Can the government sue over Obamacare disaster?

Rollout of the Affordable Care Act has been stymied by errors made by vendors. The Obama administration needs to figure out where the blame lies.

By businessed Nov 1, 2013 10:11AM
This post is a commentary by Mark P. Ressler, written for CNBC.com.

Health & Human Services Secretary Kathleen Sebelius testifying on Capitol Hill in Washington (©Evan Vucci/AP)An organization's costly, ballyhooed strategic plan crashes and burns when its new computer systems fail. Service outages and other mishaps lead to seething customers, overwhelmed employees and gloating competitors. In the meantime, a CEO is under siege as his hoped-for signature achievement becomes a technology nightmare.

Barack Obama, meet corporate America. With the disastrous rollout of the Affordable Care Act, President Obama has joined the ranks of the many chief executives whose turn-around plans have been stymied — or, in some cases, smashed to bits — by a failed software implementation.


Numerous firms and their CEOs have been buffeted by difficult — or, as with Obamacare, catastrophic — software projects. Touted as sure-fire revenue boosters and cost savers, IT projects often fail to deliver the return on investment that lead companies to pay consulting firms tens of billions of dollars to roll out new software. The promises of increased efficiencies, reduced headcount and improved customer service are frequently unfulfilled. Projects are not completed on time or on budget, draining capital and morale as the expensive new computer system turns out to be scarcely better than the old warhorse it replaced.

Far worse are the situations where new IT rollouts bring a company to its knees as coding and interface defects make a hash of ordering, shipping, accounting, procurement and inventory. This is the IT nightmare scenario that the White House is now confronting, in real time, with the Obamacare debacle.

Like many a CEO before him, President Obama needs to get to the heart of the problem — and fast. In my experience, having successfully represented companies and public entities for the last 15 years in litigation over failed software projects, there is a reason why these projects go off the rails. IT projects often become train wrecks because of critical errors made by the very vendors paid huge fees to put the systems together.

Indeed, some of the leading IT players — SAP, IBM, Accenture and Deloitte Consulting — have been sued over failed software projects. Such suits typically allege that to land these lucrative engagements, vendors misrepresent their consultants' skills. The project is then allegedly doomed when inexperienced consultants make design, coding and testing errors. The software firms respond by blaming the client, alleging it was the client's responsibility to manage the project, test the system, decide when to go-live, etc. Sound familiar? Almost all of these cases settle before trial.

As the administration and congressional investigators look for culprits, they should focus their attention on the following issues, which can place software projects at serious risk.

Deficient project management. Consulting firms pocket huge fees for these projects, deploying armies of workers who sometimes spend years on-site. When projects fail, dreadful project management is often why. On the Obamacare project, was an appropriate implementation methodology deployed and adhered to? Were the proper protocols in place to track, guide and evaluate the process as it moved through the design, configuration, coding and testing phases? For its part, did the administration ride shotgun on the vendors — or was it an episode of "Consultants Gone Wild?"

Deficient staffing. Did the administration get the A-Team the rollout required? For $600 million in fees, did the vendors supply skilled consultants who understood the claims- processing industry and the corresponding business processes? Were they competent to not only write the functional specs and code, but also to build the web of interfaces linking together system components? Or did a consulting firm attempt to leverage a handful of skilled consultants over busloads of "newbies" tasked with building the system?

Deficient testing. The fail-safe of any software project is the testing phase. Appropriate testing can, and must, flush out coding and other defects before the go live. Was robust testing performed prior to the Obamacare go-live? Or, as is often the case on failed projects, did the vendors cut corners, or deliberately under-test the system, to ensure artificially positive results in an effort to conceal problems? Did the administration accede to truncated testing to hit a carved-in-stone go-live date?

Deficient quality control. Consulting firms are hired to be on the lookout for project risk — to identify, manage and mitigate it. Did the Obamacare vendors identify project risks? If so, who in the government did they warn? Or, as we often see on failed implementations, did the consultants sugarcoat or conceal project risk? Did they recommend a risk-mitigation plan, such as beefing up the team or adjusting the timeline? Did the administration, intent on going live as scheduled, ignore show-stopping risks?

At this early stage, it's difficult to know where the blame lies. But one thing is certain: This implementation fiasco was badly managed. Knowing what questions to ask, and where to look for answers, will be the first step in determining not only how to proceed with an effective remediation plan, but also whether the government can seek recovery from consulting firms that reaped big fees on another failed IT project.


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Mark P. Ressler, a former federal prosecutor, is a partner at Kasowitz, Benson, Torres & Friedman LLP in New York who specializes in software litigation.

