Bloomberg News

Taxpayer-Funded Technology Flops Plague U.S. Government

November 20, 2013

Taxpayer-Funded Technology Flops Plague Air Force to Obamacare

The Healthcare.gov website is displayed on laptop computers arranged for a photograph in Washington, D.C., U.S., on Monday, Nov. 4, 2013. Photographer: Andrew Harrer/Bloomberg

Almost a decade before the Obamacare website’s failed debut, the Air Force began work on a project to replace 240 outdated networks with a single logistics system.

After spending about $1 billion, the program led by Computer Sciences Corp. (CSC:US) collapsed last year. Senators Carl Levin and John McCain described it as “one of the most egregious examples of mismanagement in recent memory.”

The list of federal information-technology lapses and flops includes systems to modernize air-traffic control and to secure the nation’s border, and now even President Barack Obama is wondering why the government can’t get it right.

“How we purchase technology in the federal government is cumbersome, complicated and outdated,” Obama said Nov. 14 at a press conference, remarks he echoed yesterday.

“You’re going through, you know, 40 pages of specs and this and that and the other and there’s all kinds of law involved,” he said Nov. 14. “And it makes it more difficult -- it’s part of the reason why, chronically, federal IT programs are over budget, behind schedule.”

What the Air Force and healthcare.gov systems had in common were unclear requirements, according to contracting and technology specialists. Projects from a border surveillance program to an FBI case-filing system also have failed because of late changes, a lack of oversight, cost overruns and an emphasis on deadlines rather than the flexibility to let big, complex projects evolve, they said.

‘Force’ Projects

“They try to force these IT projects through the same kind of process they use to buy desks and staples,” Chris Kemerer, a professor of information systems at the University of Pittsburgh, said in an interview. “The problem is, IT systems are never completely off-the-shelf.”

The health-insurance website didn’t get exhaustive testing and had undergone late changes before it was unveiled Oct. 1 to a public that found it difficult to use. Its initial failure gave ammunition to critics of the Affordable Care Act, the law that set up what critics and supporters alike call Obamacare.

Units of CGI Group Inc. and UnitedHealth Group Inc. (UNH:US), both behind the design of healthcare.gov, told lawmakers the government was responsible for testing that should have been done months earlier.

CGI said it got late instructions from the government to make changes to the site. The agency responsible for the website didn’t give CGI final technical requirements until May, according to one person familiar with the project. About a third of the work the contractor had previously performed had to be thrown out and started over as a result, the person said.

Big Contractors

Marilyn Tavenner, who heads the Health and Human Services Department’s Centers for Medicare and Medicaid Services, cited “some issues with on-time delivery” by Montreal-based CGI.

Contractors and federal agencies frequently don’t communicate well about the scope of government projects, said Mark Amtower, who runs a consulting firm in Clarksville, Maryland. He compared the process to a game of telephone, in which messages get increasingly garbled as they pass through different people.

In addition, agency officials typically aren’t willing to take a chance on lesser-known companies that might do a better job, he said.

“Nobody ever gets fired for buying IBM,” Amtower said in a phone interview. “And nobody gets fired for buying Northrop Grumman (NOC:US), Lockheed (LMT:US), General Dynamics or any of the other top contractors.”

Taxpayer Dollars

Big technology failures aren’t limited to the federal government. Large projects are typically handled by multiple companies, or multiple groups within a company, Michael Cusumano, a professor of management and engineering systems at the MIT Sloan School of Management in Cambridge, Massachusetts, said in an interview. In troubled projects, workers make changes that aren’t adequately coordinated, he said.

“They make changes in an attempt to improve what you’re building,” Cusumano said. “Inevitably, they don’t sync up.” The result: two-thirds or more of large IT projects are late or over budget, he said.

Unlike private industry, though, federal agencies are wasting billions of dollars in taxpayer funds.

The U.S. government has spent more than $600 billion on information technology over the past decade, and “has achieved little of the productivity improvements that private industry has realized from IT,” the U.S. Government Accountability Office said in a July report.

Air Force System

The Air Force’s Expeditionary Combat Support System, for example, already had cost $1 billion, and the fixes would have cost about the same amount.

The network, which would have been used by 250,000 people, was intended to provide the service with a single, integrated logistics system for tracking transportation, supply, maintenance, repair, engineering and acquisition.

Computer Sciences (CSC:US), a Falls Church, Virginia-based contractor, served as the lead contractor and systems integrator. It was given extra time to develop an initial pilot project and was still unable to complete the task, according to a March report by the GAO.

“CSC developed and provided to the Air Force foundational capabilities and IT assets for implementing a logistics software system in the future,” Heather Williams, a company spokeswoman, said in an e-mail. “We believe that the progress we made, jointly with the Air Force, and the software we have delivered could be the foundation for the next effort to develop and deploy a logistics system for the Air Force.”

‘Nebulous Requirements’

The Air Force took some responsibility for the project’s demise. There was a lack of an adequate acquisition process to handle a complex program with “nebulous requirements,” Lieutenant General Charles Davis, the service’s top uniformed acquisition official, said in a January interview.

The Air Force system is among 15 information technology projects killed by the federal government since 2003, according to a list compiled by the GAO.

The casualties include a remake of the Federal Bureau of Investigation’s case-filing system that had poorly defined requirements and limited oversight. It ended in 2005 after three years and $170 million in spending.

An attempt to use surveillance technology to help secure the border also failed to deliver. Chicago-based Boeing Co. (BA:US) received about $1.3 billion for the work beginning in 2006, according to data compiled by Bloomberg Government.

‘Costly Rework’

The Department of Homeland Security didn’t properly oversee Boeing, the government’s No. 2 contractor, resulting in “costly rework” and contributing to the program’s “history of not delivering promised capabilities and benefits on time and within budget,” according to a 2010 GAO report.

At the Federal Aviation Administration, a $438 million replacement of air-traffic computers went over budget and risked being delayed in part because the agency didn’t complete technical requirements or follow its own rules for setting completion schedules, an auditor found in May.

In 2003, a database with initial funding of $36.8 million debuted to track foreign students with visas, according to the Justice Department’s inspector general.

Schools reported that the system frequently lost data, and immigration forms needed at one school would print out elsewhere.

Some students were barred from entering the U.S. because of problems with the system, said Mark Forman, chief executive officer of Government Transaction Services LLC, a technology company based in Vienna, Virginia.

‘Fearful’ Vendors

“It was such a big disaster,” said Forman, who served under former President George W. Bush in a position now known as the U.S. chief information officer.

A government official told a House subcommittee in 2003 that the student tracking system was developed and deployed under an aggressive schedule.

The main contractor, Electronic Data Systems Corp., bought by Hewlett-Packard Co. (HPQ:US) for $13.2 billion in 2008, said it knew the system wasn’t properly set up and needed to be fixed before its debut, Forman said. The government didn’t listen, he said.

“The government has told a lot of these contractors so many times that ‘We don’t want to hear what you think, we need you to do what we told you to do and make it work,’” he said. “A lot of the vendors are either fearful, or believe there is no point in telling the government how to do it right.”

To contact the reporters on this story: Kathleen Miller in Washington at kmiller01@bloomberg.net; Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net


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Companies Mentioned

  • CSC
    (Computer Sciences Corp)
    • $59.79 USD
    • -0.19
    • -0.32%
  • UNH
    (UnitedHealth Group Inc)
    • $86.68 USD
    • 0.34
    • 0.39%
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