everything else in the USSA.

Fri, 01/10/2014 - 20:10 | 4321358 Bazza McKenzie
Bazza McKenzie's picture

They're all too busy working where the real money is made:  Wall Street and NSA.

Fri, 01/10/2014 - 15:48 | 4320643 NOTW777
NOTW777's picture

waiting for ZH to blame Bush

Fri, 01/10/2014 - 14:21 | 4320270 devo
devo's picture

They should have just used drupal and done it for 10 bucks.

Fri, 01/10/2014 - 14:33 | 4320335 Grande Tetons
Grande Tetons's picture

I miss the old days when Presidential scandals involved blowjobs, arms deals and movie icon fucking. 

This is too high tech for me. 

Fri, 01/10/2014 - 14:21 | 4320272 starman
starman's picture

Were they cripted in Mexican or Chinese?

Fri, 01/10/2014 - 14:22 | 4320277 SAT 800
SAT 800's picture

Sounds like the programmers who wrote the code for the Climate Forecasting Models for UN's global warming scam. they were hacked and; surprise, surprise, the programs turned out to be childish nonsense. How amazing.

Fri, 01/10/2014 - 15:37 | 4320590 Bawneee Fwank
Bawneee Fwank's picture

"Childish Nonsense"  Funny after hearing about Obamas "Promise Zones" yesterday I told a buddy that the US is being run by pre-school teachers.  Shit is getting so fucking pathetic, I can not even stand to read or hear about this juvenile horseshit anymore. 

Fri, 01/10/2014 - 14:23 | 4320280 SAT 800
SAT 800's picture

I guess they'll just have to outsource it to Pakistan.

Fri, 01/10/2014 - 14:45 | 4320389 Keyser
Keyser's picture

No, the work will be done in Mumbai. 

Fri, 01/10/2014 - 14:23 | 4320283 ultraticum
ultraticum's picture

About 3 hours of tapered QE.  Pocket change, my friends.

Fri, 01/10/2014 - 14:23 | 4320284 icanhasbailout
icanhasbailout's picture

I get no credit for reporting on this (exclusively, before anyone else had it) 2 months ago?


Mostly here: http://thebullelephant.com/healthcare-gov-is-an-identity-theft-machine/

with some more here: http://thebullelephant.com/it-cant-be-fixed/

and here: http://thebullelephant.com/son-of-it-cant-be-fixed/


Give kitty some hat tip love please!


Fri, 01/10/2014 - 14:41 | 4320373 icanhasbailout
icanhasbailout's picture

Oh also, the chart is missing a note the #1 security problem regarding healthcare.gov - the fact that the highly insecure website can be used to data mine almost any major government database! For all we know, this thing could have been mining SS, VA, IRS, DHS etc. databases for months now, and might still be doing it!

Fri, 01/10/2014 - 14:24 | 4320286 honkadoo
honkadoo's picture

One can only imagine how those client conference calls went between HHS and CGI.

Fri, 01/10/2014 - 15:12 | 4320499 ElvisDog
ElvisDog's picture

Are you kidding? They're probably all friends. They asked each other about their spouses and kids and then got down to damage control planning. After the meeting, they all went out to dinner (at taxpayer expense).

Fri, 01/10/2014 - 14:24 | 4320288 darteaus
darteaus's picture

CGI does have a proven business model.

Fri, 01/10/2014 - 14:48 | 4320407 Keyser
Keyser's picture

They learned it from the US governemnt.


1. Make wild promises in order to get the job

2. Never deliver on those promises 

3. Grossly over budget on every project

4. Zero accountability


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