October 10, 2013

Digital Trends Writer Blames ‘Bunch We Have in Congress at the Moment’ for HealthCare.gov’s Outrageous Cost

Andrew Couts at Digital Trends is apparently the one who has broken the story (link is in original) that “The exact cost to build Healthcare.gov, according to U.S. government records, appears to have been $634,320,919, which we paid to a company you probably never heard of: CGI Federal.” Without getting into minutiae, some of that amount may not be directly related to HealthCare.gov, but Kathleen Sebelius’s HHS is obviously nowhere near done spending development money yet.

The bio for Couts says that he “covers a wide swath of consumer technology topics, with particular focus on the intersection of technology, law, politics, and policy.” His represented background would seem to indicate that he should know that the pin-the-blame-on-Congress game he plays in his writeup is misleading and irresponsible. Excerpts follow the jump (links are in original; bolds and numbered tags are mine):

We paid $634 million for the Obamacare sites and all we got was this lousy 404

HealthCareDotGovWaitMsa1013It’s been one full week since the flagship technology portion of the Affordable Care Act (Obamacare) went live. And since that time, the befuddled beast that is Healthcare.gov has shutdown, crapped out, stalled, and mis-loaded so consistently that its track record for failure is challenged only by Congress. [1]

… The site is so busted that, as of a couple days ago, the number of people that successfully purchased healthcare through it was in the “single digits,” according to the Washington Post.

The reason for this nationwide headache apparently stems from poorly written code, which buckled under the heavy influx of traffic that its engineers and administrators should have seen coming. But the fact that Healthcare.gov can’t do the one job it was built to do isn’t the most infuriating part of this debacle – it’s that we, the taxpayers, seem to have forked up more than $634 million of the federal purse to build the digital equivalent of a rock.

The exact cost to build Healthcare.gov, according to U.S. government records, appears to have been $634,320,919, which we paid to a company you probably never heard of: CGI Federal. [2] The company originally won the contract back in 2011, but at that time, the cost was expected to run “up to” $93.7 million – still a chunk of change, but nothing near where it ended up. [3]

for the sake of putting the monstrous amount of money into perspective [4], here are a few figures to chew on: Facebook, which received its first investment in June 2004, operated for a full six years before surpassing the $600 million mark in June 2010. Twitter, created in 2006, managed to get by with only $360.17 million in total funding until a $400 million boost in 2011. Instagram ginned up just $57.5 million in funding before Facebook bought it for (a staggering) $1 billion last year. And LinkedIn and Spotify, meanwhile, have only raised, respectively, $200 million and $288 million.

… (a knowledgeable person says that) the factors that play into which companies receive government contracts, a process called “procurement,” are fundamentally broken.

“Contracting officers – people inside of the government in charge of selecting who gets to do what work – are afraid of their buys being contested by people who didn’t get selected,” writes the author. “They’re also afraid of things going wrong down the line inside of a procurement, so they select vendors with a lot of ‘federal experience’ to do the work.” [5]

And when things still go wrong, they simply throw “more money at the same people who caused the problem to fix the problem.” [6]

Considering the frustrating bunch we have in Congress at the moment, this assessment seems particularly believable. [7]


[1] — This is relatively vague compared to what comes later. But Couts seems unaware, or doesn’t care, that the entire problem with HealthCare.gov is in government’s executive branch, i.e., the Obama administration. Amazingly, the names “Obama” (except as part of “Obamacare”) and “Sebelius” never appear in Couts’s writeup. If there’s a “Congress” upon which to assign direct blame, it would be the Democrat-dominated House led by Nancy Pelosi and the Democrat-dominated Senate led by Harry Reid of 2009 and 2010, which passed a law which wore out the phrase “the Secretary shall.” The current Congress, particularly the House, has been limited in its oversight functions by a singularly uncooperative administration. Reid’s Senate has done nothing to hold Sebelius accountable.

[2] — As I noted in a column elsewhere earlier this week, CGI is a Canadian company which touts its experience with that country’s single-payer system. That “expertise” would seem to be of little use to what is supposed to be a “marketplace” of alternatives. In addition to not being U.S.-based, CGI, which operates in the U.S. out of Northern Virginia, increased the number of H-1B visa requests it placed from 172 in 2011 to 299 in 2012. While many experience IT professionals continue to languish in long-term unemploymentIt seems reasonable to believe that CGI has dozens of H-1B visa workers on the HealthCare.gov project.

[3] and [6] — The contract or contracts appear to be largely if not entirely “cost-plus” in nature. Absent some absolute cap on cost, this means that CGI and others involved have no incentive to be efficient, and the government has no incentive to control costs.

[4] — Couts’s attempt at “perspective” may be the best available, but it woefully overstates the amount of true development spending the the private entities involved. The start-up cash these entities burned through includes administration and overhead; HealthCare.gov’s amount appears to be solely for development.

[5] — The preference for vendors with federal experience is really dumb. Insurance companies and online entities like ehealthinsurance.com have experience doing most of what HealthCare.gov is trying to do. Getting their help, or the help of firms which have done the development for them, would have been far more logical than using a firm with (it appears) only single-payer experience.

[7] — So it’s not just “Congress” generically which is to blame, it’s “the bunch we have in Congress at the moment,” without even identifying the Senate. Earth to Andrew: The current House did not pass Obamacare. It has voted to repeal it many times. It has been prevented by a secretive HHS and a paranoid administration from exercising meaningful oversight over procurement and contract administration. Yet you clearly want readers to believe that the problems you have enumerated are their fault. Shame on you.

Drudge, Fox Nation and others are linking to excerpts of Couts’s work at Weasel Zippers. In a way, because of denied traffic, that’s too bad for Digital Trends. But I can’t say that I blame those who won’t directly link for their decision. Readers shouldn’t have to sift through Andrew Couts’s Congress-bashing rubbish to get to the key truths.

Cross-posted at NewsBusters.org.



  1. *cross-posted from Newsbusters.org

    I wasn’t actually trying to blame Congress or Obama, but rather the gummed up system of procurement that resists the nimble nature of many U.S. Internet companies – the very thing that allows them to achieve so much and scale so well.

    This was written for a technology website, from the perspective of an average user of an online system; I was in no way attempting or intending to assign blame to any particular party. My jab about Congress in the beginning was a joke – not a serious assessment of who’s to blame for whatever fiasco we might currently suffer as U.S. citizens.

    I appreciate your analysis of my piece (even if it was critical), but I think you’ve dug past the explicit point I was trying to make: When it comes to building Web-centric systems, Silicon Valley runs rings around Washington, which is a shame and a waste.

    Comment by Andrew Couts — October 10, 2013 @ 7:39 pm

  2. Thx. See my comment at NB.

    Comment by Tom — October 10, 2013 @ 11:29 pm

  3. From the NYT, the money quote:

    From the Start, Signs of Trouble at Health Portal


    Confidential progress reports from the Health and Human Services Department show that senior officials repeatedly expressed doubts that the computer systems for the federal exchange would be ready on time, blaming delayed regulations, a lack of resources and other factors.

    Imagine that, after spending hundreds of millions of dollars, the problem in no small part was a “lack of resources”. The typical liberal response, we didn’t spend enough money for the project to work. But it was all the Republicans’ fault for being critical and threatening to cancel the whole thing.

    Comment by dscott — October 13, 2013 @ 10:20 am

  4. [...] attempt to shift blame to Republicans and recalcitrant states (HT to frequent BizzyBlog commenter dscott; bolds and numbered tags are mine): From the Start, Signs of Trouble at Health [...]

    Pingback by BizzyBlog — October 13, 2013 @ 11:31 pm

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