It turns out there were even more reasons the Centers for Medicare and Medicaid Services shouldn't have picked the free-wheeling and allegedly shady CGI Federal to build HealthCare.gov. When CGI was vetted back in 2007, it didn't have any obvious black marks on its record, the Washington Post explains. But CGI is a "roll-up" company formed by acquiring other companies—one of which, American Management Systems, was one giant black mark. AMS projects have hit trouble in at least 12 states as well as at the federal level, including a much-publicized 2001 failure to automate federal retirement benefits. The company went $60 million over budget on that one, yet produced nothing useful.
More than 100 AMS alumni are now CGI executives or consultants. "Should CMS have recognized that ‘OK, here’s CGI Federal. It’s a new company, but, oh, my God, it looks a lot like the AMS from yesterday’?" asked one ex-CMS official. "Yes. I would consider that dropping the ball." But it didn't come up in 2007, and CMS never re-vetted the company, the Post's review of internal documents reveals. On the bright side, the review also reveals that the decision was politics-free, made purely because officials considered CMS' bid "technically superior." Vanity Fair, meanwhile, has an in-depth piece today on what many suspect is an accounting scandal brewing at CGI. It looks a lot like the company is using its acquisitions to mask financial problems, a quasi-legal practice known as creating a "cookie jar." (Read more Centers for Medicare and Medicaid Services stories.)