CMS awarded $58M to Healthcare.gov firm it already fired

(Photo by Jon Elswick/AP)
(Photo by Jon Elswick/AP)

The Obama administration has awarded a contract extension to a Healthcare.gov vendor, months after federal health officials had selected another firm to replace it.

According to a posting on the main federal contracting Web site Thursday, the Centers for Medicare and Medicaid Services and Verizon Terremark signed a contract extension in late January for cloud computing services, even though the federal agency overseeing HealthCare.gov had already selected HP Enterprise Services last July to take over the work.

A Terremark data center infamously suffered a couple of outages in late October that knocked Healthcare.gov offline for hours, including once at the very moment Health and Human Services Secretary Kathleen Sebelius was testifying before Congress about troubles with the enrollment Web site.

The original Terremark contract was supposed to expire this month, but CMS is keeping the company on the payroll for at least four months to aid the transition to HP. The follow-on contract with Terremark includes options that could extend the work an additional three months, which would bring its total value to $58 million.

“CMS is undertaking the necessary activities to transition the data center over to HP,” said CMS spokesman Aaron Albright in an emailed statement. “As such, we extended Terremark’s contract term in order to ensure a successful transition between the two contractors. HP and Terremark will work together so that the site runs smoothly for consumers during the remaining weeks of open enrollment.”

The contract justification said some of the transition work, after some delays, didn't get started until December and January.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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