Great news: We spent $634 million on ObamaCare exchanges

posted at 10:01 am on October 10, 2013 by Ed Morrissey

I could have added this to the earlier ObamaCare post, but this kind of cash really should pay for its own post, no? It obviously doesn’t pay for a working website — not for the government, anyway — but it’s good for a web page with limited interactive capabilities.  Limited?  Who am I kidding?  You probably can’t leave comments on the UnicornHealthCare.gov (via Weasel Zippers and Instapundit):

It’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.

The site itself, which apparently underwent major code renovations over the weekend, still rejects user logins, fails to load drop-down menus and other crucial components for users that successfully gain entrance, and otherwise prevents uninsured Americans in the 36 states it serves from purchasing healthcare at competitive rates – Healthcare.gov’s primary purpose. 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.  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.

If you’re wondering, CGI Federal isn’t much of a player in political fundraising.  A review of FEC records at OpenSecrets shows a total of slightly under $65,000 in donations over three cycles, mostly to an industry PAC.  The other donations get split between Republicans and Democrats, including smallish soft-money checks to the party committees and smallish hard-money checks to candidates.  Both Mitt Romney and Barack Obama got cash from CGI Federal employees, so the story isn’t really crony capitalism.

Instead, this looks like yet another case of government incompetence.  The amount of money spent on this system was seven times its initial estimate of just two years ago. Mull that over for a while, and then think of what that means when multiplied across the entire ObamaCare structure.  The amount of cash sunk into this brick exceeds that spent on Solyndra — by about 20%.

This is what happens when government takes over what should be private-sector tasks.  No private-sector organization would have tolerated a $634 million web-portal project in the first place, nor would it have tolerated a three-and-a-half year rollout.  A firm competing in the private sector would have tested its software before release to make sure it at least functioned, well enough to sell the product if nothing else.  Every step of the path for this exchange, including its price tag, reminds us why we don’t want government eclipsing the private sector, if on no other basis than rational use of resources.

Update: Now the Washington Post tells us:

Problems with the federal government’s new health-care Web site have attracted legions of armchair analysts who speak of its problems with “virtualization” and “load testing.” Yet increasingly, they are saying the root cause is not simply a matter of flawed computer code but rather the government’s habit of buying outdated, costly and buggy technology.

The U.S. government spends more than $80 billion a year for information-technology services, yet the resulting systems typically take years to build and often are cumbersome when they launch. While the error messages, long waits and other problems with www.healthcare.gov have been spotlighted by the high-profile nature of its launch and unexpectedly heavy demands on the system, such glitches are common, say those who argue for a nimbler procurement system.

They say most government agencies have a shortage of technical staff and long have outsourced most jobs to big contractors that, while skilled in navigating a byzantine procurement system, are not on the cutting edge of developing user-friendly Web sites.

These companies also sometimes fail to communicate effectively with each other as a major project moves ahead. Dozens of private firms had a role in developing the online insurance exchanges at the core of the health-care program and its Web site, working on contracts that collectively were worth hundreds of millions of dollars, according to a Government Accountability Office report in June.

Again, the lesson here is easy: stop the federal government from eclipsing the much more efficient private sector.


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They’re pissing on our heads and telling us it’s raining…

PatriotRider on October 10, 2013 at 10:05 AM

Remember the tobacco settlement lawsuit? There was an attorney who did 20 minutes work and put in a claim to be paid around 400 million dollars out of the settlement, which he was on his way to collecting as I recall before an anti-attorney group caught him.

We haven’t seen nothing, yet.

Marcus on October 10, 2013 at 10:05 AM

Let’s see… 300 Million US citizens. $10 a T-shirt. That’d be $3 billion for a “I’m with Stupid Obamacare” T-shirts for everyone in America.

I’d earmark it.

Nethicus on October 10, 2013 at 10:06 AM

Reminds me of a movie line: “The first rule of government spending, why buy one when you can have two for twice the price.”

Bishop on October 10, 2013 at 10:07 AM

Any contractor can tell you.

Nobody makes money on the original bid. It’s the Change Orders where you get rich.

LtGenRob on October 10, 2013 at 10:08 AM

We spent an extra $17 Trillion on government and all I got was this lousy socialism.

Oil Can on October 10, 2013 at 10:08 AM

We spent $634 million on ObamaCare exchanges

That’s not the story. The real story is that we spent $634 million on ObamaCare exchanges AND NOBODY IS GOING TO JAIL FOR IT.

