The maze of Obama administration web contracting cronyism keeps getting bigger /cms/images/spacer.gif

January 14, 2014 04:12 AM

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Whether it’s Washington, DC or state patronage systems, the modus operandi for IT contracting is to stonewall and delay transparency.

On Friday, we learned that the Obama administration will not renew the $93 million contract of the primary contractor, CGI Federal. Accenture will take CGI’s place, by virtue of a no-bid $90 million, twelve month contract.

A USA Today report suggested that CGI used 10-year old technology on and the site may need a complete overhaul. According to the Washington Examiner, this same company ran into trouble doing work in Canada, "the Montreal-based CGI Group was officially terminated by an Ontario government health agency after the firm missed three years of deadlines and failed to deliver the province’s flagship online medical registry."

Never-the-less, CGI just received another $37 million in U.S. government IT work. Michelle Obama’s classmate at Princeton is a senior vice president at CGI and the idea that this has nothing to do with using CGI stretches credulity.

Accenture gets to drive despite agreeing in September 2011 to pay a $63 million settlement to the Justice Department who had filed suit alleging price inflation and bid distortion.

Accenture’s not the first contractor to be investigated for wrongdoing. Since 2012, Client Services Network, Inc (CNSI) has been a subcontractor under QSSI. CNSI’s contract on Louisiana’s Medicaid Management Information System (MMIS) was recently terminated by Gov. Jindal for alleged irregularities during the bidding process. News reports have chronicled a grand jury investigation.

But the patronage parade isn’t over. Our investigation has uncovered that the user interface contract went to a small "garage startup" company, Development Seed. Their general manager is Dave Cole who is the former Obama administration executive in charge of Our sources say Development Seed needed the insider connections of Cole to land the plum healthcare website contract.

While in the Obama administration, Cole was in-charge of The site was successfully launched soon after the inauguration for less than $1 million. Cole then brought in a new vendor, Acquia, Inc and expensively revamped the already working site. According to federal checkbook data posted at, just in 2012, the Executive Office of the President paid $6.4 million to this company and 2013 payments totaled $5.3 million.

None of these schemes would surprise Illinois residents. The state may be the poster child for turning IT contracts into lucrative, opaque deals. The state’s last "successful" GOP governor, the revered Jim Edgar, was chased out of Springfield before an IT contracting scheme potentially could have cost him his career. The fact is, Obama learned the lessons of Illinois’ legalized-money-laundering-schemes well, and applied them in his own administration. The problems confronting the Federal Government’s rollout of Obama are mirrored in the Illinois experience.

The Federal government funds 90 percent of IT costs of implementing state-level Obamacare plans. The contracting schemes to upgrade state Medicaid Management Information Systems (MMIS) tend to resemble those being found at the national level.

In President Obama’s home state, the Fox News Channel highlighted our investigation that Illinois circumvented its own procurement law and implemented Obamacare with up to $190 million of no-bid IT contracts and "extensions." The primary vendor to Illinois was just terminated in Louisiana and is now subject of federal criminal investigation. In fact, a key Obamacare advisor to Illinois and other states, James Gorman, may have a significant conflict of interest in this case.

James Gorman is a key Obamacare advisor in CMS — Center for Medicare & Medicaid Services — to the states. Gorman founded and sold HWT Services, now a subsidiary of OptimumInsight and United Healthcare. Gorman lends advice, crafts plans and is part of a team that provides federal funding to the states. States like Illinois are awarding no-bid contracts and contract extensions to the very company who purchased Gorman’s original company. requested Gorman’s federal financial disclosures and was rejected. The Openness, Transparency and Accountability Group of Central Medicare & Medicaid Services (CMS) said "Yes, we have 36 pages of information, but no, we won’t show you." This from an administration that crows about being transparent as it stonewalls watchdogs.

Why does a top "gatekeeper" for billions in ObamaCare MMIS contracts have financial connections to contractors he is responsible for vetting?

National Review’s subsequent follow-on investigation with our whistleblowers turned up hard evidence that vendors gave Illinois executives Cuban cigars, wine baskets, and solicited with open-bar Boston Harbor boat cruises, and Bollywood performers. Magically, the vendors received contracts outside of a procurement process.

In a another contract case, Illinois Governor Pat Quinn attempted to use two Healthcare and Family Services Directors, Julie Hamos and Kelly Jakebek, to badger the Huffington Post into removing our articles exposing contracting irregularities in Illinois, a strong-arming effort that HuffPo resisted. These columns highlight Cognizant Technology Solutions, Inc. and their recruiting efforts in India. The contract allows expensive billing of up to a quarter million dollars per position per year for up to 100 H-1B visa IT workers.

Various commentators have begun using the term "the Chicago Way" or "the Illinois Way" to describe the Obama administration’s behavior. With the failed rollout of Obamacare, we see the costs of rewarding political insiders and their substandard IT companies with plum projects. Being from Illinois, we’ve seen this all before. Barack Obama has merely let the cancer metastasize to the federal level.

Adam Andrzejewski is the Founder of and a former 2010 candidate for Governor of Illinois

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