Contract Dispute

¶ … Government Contracting class. GAO case study: Contract dispute One of the most recent government debacles of 2013-2014 was that of the healthcare.gov crisis. Healthcare.gov, the Internet exchange on which people could buy healthcare plans on the open market, was largely inoperable for the first months of its existence. The fact that the website was effectively the result of a failed government contract is often forgotten, due to the focus on the policy debate swirling around the requirement that all American citizens are ensured.

There was later an investigation into the contract between the government and the firm (CMS) charged with designing the website. "To be expedient, CMS issued task orders to develop the federally facilitated marketplace (FFM) and federal data services hub (data hub) systems when key technical requirements were unknown, including the number and composition of states to be supported and, importantly, the number of potential enrollees.

CMS used cost-reimbursement contracts, which created additional risk because CMS is required to pay the contractor's allowable costs regardless of whether the system is completed" ("Ineffective planning," 2014). The result was that costs spiraled out of control as well as the timeframe of the project. Without an incentive to contain costs given the requirement that all the contractors' allowable costs be covered, subcontractors began to take a lackadaisical attitude towards deadlines.

This was deadly for the website project, given the looming required date by which all Americans had to have purchased some form of health insurance, if they had not done so previously. Over the course of the project, "CMS incurred significant cost increases, schedule slips, and delayed system functionality for the FFM and data hub systems due primarily to changing requirements that were exacerbated by oversight gaps…New requirements and changing CMS decisions also led to delays and wasted contractor efforts.

Moreover, CMS delayed key governance reviews, moving an assessment of FFM readiness from March to September 2013 -- just weeks before the launch -- and did not receive required approvals. As a result, CMS launched healthcare.gov without verification that it met performance requirements" (Ineffective planning," 2014). CMS employed a series of subcontractors whose work was ultimately found to be questionable and led to the website failure but CMS also engaged in a lackadaisical attitude towards quality that was even more damaging to the reputation of healthcare.gov in the long run.

Although delaying the site launch would hardly have been ideal, after the considerable technical issues which arose, the failed launch became even more of a public relations disaster. Even people who had supported the ACA (Affordable Care Act) began to sour given the technical issues they were facing. There were also very serious security issues regarding potential data breaches with the website, as well as individuals who were frustrated and frightened because they did not understand the law and could not operate the.