Happy Nomad on October 10, 2013 at 10:12 AM

Well, here. See how you can help.

HealthCare.gov for Developers

We’re making our source code freely available on GitHub. All of our educational content about the Health Insurance Marketplace is available in machine-readable formats so that innovators, entrepreneurs, and partners can turn it into new products and services.

Quisp on October 10, 2013 at 10:14 AM

I’m going to file a False Claims Act lawsuit against the vendors since they sold a faulty website. A cool 20% of $634 million from a qui tam action looks mighty lucrative right now.

blammm on October 10, 2013 at 10:14 AM

Professors Cloward and Piven stand with their mouths agape, completely in awe of what they are seeing.

“We thought that overloading the social state might cause it to collapse at some point, but hey it’s “publish or perish” in our business. This Obama guy, though… He makes us look like pikers! Patriots, even!”

turfmann on October 10, 2013 at 10:14 AM

Why don’t we just rename it 404-Care?

ajacksonian on October 10, 2013 at 10:15 AM

Just like the last big Rat-led health spending binge, I see. Budget big, then blow the budget by orders of magnitude.

Steve Eggleston on October 10, 2013 at 10:15 AM

The U.S. government spends more than $80 billion a year for information-technology services, yet the resulting systems typically take years to build and often are cumbersome when they launch.

This is a constant problem with any large Federal IT contract.

The DOD wanted to modernize it’s pay and personnel systems. Currently they are using about a dozen different stand alone systems that have to be taken off line so data can be shared between them overnight or on weekends. Some systems do not update other systems for one or two weeks. So they put out a contract for an integrated pay/personnel system called DIMHRS. After nearly 10 years of testing and modifications the Navy and DOD had spent nearly $1 BILLION dollars on testing and programming for a system that was never deployed.

Johnnyreb on October 10, 2013 at 10:17 AM

Any contractor can tell you.

Nobody makes money on the original bid. It’s the Change Orders where you get rich.

LtGenRob on October 10, 2013 at 10:08 AM

Yea, but any company whose change orders equaled seven times their original bid would be hauled into court, either by their private contractor or any local — and most state — government entities. For team Obama, where there’s really no difference between spending $93 million, $634 million or a million, billion, zillion, gadillion dollars because it’s Other People’s Money, there won’t be any attempt at all to recoup the funds. Instead, they’ll pay out another $634 million or so to fix it, because it’s (much, much, much) easier for them to spend taxpayer dollars than to admit they made a mistake.

jon1979 on October 10, 2013 at 10:17 AM

Follow the money. If $635M is going to get flushed down the toilet, DC insiders are going to make sure their friends are going to be in on the action.

WisRich on October 10, 2013 at 10:18 AM

I can except that.

rogerb on October 10, 2013 at 10:18 AM

Johnnyreb on October 10, 2013 at 10:17 AM

In the ’90s the FBI had an idea of a one-station sign-on for their agents to get access to all the major databases (mugshots, fingerprints, blood analysis, case records, etc.). The first time the contract failed in year 1, going over budget because each database had its own front-end and some of them were mostly manual affairs.

A few years later they tried again and, once more, failed in the process and decided on a decade process of slowly requiring older systems to move to a common interface standard… that is still in progress last I heard and there is still no single station log-in capability inside the FBI.

Why did ANYONE think Obamacare would work just from an IT perspective?

ajacksonian on October 10, 2013 at 10:21 AM

While the error messages, long waits and other problems with http://www.healthcare.gov have been spotlighted by the high-profile nature of its launch and unexpectedly heavy demands on the system

How was this “unexpected?”

pain train on October 10, 2013 at 10:22 AM

Once again.

If you think more government is the solution it’s obvious you do not understand the problem.

Oldnuke on October 10, 2013 at 10:24 AM

The big dig of DC

cmsinaz on October 10, 2013 at 10:24 AM

The amount of money spent on this system was seven times its initial estimate

In 1964, the Johnson administration predicted that Medicare would cost $12 billion in 1990.

In 1990, Medicare cost $110 billion.

Nearly 10 times the original estimate, but people like JustTheЯ3t@rD and brayam want to expand it to cover everyone ‘to save money.’

Error404care was supposed to reduce costs. It won’t.

Error404care was supposed to cost less than $1 trillion over the first decade. It is likely to cost $2.7 trillion. Yet, there are those that will still argue that it is fiscally responsible.

