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Wednesday, December 25, 2013

The Botched Obamacare Website Rollout and Government Contracts

It seemed unthinkable that the Obama administration could have so badly botched the rollout of the website associated with Obama's signature legislation, the Affordable Care Act (aka Obamacare).   However, as The New York Times reported here on Monday, and as we have already discussed here and here, the technological fumble may be a result of broader problems in the structures of government procurement systems which may finally get the attention they deserve because of the high-profile Obamacare rollout fiasco.  

SebeliusTo reduce the Times' report to its essence, the process of winning a government contract is very complex and daunting.  There are two problemmatic consequences of this structural element of government contracting.  First, it is hard for small companies or companies without expertise in the government procurement process to jump through all the hoops associated with that process.  Second, when the contracts are both long term and deal with technology, the government in some cases would be better served by working with smaller, more nimble contractors that can innovate and adapt as technology develops.  With technology improving at the rate at which it improves, the government cannot afford to get locked into multi-year contracts with entities that are not in a position to adapt as quickly as technology advances.  As the Times puts it:

Longstanding laws intended to prevent corruption and conflict of interest often saddle agencies with vendors selected by distant committees and contracts that stretch for years, even as technology changes rapidly. The rules frequently leave the government officials in charge of a project with little choice over their suppliers, little control over the project’s execution and almost no authority to terminate a contract that is failing.

“It may make sense if you are buying pencils or cleaning services,” said David Blumenthal, who during Mr. Obama’s first term led a federal office to promote the adoption of electronic health records. But it does not work “when you have these kinds of incredibly complex, data-driven, nationally important, performance-based procurements.”

A review of large-scale government contracts entered into over the past decade deemed only 4.6% successful, while 40% failed.  The rest were simply termed "challenged".  In what has become a familiar narrative (see, e.g., this Brennan Center report on the Obama administration's failed attempts to rein in overclassification), the Obama administration has taken steps to address the problem, but those steps are widely regarded as inadequate, in part because the administration is unable to overcome institutional resistance to change.  In this case, the standoff seems to be a result of resistance from the Office of Management and Budget to congressional legislation that would have exempted the Pentagon form the reform mandate. 
 
The solution for long-term projects involving technology seems to be to break up government contracts into small subcontracts and to partner with small companies that can focus on one task and make certain that the tecnology they employ is up-to-date throughout the life of the contract.
 
[JT]

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