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Website firm has history of failures

– CGI Federal, the company responsible for building the problem-plagued website for the Affordable Care Act, won the job because of what federal officials deemed a “technically superior” proposal, according to government documents and people familiar with the decision.

Not considered in the 2011 selection process was the history of numerous executives at CGI Federal, who had come from another company that had mishandled at least 20 other government information technology projects more than a decade ago. But federal officials were not required to examine that long-term track record, which included a highly publicized failure to automate retirement benefits for millions of federal workers.

By 2011, CGI Federal already had been cleared to do government work at the Centers for Medicare and Medicaid Services, the agency overseeing the rollout of the new health care law.

The company had been included in a pool of pre-screened, approved contractors in 2007, during the George W. Bush administration, and only firms in that pool were later allowed to bid for the Affordable Care Act work. It was at that earlier time that the problems at American Management Systems, the Fairfax County, Va., IT contractor acquired by CGI, would have figured into the assessment of CGI Federal, contracting experts say.

In hindsight, one former CMS official said, the AMS record “could well have knocked (CGI Federal) out of the competition and probably should have.”

In light of the bungled launch of the health-care website, critics have repeatedly asked how CGI Federal got the contract, and there has been widespread speculation on online news sites and blogs that the firm was selected because of political ties to the Obama administration.

But a review of internal documents and interviews with former and current federal officials show that the selection process was walled off from politics.

Career officials at CMS focused in 2011 on the proposals submitted by four bidders, examining technical competency and cost while giving relatively little attention to past performance. Since 2007, CGI Federal had won 17 other CMS jobs under the pre-screened contract, worth several hundred million dollars.

The review of CGI Federal concluded there was “no evidence of performance risk,” according to a CMS document, portions of which were read to the Washington Post by a person familiar with the contracting process.

CGI Federal won the $93 million contract, now worth $293 million, in September 2011.

CGI Federal had grown out of CGI Group’s acquisition in 2004 of AMS, which had a recent history of troubled projects, including a Philadelphia school computer system that sent paychecks to dead people and a Mississippi tax system so dysfunctional that a jury awarded a $474 million verdict against the firm.

Three former CMS officials said in recent interviews that the AMS problems should have raised red flags.

“Should CMS have recognized that ‘OK, here’s CGI Federal. It’s a new company, but, oh, my God, it looks a lot like the AMS from yesterday?’ ” asked one former CMS official familiar with the contracting process who, like others interviewed for this article, spoke on the condition of anonymity to discuss internal procedures. “Yes. I would consider that dropping the ball.”

Tasha Bradley, a CMS spokeswoman, said in a statement that the agency “adheres by a long-established contracting process where expert, career contracting officials evaluate and award contracts based on criteria outlined in the contract solicitation, including past performance, technical expertise and proposed contract value.”

CMS declined to comment on specific questions about how closely CGI Federal’s past performance was evaluated and whether that review looked at AMS.

Standing by its work

Former AMS executives have defended that company’s performance, and CGI officials have rejected any comparison with AMS’s earlier failures.

CGI Federal has also defended its work on, despite an October launch that White House officials have acknowledged was disastrous. Federal officials have faulted the company’s performance, saying it missed deadlines, understaffed the job and overstated its progress.

The federal online marketplace that is selling health plans in 36 states under the 2010 health care law has been functioning better in recent weeks, but officials are still working to fix lingering problems, including errors in enrollment records sent to insurance companies. CGI Federal remains intimately involved in the project, writing computer code in attempts to fix various aspects of the system.

Linda Odorisio, CGI’s vice president for global communications, said the company “continues to work closely with CMS and all of its vendor partners to deliver continuous enhancements in system performance and the user experience” on the website.

She added that CGI Federal “contributed to the significant improvements made to the system over the last two months, resulting in more than half a million Americans enrolling in just the first three weeks of December.”

Failed process

In December 2006, CMS put out a request for proposals. The agency said it was seeking “world-class IT services” to improve and maintain the systems that run Medicare and Medicaid, according to documents. Thirty-one bidders responded, including CGI Federal.

CMS used a procurement method that has become increasingly common over the past decade. The agency first awarded an umbrella contract to a group of firms, and those firms were then eligible to bid on future IT work. Experts say this saves the government time because it shortens the subsequent bid process.

In evaluating the bids, CMS was to scrutinize each company’s performance on previous contracts, according to an internal agency document obtained by the Post. The document described a risk assessment of cost control, on-time delivery and other factors.

Federal law requires that past performance be considered for all federal contracts worth more than $150,000, with limited exceptions. Federal regulations also say CMS should have considered the record of “predecessor companies,” such as AMS. Several former officials familiar with the 2007 selection said no concerns about CGI Federal were raised inside the agency. AMS projects had run into trouble at the federal level and in at least 12 states, according to government audit reports, interviews and news accounts.