The lesson and performance of the website should be instructive to people such as Ezra Klein, but it won’t be. They’ll just move the goalposts and start talking about feel good things still expecting unicorns will make all of the promises originally come true. Just as though two idiots in California do.

Resist We Much on October 10, 2013 at 10:26 AM

so the story isn’t really crony capitalism.

Are we certain? What did this company spend 634 million on? How many “consultants” were hired to help “design” and “facilitate” the project?

We already know that lots of money has been spent in other areas of ObamaCare “implementation” that were big hand outs to community organization/ACORN type groups.

gwelf on October 10, 2013 at 10:27 AM

Any CEO in the private sector would be shown the door.

teejk on October 10, 2013 at 10:29 AM

The lesson and performance of the website should be instructive to people such as Ezra Klein, but it won’t be. They’ll just move the goalposts and start talking about feel good things still expecting unicorns will make all of the promises originally come true. Just as though two idiots in California do.

Resist We Much on October 10, 2013 at 10:26 AM

Ace of Spades has called out these liberal pundits – Ezra Klein in particular – for changing the story. Before ObamaCare was passed it was all premiums and the actual cost of healthcare would drop and unicorns and skittles. Now that’s it’s started to be implemented they claim that of course everyone knew all along that it was a massive redistribution system where many people would see their premiums go up necessarily to fund high risk pools blah blah blah.

gwelf on October 10, 2013 at 10:30 AM

How was this “unexpected?”

pain train on October 10, 2013 at 10:22 AM

exACTly.

The Bush administration expected 20,000 simultaneous visitors for the launch of Medicare D. They built a site to accommodate 150,000.

The Schaef on October 10, 2013 at 10:32 AM

The belief that IT is magic and anything you want can be produced by a bunch of nerdy kids over the weekend is a myth.
Most of the large IT (ERP) implementations I have seen in private industry have been messy (taking years to work out bugs a quirks) and those were based in pre-existing code.
This fiasco was predictable and the GOP should have been ready to exploit it but we have dopes like McCain who can barely use a telephone as out leaders, really too bad.

notalemon on October 10, 2013 at 10:35 AM

The website even has the look of a website from the 1990′s. Why didn’t Obama hire Julia to design the website? I’m sure Julia’s websites smashing and modern!

thuja on October 10, 2013 at 10:39 AM

Mull that over for a while, and then think of what that means when multiplied across the entire ObamaCare structure. The amount of cash sunk into this brick exceeds that spent on Solyndra — by about 20%.

What a great GOP campaign ad!

nazo311 on October 10, 2013 at 10:40 AM

The website even has the look of a website from the 1990′s. Why didn’t Obama hire Julia to design the website? I’m sure Julia’s websites smashing and modern!

thuja on October 10, 2013 at 10:39 AM

Ha ha ha ha.

gwelf on October 10, 2013 at 10:41 AM

I wonder how much of that will be funneled back to democrats.

darwin on October 10, 2013 at 10:42 AM

I’m reminded of the report about a public library which wanted to install a server so that it’s patrons could access the Internet. The library received $30,000 worth of funding and purchased 5 really fast servers each one of which could handle 5000 patrons. They had enough computing power to support a small city.

That public library had – at most – about 25 patrons at any one time.

When asked why they needed so much computing power when they could have gotten by which a few cheap servers, the supervisor said that they wanted to make sure they had enough computing power for “future needs.”

Of course as anyone knows, any computer equipment you buy will become obsolete inside of 5 years.

As Milton Friedman pointed out: “No one spends someone else’s money as wisely as they spend their own.”

The larger share of the economy that is managed by the government, the less wisely it will be managed.

PackerBronco on October 10, 2013 at 10:48 AM

Should have just taken that $630 million and bought health insurance for the uninsured. Problem solved.

Bruce MacMahon on October 10, 2013 at 10:49 AM

Any CEO in the private sector would be shown the door.

teejk on October 10, 2013 at 10:29 AM

Basic principle of liberalism: While the private sector weeds out failure and incompetence, government grows in response to failure.

PackerBronco on October 10, 2013 at 10:51 AM

crony capitalism

It is not “crony capitalism”, the politically correct term is “crony socialism”.

GardenGnome on October 10, 2013 at 10:59 AM

So they spent way too much money on software that didn’t even work. Who do they think they are? The Romney for President 2012 campaign?

