Massachusetts, Vermont Halt CGI Funding Until Health Exchange Sites Meet Standards

Massachusetts and Vermont have frozen funding to CGI Federal as a result of the firm's continued failure to meet deadlines and specifications, and will not pay out further until contractual obligations are met for the state health exchanges, the states announced Thursday.

The two states enlisted CGI Federal, the U.S. subsidiary of Montreal-based CGI Group, to build pieces of the federal exchange as well as five other state exchanges for the implementation of the Affordable Care Act, commonly known as Obamacare, which has been plagued with technical problems since its Oct. 1 launch.

For the Massachusetts exchange, CGI failed to deliver on deadlines, resulting in major problems in the back-end databases and an overall compromised user experience, Jason Lefferts, spokesperson for the Massachusetts Commonwealth Health Connector, told CRN. More specifically, Lefferts said that CGI's failures have resulted in system performance struggles, log-in problems, time-out problems, connectivity between enrollment information and the carrier, as well as random sporadic site issues, to name a few.

[Related: Obamacare Site Disaster: 10 Steps Solution Providers Would Take To Fix It ]

"Overall, at this point the system remains far from where it needs to be," Lefferts told CRN. "There is key functionality that [was] delayed and [has] yet to be delivered."

Although Massachusetts has already paid $11 million of the $69 million it contracted CGI for, the state will not pay the contractor any more until the site is working properly, Lefferts said. Similarly, Vermont has already paid CGI $18.6 million of the contracted $82.6 million, the remaining difference of which the state will not pay until the firm delivers on its deadlines.

Lefferts said that some Oracle systems and personnel have been pulled in to help with various aspects of the project, but overall the state exchange is standing steadfast to holding CGI accountable for the contracted work.

"At this point, we're holding the vendor accountable and we're going to continue to apply nonstop pressure," Lefferts said.

The CGI contract was designed on a "pay-by-delivery" contract, under which the contractor was to be paid as it reached certain deadline milestones, all of which were supposed to have been hit by the Oct. 1 launch date. But much of the work has "fallen off that schedule," Lefferts said.

CGI said the contractor is working hard to fix the problems with the exchanges, the company told The Associated Press.

"CGI fully intends to honor the terms of its contract," CGI Vice President of Global Communications Linda Odorisio said in a statement to AP.

While CGI's funding has been cut off for now, Lefferts said that Massachusetts will have a meeting in January to discuss how to proceed, either through financial or legal means.

"We haven't made any decisions yet," Lefferts said.

However, he said that the state ultimately will be holding the vendor accountable for the exchange to make sure there are no gaps in coverage for the consumer.

After the publication of this story, CRN received the following statement from Odorisio:

"CGI has led or played a major role on the most successful state insurance marketplaces in the country, including Colorado, Kentucky and California. The healthcare marketplaces in both Vermont and Massachusetts are successfully processing applications from citizens to enroll in insurance, despite media reports to the contrary. On average, more than 700 Vermont residents continue to apply daily for health insurance online via Vermont Health Connect. CGI and the state of Vermont remain focused on the best way forward to continually improve the site, despite the many challenges of this complex program. In Massachusetts, CGI is working side-by-side with Connector staff to steadily increase the ranks of the insured. More than 100,000 online applications for insurance are in progress and consumers now have until December 31 to select a plan. CGI and its resources remain dedicated to delivering continuous improvements in system performance and the user experience in both states, working closely with government leaders to ensure that contract requirements for all parties are met."

PUBLISHED DEC. 27, 2013