I’m shocked…shocked that CMS went over budget!  The Health and Human Services Inspector General’s (HHS-IG) office released a report last Tuesday, August 26, that shows the Center for Medicare and Medicaid Services (CMS), the agency that is overseeing the implementation and operation of Healthcare.gov, went over its budget for developing the on-line marketplace.  The IG office states, “This report is the first in a series that will address the planning, acquisition, management, and performance oversight of Federal Marketplace contracts, as well as various aspects of Federal Marketplace operations…”

Specifically, the HHS-IG reviewed 60 contracts that contributed to the development and operation of the federal on-line marketplace, Healthcare.gov.  The IG found that at the time of the award to the contractors, the original estimate of the 60 contracts totaled $1.7 billion.  The contracts ranged in price from $69,195 to over $200 million. Of the 60 contracts, 20 had amounts obligated through February 2014 that had exceeded the estimated value of the contract.  For seven of these contracts, the obligated amounts exceeded the expected cost by 100 percent.  In other words, one-third of the contracts were over budget by February 2014.

The IG writes about the different types of contracts involved and breaks down the data in charts.  In developing the federal marketplace, HHS chose primarily from two broad categories of contract types.  These are fixed-price and cost-reimbursement.  The fixed-price is a firm contract in which the contractor provides the service and the price is not subject to any adjustment.  There is a maximum the government must pay so the contractor assumes the risk for any over-runs.  In the cost-reimbursement contract, the contract states the amount of costs allowed.  The federal government assumes the risk for cost over-runs.  These categories can be furthered broken down into other groups such as cost plus-award-fee and a time-and-materials contract.

According to the IG, 26 were firm-fixed-price contracts, 13 time-and-material contracts, 9 cost-plus-fixed fee contracts, 6 cost-plus-award contracts, and 6 contracts that are a combination of the different types.

The IG provides data in two charts.  One breaks down the amounts by the type of contract that was utilized.  The other chart provides the data for each of the 60 contracts and descriptive information of what the contractor was supposed to provide.

The IG doesn’t give any specific recommendations but provides an overview of the characteristics of the contracts involved in order to be an “informational resource.”  More in-depth audits will be forthcoming but clearly the contracts, which puts the government at risk, are the ones that put the taxpayer at risk.  The IG says, “The troubled launch of the Federal Marketplace on October 1, 2013, raised serious concerns about the Department’s management and oversight of the project, including the selection and oversight of the many contractors that played a role in the development and operation of the Federal Marketplace.”  No kidding.

But, when it comes to OPM (other people’s money) being put at risk and no consequences for poor management by government bureaucrats, taxpayers should be prepared for even more disturbing fiscal news when it comes to Obamacare.