J.S.K. on October 10, 2013 at 11:03 AM

Quisp on October 10, 2013 at 10:14 AM

HackaRama ™

dogsoldier on October 10, 2013 at 11:10 AM

Scrap ObamaCare and Impeach Obama.

The economy would improve INSTANTLY.

Meople on October 10, 2013 at 11:10 AM

Resist We Much on October 10, 2013 at 10:26 AM

Thanks for the expansion of my one-sentence point.

Steve Eggleston on October 10, 2013 at 11:13 AM

So they spent way too much money on software that didn’t even work. Who do they think they are? The Romney for President 2012 campaign?

J.S.K. on October 10, 2013 at 11:03 AM

I knew I saw the similarities to Project ORCA.

Steve Eggleston on October 10, 2013 at 11:13 AM

This sort of catastrophe is what happens when you have complete idiots running a software development. I’ve lived through this, but the scale of this EpicClusterFarkNado ™ is on a scale never seen before.

Chances of sorting out the mess diminishes with each iteration, because the code gets nastier and nastier as they apply baling wire, bubble gum, band-aids and post it notes.

dogsoldier on October 10, 2013 at 11:14 AM

Romney’s $10K says all the money went to minority owned small businesses, who had no experience with building a major computer system, and whose owners are Dem cronies.

dentarthurdent on October 10, 2013 at 11:23 AM

The amount of money spent on this system was seven times its initial estimate of just two years ago.

Actually, according to CGI Federal’s announcement back on 1 December 2011 that it won the contract, it was noted that,

“The contract to build Federal Exchange was awarded by CMS’ Center for Consumer Information and Insurance Oversight. It has a two-year base value of $55.7 million with three one-year options.”

So the base value was $55.7 million was through 2013. That would make the system cost eleven times the initial estimate.

One other difference, I’d note. The $55.7 million initial estimate presumes a working system. The $634 million represents a clusterfark.

Dusty on October 10, 2013 at 11:26 AM

Error404care was supposed to cost less than $1 trillion over the first decade. It is likely to cost $2.7 trillion. Yet, there are those that will still argue that it is fiscally responsible.
Resist We Much on October 10, 2013 at 10:26 AM

Given the gubmint’s record on cost projections, I’d say $2.7Trillion estimate is off by an order of magnitude.

dentarthurdent on October 10, 2013 at 11:27 AM

Contractors expect big money from the fed or even state and local governments. I live in a small town of about 7000 people. The town hall wanted a new computer so they hired a contractor with the lowest bid. For $110,000.00 we got one really low end built buy the contractor desktop with an old CRT display and two printers. We didn’t even get a network with that. It was two printers on a switch box. I told a selectmen that I would have done it for 10 grand, gotten a better computer and printers and walked away with 6 or 7 grand in my pocket.

Dr. Frank Enstine on October 10, 2013 at 11:32 AM

Basic principle of liberalism: While the private sector weeds out failure and incompetence, government grows in response to failure.

PackerBronco on October 10, 2013 at 10:51 AM

My economics professor said public service is for the people that can’t get or hold a job in the private sector.

Dr. Frank Enstine on October 10, 2013 at 11:35 AM

Thought I’d bring this comment over to this thread as well.

Ya – pretty much EVERY new system of any kind the gubmint rolls out starts out as a disaster. I could fill a couple pages with stories of horribly designed and implemented systems I’ve been involved with that were built for the Air Force, and specifically in Cheyenne Mountain. At least DoD usually gets them working right – eventually – but typically at a high cost to hire new people to come in and fix the original fiasco.

dentarthurdent on October 10, 2013 at 11:14 AM

dentarthurdent on October 10, 2013 at 11:36 AM

Oklahoma is suing on how the feds pay states which set up their exchanges and doesn’t pay the states which didn’t…lots to it but it will be interesting to see how the SC will handle.

Someone should sue, all the way to the SC on the dual treatment of citizens, congress/exempted, and the rest, after Jan. 01, 2014, when the travesty of differentiation goes into effect.

That’ll be epic. Roberts can make good or go to Hell, into the slowest roasting layer.

Schadenfreude on October 10, 2013 at 11:52 AM

$634,320,919

That’s 634,320,899 higher than Barky can count to … so, to the Indonesian, it’s about the same as $93,700,000.

Thank you, self-destructive affirmative action insanity, for giving such opportunities to a total imbecile who never should have been in charge of anything more complicated than a mop.

