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Watchdog: CMS had trouble getting PPACA exchange IT bidders

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The Centers for Medicare & Medicaid Services (CMS) used an existing pool of enterprise system development contractors to set up much of its part of the Patient Protection and Affordable Care Act (PPACA) public exchange system.

CMS, an arm of the U.S. Department of Health and Human Services (HHS), often went with the companies that had gone through a 2007 information technology (IT) procurement process in an effort to speed up exchange construction. That strategy might have accelerated the contracting process, but it meant that only 16 companies could bid for some of the exchange development contracts, according to officials at the HHS Office of Inspector General (HHS OIG).

The officials at HHS OIG – an HHS watchdog agency – say in a report on CMS contracting for the HHS-run PPACA exchanges that many of the companies in that 16-company pool declined to submit bids when CMS put out requests for proposals (RFPs) for exchange construction projects.

For one-third of a group of 60 contracts, CMS solicited a proposal from just one company, officials say.

For two of six key contracts issued through competitive processes, with a total estimated value of about $464 million at the time of the award, only four of the 16 companies in the prescreened bidder pool submitted proposals.

For three key contracts, fewer than half the proposals submitted were found to be technically acceptable, and, for one, officials say – for the HealthCare.gov front-end enrollment system – only one bidder, CGI Federal Inc., submitted what reviewers found to be a technically acceptable proposal. 

HHS OIG officials also criticized the CMS effort to manage the project itself, without help from a systems integrator, and they said CMS used contracts that had CMS assume too much risk. Because of the type of contract used, the value of the CGI contract grew to $207 million, from $58 million, officials say.

The value of another key contract also tripled, and the value of four other contracts increased from 1 percent to 54 percent.

HHS officials noted that most of the exchange systems developed through the exchange contracting process worked well, but they say they have now learned that using a lead systems integrator for a complex IT project is a good idea.

See also: Marilyn Tavenner to leave CMS post.