Great news: Obama administration awarded fixer contract for back end on a no-bid basis

I saw this over the weekend, but I honestly thought the no-bid contract for Novitas had been reported a long time ago. Actually, HHS and the Obama administration handed off the public-relations contract for ObamaCare on a no-bid basis, to politically connected friends of the White House, a revelation that came to light six months ago.  Reuters teed up the scoop on a Saturday, oddly:

Caught flat-footed by the challenges of building the financial-management and accounting parts of the U.S. government’s new online marketplace for health insurance, officials rushed to hire a familiar contractor without seeking competing bids, according to government procurement documents reviewed by Reuters.

The documents dated in August – less than two months before the opening of online marketplaces established by President Barack Obama’s landmark healthcare law – showed the agency in charge had only “recently learned” that building the financial management functions was “beyond (its) currently available resources.” …

The contract, valued at nearly $12 million, was awarded on August 9 to Novitas Solutions, according to the documents. Novitas has numerous contracts with CMS, including to administer doctor and hospital claims in the federal Medicare program for elderly Americans.

This relates to the surprise testimony of Henry Chao, the Deputy CIO at HHS who told Congress that the subsidy-payment systems of ObamaCare hadn’t even been built yet.  Chao tried to pass this off as an expected delivery schedule, but the panic no-bid contract to Novitas belies that spin.  HHS expected the back end to be complete by January 1, which is when insurers will need to be paid the subsidies to ensure coverage for millions of people who assume they have enrolled in an insurance plan.

The timing seems very strange indeed.  HHS had forty-two months to build this system after the passage of the Affordable Care Act in March 2010 to hit the October 1 deadline.  Why did they wait more than forty months to begin building the payment system that is absolutely critical to the system’s potential operation? And what can we expect to see from a massive, $12 million system that has to be delivered in less than four months, which to this day is still not complete?

Here’s a better question. Congress has held lots of hearings on the progress of ObamaCare.  Why didn’t anyone mention that the back end had been ignored to the point that HHS hadn’t even sent out RFPs for bids on the system? Lots of Obama administration officials testified that the project was proceeding on time for its October 1 rollout, starting with HHS Secretary Kathleen Sebelius. Now we find out that 40% of the system slipped through the cracks until well past the last moment, and CMS was forced to do a no-bid award to catch up.

The incompetence exposed by this disaster almost escapes the ability of adjectives to adequately describe it.  Obama should have fired Sebelius and a number of other people weeks ago to bring in more disciplined and competent executives.  Does the nuclear option detonated by Harry Reid last week make that more likely?

Kathleen Sebelius may become the biggest loser in the Senate’s approval of filibuster reform.

The Health and Human Services (HHS) secretary has kept her job despite the botched rollout of ObamaCare’s insurance exchanges, but it will now be easier for Obama to replace her.

After the Senate’s vote, confirming an executive-branch nominee now takes just 51 Senate votes. Some think that raises the likelihood Sebelius will soon be a former Cabinet member.

“The president’s hands were previously tied,” said John Hudak, a fellow in governance studies at the Brookings Institution, who wrote a piece on the topic Thursday.

“Now, he has more breathing room and he is able to fire whoever he wants at HHS. That’s a very, very appealing approach, whether it fixes the problems with ObamaCare’s rollout or not.”

I’m skeptical that the threat of a filibuster kept Obama from firing Sebelius.  Republicans would have allowed any reasonable replacement after the meltdown became exposed, simply to keep from providing Democrats from having an excuse to blame Republicans for the inevitable consequences still on the way.  Obama could have nominated former Senator Tom Daschle, whose tax woes derailed his appointment to Sebelius’ position nearly five years ago, and the Senate club would hardly have blocked his ascent, under the circumstances.  Obama is keeping Sebelius on board either out of a mistaken sense of loyalty or out of fear of admitting that the administration blew its chance on ObamaCare — which is one reason why Obama looks increasingly out of touch with reality.

Update: I knew this sounded familiar.  Jeryl Bier reported on it in September for The Weekly Standard, and tried following up last week.  “It sounds like Reuters isn’t getting any more cooperation from CMS or Novitas than I did, however,” Jeryl tells me via e-mail, but that’s no surprise.  Be sure to read Jeryl’s reporting, especially now that we have the context of Chao’s testimony.

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