Report (OEI-03-14-00230) 01-20-2015 Federal Marketplace: Inadequacies in Contract Planning and Procurement

• WHY WE DID THIS STUDY: “The Federal Marketplace at HealthCare.gov was designed to enable millions of Americans to select health insurance in a “one-stop shop” environment. A project of this magnitude and complexity required the development, integration, and operation of multiple information technology (IT) systems and Government databases. CMS acquisition planning and procurement activities were among the first steps critical to ensuring the success of this project. CMS awarded 60 contracts across 33 companies to perform this work. The troubled launch of the Federal Marketplace at HealthCare.gov in October 2013 raised a number of concerns, including questions about the adequacy of CMS’s planning and procurement efforts for this key project under the Affordable Care Act.
• HOW WE DID THIS STUDY: We conducted a detailed review of documentation provided by CMS for the 60 Federal Marketplace contracts, selected 6 key contracts for indepth review, and interviewed Department of Health and Human Services (HHS) and CMS officials involved with contracting for the Federal Marketplace. We also reviewed procurement regulations, manuals, guides, and procedures provided by both HHS and CMS for acquisition planning, contractor selection, and contracting oversight processes.
• WHAT WE FOUND:  When awarding the Federal Marketplace contracts, CMS did not always meet contracting requirements. For example, CMS did not develop an overarching acquisition strategy for the Federal Marketplace or perform all required oversight activities. Moreover, for a project of this size and importance, CMS missed opportunities to leverage all available acquisition planning tools and contracting approaches to identify and mitigate risks. Specifically, 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. The complexity of the Federal Marketplace underscored the need for CMS to select the most qualified contractors. However, CMS did not perform thorough reviews of contractor past performance when awarding two key contracts. CMS also made contracting decisions that may have limited the number of acceptable proposals for much of the key Federal Marketplace work. In addition, CMS selected contract types that placed the risk of cost increases for this work solely on the Government.”