On the positive side … I guess … when the functionally illiterate Indonesian Dog-Eating Retard said, “We are on the precipice of an achievement that has eluded Congresses and presidents for generations,” he was mistakenly accurate. “On the precipice” was the perfect description. I give the retard a solid B+ for that – as required by affirmative action and white guilt.

ThePrimordialOrderedPair on October 10, 2013 at 12:14 PM

Keep voting democrat!

Murphy9 on October 10, 2013 at 12:35 PM

Quisp on October 10, 2013 at 10:14 AM

That appears to be front end code, not back end code. It’s the back end where they’re f**ked.

I build custom websites for a living.

My initial WAG on cost for healthcare.gov, based upon what I’ve seen of the front end, and what I understand is necessary for the back end, is $100MM.

Which, amazingly enough, is pretty close to that $93.7MM bid.

I don’t see how you get anywhere close to $600MM unless the design phase was just AWFUL.

The cost rule of fixes:

If it takes $1 to change something in design, then it takes $10 to change that same thing in development, and $100 to change that same thing during testing.

When you have huge cost overruns like this, it’s because the design was incomplete or wrong. Most of the issues that cause the design to be so horribly incomplete or wrong are the fault of the client, but not all. It could be that CGI is just grossly incompetent, but I doubt it.

And I’ve seen it all from the clients. One big public service project I did, there was one whole group from the client who would never meet with us. We pretty much did the design docs on our own. They approved them. We developed exactly what we designed, and then at testing they told us it was completely wrong. And I mean, completely. We salvaged maybe 10-20% of the code. That was awful, and very expensive. I think we had an 800 page change order on that one, and there were several change orders well over 100 pages as well.

On another project I did, private sector this time, we had one whole group that was openly hostile to the project and did everything possible short of deliberate sabotage to make the project fail. We went over on cost on that one by quite a bit too.

Now, a good enough PM can help you through those things, but if the client is bad enough, there’s just little the PM can do. On that same private sector gig, we had a number of very serious concerns with the design that we red flagged very early on. We brought them up at every single weekly status meeting with the client for months, and we never got resolutions. We even went higher up the ladder. Didn’t help very much. There’s only so much you can do.

Chris of Rights on October 10, 2013 at 12:54 PM

I don’t see how you get anywhere close to $600MM unless the design phase was just AWFUL.
Chris of Rights on October 10, 2013 at 12:54 PM

That’s the key right there – but actually one step earlier in the process.
In my 30 years with DoD, about 8 yers of it as a contractor requirements analyst, I can tell you the government is HORRIBLE at defining and writing system requirements, which leads to a bad design, which leads to a dysfunctional system.
$100M estimate, $93.7M bid (expecting change orders to add to the cost for higher profit), $634M actual cost – par for the course for what I’ve seen over 30 years.

dentarthurdent on October 10, 2013 at 1:18 PM

As a fiscally moderate Marxist Democrat might say to the information:

$634,000,000? Why that’s outrageous. Do you have any idea how many babies we could have killed for that kind of money?

Don L on October 10, 2013 at 2:27 PM

“They say most government agencies have a shortage of technical staff”
Geezzz, you mean if we had just had more government employees this would have worked perfectly?

GaltBlvnAtty on October 10, 2013 at 3:01 PM

I’m a federal contractor and I’d suggest we need to use the 24-hour rule on this $600 million number. There’s almost no way that’s correct. FPDS information is wrong all the time — I have to try to use it for size-of-market calculations and the errors will make you tear your hair out. Let’s not have PPACA supporters turn this around on us and say it damages our credibility until we’ve FOIAed the award and understand what was included in that $600 million number and what wasn’t. If there were $500 million in change orders that ought to be in FPDS too.

It’s enough of an outrage that we paid anything for it since it doesn’t work. No sense getting fixated on a number yet.

I would also suggest that someone FOIA the RDD, RTM and other design/development documents to see whether HHS/CMS had a realistic plan in mind.

DrSteve on October 10, 2013 at 3:34 PM

I would also suggest that someone FOIA the RDD, RTM and other design/development documents to see whether HHS/CMS had a realistic plan in mind.

DrSteve on October 10, 2013 at 3:34 PM

Is that meant in jest? NO part of this plan ever had “real world” in mind. A tiny worm on the end of a hook is more appealing to a sucker than is a 10′ python.

FOIA in the “most transparent administration ever”??? It will take you years to get it, then every other word will be blacked out.

teejk on October 10, 2013 at 4:40 PM