Wednesday, January 21, 2015

Contracting Deficiencies at DHHS (Department of Health and Human Services)

Everyone is aware of of the troubled launch of The Office of Inspector General (OIG) for the Department of Health and Human Services (DHHS) set out to find out the causes and has just released a report noting that the root causes were primarily contract related (no surprise there).

The Federal Marketplace at was designed to enable millions of Americans to select health insurance in a "one-stop shop" environment. A project of that magnitude required the development, integration, and operation of multiple information technology (IT) systems and Government databases. The CMS (Centers for Medicare and Medicaid Services) was the organization within DHHS responsible for the project. CMS acquisition planning and procurement activities were among the first steps critical to ensuring the success of this project. CMS awarded 60 contracts to 33 different companies to perform the work. The fractured launch of the Federal Marketplace raised a number of concerns, including questions about the adequacy of CMS's planning and procurement efforts for the project.

In its report, the OIG noted that CMS did not always meet contracting requirements. For example,

  • CMS did not develop an overarching acquisition strategy for the Federal Marketplace
  • CMS did not perform all required oversight activities
  • CMS missed opportunities to leverage all available acquisition planning tools and contracting approaches to identify and mitigate risks
  • CMS did not exercise the option to plan for a lead systems integrator to coordinate all contractors' efforts prior to the launch of the Federal Marketplace.
  • CMS did not perform thorough reviews of contractor past performance when awarding two key contracts.
  • CMS made contracting decisions that may have limited the number of acceptable proposals for much of the key work.
  • CMS selected contract types that placed the risk of cost increases for this work solely on the Government (i.e. CMS awarded cost-reimbursable contracts).

And, of course, CMS made a number of dutiful recommendations corresponding to these identified deficiencies but such recommendations are pretty much meaningless - its like closing the barn door after the cows have left the barn. CMS may never have another program of the size and magnitude of the Federal Marketplace  - and if they do, perhaps it would be wise to ask for help from an agency that has experience in major systems acquisition planning and contracting.

It always amazes us that after some major flare-up like the roll out of, the agency's Inspector General arrives for an audit, spends a lot of time, and issues reports stating the obvious - you didn't follow policies and procedures. Agency responses are always the same - oops, you're right and it will never happen again because we're going to do this, that, and the other thing. The OIG then says something like "good response, your proposed corrective action will work", then go home and collect their paychecks.

You can read the entire OIG report here.

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