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821Comments
Nov 1, 2013 1:21PM
Nov 1, 2013 1:27PM
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How about the fact that our President is underqualified, and a narcisstic, self absorbed, fraudelent, nitwit?? And that he is the worst leader we have ever had in this country?? Could that be a part of the reason?
Nov 1, 2013 10:43AM
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How about "Deficit of Leadership" as the primary problem?
Nov 1, 2013 1:23PM
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Just remember folks, this whole mess belongs to the demorats. The only people that should have to pay the price are the people who voted for libtards.
Nov 1, 2013 1:25PM
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The going rate for tech's to build a site such as this is $200/hr. This means we were billed for over 3,000,000 man hours to build this debacle. Bullsh*t. Cronyism at play here boys and girls. This site could have been completed for less than $5m instead of over $600M, and been done in less than a year, not a mess after nearly 4 years. Cronyism and sheer government incompetence is cause of all these problems which is why we need smaller government, less spending and far less regulation if we are to have a chance at a decent life.
Nov 1, 2013 1:24PM
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obama wants this to fail. He wants it to bring the economy down and America to become a third world country. This is all just a smoke screen to keep your eye OFF the ball. This whole thing brings to mind a picture of late thirties Nazi Germany. ALL the German people crying and waving and saluteing Hitler. obama, much like Hitler was, is a great speaker but just plain evil. The people that voted for and continue to deffend obama will have the blood of this nation on their hands.........stoops.
Nov 1, 2013 1:32PM
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Hey, Someone...it was a NO BID contract.  No RFP was ever sent out to any other company in the US or even in the rest of the world!

 

As a former contract specialist for the Federal Gov, things like this are not the norm.  When it does occur, everyone knows it's a political payoff.

 

 

 

 

Nov 1, 2013 1:26PM
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The Obama administration needs to figure out where the blame lies..................................I lies with THEM!
Nov 1, 2013 1:30PM
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NBC, ABC, CBS knew in 2010 and covered it up.

Nov 1, 2013 1:23PM
Nov 1, 2013 1:35PM
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I have a new slogan for the Republican party....

If you are happy with obama care, thank a democrat.

If not, vote Republican!

Nov 1, 2013 1:18PM
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Doubtful they would win. We would have an Obama appointee handling the case were it filed, so that means yet another incompetent administration appointee handling the matter. Aside from that, I am sure these were Obama Cronies that were given the "job" of rolling out this debacle so I am sure Obama will not pursue anything to get our money back.
Nov 1, 2013 10:40AM
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Lets see a show of hands who thinks the US will sue Michelle's college bestie.
Nov 1, 2013 1:24PM
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Since they didn't go through a normal bid process to select vendors it leaves it more murky.  In Florida they (those in the government) would have been in violation of the "Sunshine Law."  AKA Government in the Sunshine.  That would include not only the decisions on the vendors but ALL meetings, status reports, etc.  Since it is publicly funded, the public has a right to know.  This project has been treated like a Black Ops project which is inexcusable.
Nov 1, 2013 1:45PM
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report this morning shows only 228 have signed up for Obamacare since October 1 yet over 1.2 million Americans are being cancelled from current insurance plans.

 

I am sure the 228 who signed up are either illegal immigrants or ghetto lackeys with issues (aka the uninsurable) while the 1.1 million losing insurance are tax-paying, working middle-class Americans.

 

Obamacare is on track to prove itself to be the biggest FRAUD America has ever seen

Nov 1, 2013 1:36PM
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Maybe the white house should look next to Michele Obama at her cronyism in hiring these people without competitive bidding in the first place.  Dirty Chicago politics in the white house.  Are we surprised he denies that he doesn't know the answer?  The problem is President gosh-I-had-no-idea-that-was-happening Obama.  The good old buddy system quid pro 
quo didn't work.  He's disgusting at the best.  Can we sue the president for malfeasance and collect damages?
Nov 1, 2013 1:28PM
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Bull---- the federal government controlled everything between all companies and its own branches ( IRS, health and welfare / etc.It's bad management and nothing else-they were told it's not working.But somebody with a big head said it's stays on my realease date and will fix it as it goes.You believe that with all the new additions to basic coverage that the price would stay the same, are you from Cuba.People you've been sold down the river by a used car saleman from the democratic party.Set back and watch what happens in 2014.
Nov 1, 2013 11:38AM
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When two parties agree on a contract and one party does not fulfill their obligation they are in breach on contract. The companies that were contracted to build the website should be required to correct the issues without getting any more money. If the companies failed to see how much it would cost them it is their fault for not giving a higher bid to complete the project.
Nov 1, 2013 1:00PM
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wonder what happened to bill clinton? didn't Oman ask bill just a short while ago to go out and drum up support for the ACA? i see he's campaigning in virginia but he's not out stumping for Ocare. any of you libs out there that know otherwise?

Nov 1, 2013 11:48AM
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They should sue themselves they're the ones that kept changing crap, but of course you have a lawyer president and the majority are lawyers in the House and Senate i wouldnt be surprised.
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