As the scandal and complaints have unfolded around the roll out of HealthCare.gov, I’ve mostly stayed on the sidelines.
But I’ve noticed the misinformation, mistakes and mischaracterizations. Early on, CGI Federal became the poster child of everything that was wrong with the roll out and government contracting in general.
That struck me as very unfair. Over time, however, other contractors emerged as important players in developing HealthCare.gov so CGI wasn’t alone facing the firing squad.
I’ve wished that these companies would step forward and defend themselves and explain what went wrong and why, but the companies have remained silent, respecting a gag order placed on them by their customer, the Centers for Medicaid and Medicare Services.
CMS picks 'general contractor' to oversee HealthCare.gov fixes
But on Thursday, four of the major contractors working on HealthCare.gov – CGI, Quality Software Services Inc., Equifax Workforce Solutions and Serco Inc. – got their chance to speak, as they were the star witnesses at the House Energy and Commerce Committee hearing on the portal.
Now, I wasn’t there, but I’ve been reading and talking to people who were there, and one part of the testimony from the four executives really stands out to me.
In fact, I think it points to a problem much broader than HealthCare.gov and speaks volumes for why there are so many failed projects across the government.
These projects run aground because there is no sense of partnership or a team concept between the various contractors and their government customer. Each is playing an individual game and not a team sport.
IT is a team sport, and the ultimate goal is the customer’s success, not meeting the individual requirements, but making sure those requirements build toward real results.
This came into focus for me during the part of the hearing when the contractors talked about when they knew there were problems, and what they did about it.
When asked if they recommended to CMS that the launched be delayed, they said it wasn’t their place.
When asked why they didn’t warn the committee during a hearing in September that there hadn’t been any end-to-end testing, they said it wasn’t our area of responsibility, or words to that effect.
And there you have the problem. They sat on their hands and kept their mouths shut. Maybe their individual pieces were working, but they saw the whole wasn’t solid and yet they remained silent.
Too often, that seems to be the environment of government contracting. I don’t think it is unique to HealthCare.gov; it happens over and over, it just doesn’t make national news.
CMS was probably doing a horrible job as the systems integrator on the project, but these companies are part of the team, and if the project is failing, the teaming is failing. Shouldn’t everyone on the team be able to voice a concern? Shouldn’t that be second nature?
All of them own the failure, even if their individual piece was fine.
What worries me is that the current system encourages companies to act as individuals and not as teammates working in concert with your customers and other stakeholders.
Until we break the current culture and encourage more of a “we are all in this together” environment, we just are going to keep having these kinds of failures and shortcomings.
Frankly, we deserve better.
Posted on Oct 25, 2013 at 2:25 PM1 comments
The prevalence of lowest price, technically acceptable contracting is hard enough on incumbents and prime contractors, but it is worse for subcontractors.
That was one of the main takeaways I pulled from a panel discussion at an event on LPTA put on by Market Connections and Centurion Research Solutions.
The two companies worked together on a research project and survey looking at the impact of LPTA from both the contractor and government perspective. The survey results drove home the point that lowest price contracting is here to stay.
“It’s the world we live in,” said Lisa Dezzutti, president and CEO, of Market Connections.
The panel consisted of Deb Alderson, CEO of Sotera Defense Solutions, Michael Fischetti, executive director of the National Contract Management Association, George Obertubbesing, vice president of business development for Harris IT Services, and Ray Whitehead, vice president of business development and strategic planning, General Dynamics IT.
They voiced some familiar complaints about LPTA and government contracting in general, namely that the government is horrible at writing requirements. And without good requirements, LPTA is a risky proposition.
As the primes adjust to LPTA bidding, most are looking for ways to move more of the work in-house instead of relying on subcontracts.
Even if you are a subcontractor on a team, the pressure continues after the award.
Alderson related the story of how Sotera was a sub on a winning team, and “then the prime decided to compete all the billets,” she said. So, for each task order that went out, Sotera and three other subcontractors would have to propose how they could support the task.
The prime said that if they can’t respond in two days, they would do it themselves, she said.
“As a subcontractor you need to be more aggressive on the teaming and subcontracting agreements,” she said.
“There is definitely more pressure on subs,” Harris’ Obertubbesing said. “The primes have to keep their growth engines funded.”
GD’s Whitehead said he is always trying to strike a balance between what to keep in-house and when to use subcontractors.
The key, he said, is working with trusted subcontractors.
Whitehead talked about GD’s recent small business awards ceremony. A common thread that ran through the award winners was their ability to deliver great services at low prices.
“You need great talent, but you need to figure out how to deliver that at competitive prices,” he said.
Alderson said that’s she’s always look for subcontractors with strong technical skills and strong relationships with the target customer.
“You need to become that must-have sub,” she said.
Those comments really popped like a bright light for me because, here at Washington Technology, we are in the home stretch of finishing our second Insider Report exploring the prime-subcontractor relationship. It should be out next week.
The panelists’ comments echoed precisely what our research found.
In part of the study, we asked prime contractors to rank the importance of attributes such as technical expertise, teamwork, customer knowledge, industry perception and process.
We also asked them to rank the performance of the overall group of subcontractors and to rank their single best subcontractor.
The performance of the overall group consistently ranked below the value the primes placed on those attributes.
But the single best subcontractor performed better than the value the primes placed on the attributes.
To me, that reinforces the point the panelists were trying to make, and points toward an opportunity for subcontractors. If you want to survive in the current market, you can be a preferred partner if you focus on those key attributes, particularly technical expertise, teamwork and customer knowledge.
It doesn’t mean that the market will be easier; it’s a tough market and will continue to be.
As Harris’ Obertubbesing said, “This market is a little mindboggling.”
Posted on Oct 24, 2013 at 12:32 PM2 comments
If you know Donna Morea, and a lot of people in this market do, you didn’t really think that she was going to sit on the sidelines after retiring from CGI Group, did you?
In the two years since then, she’s served on corporate boards, including CGI’s, and has provided consulting and advisory services to companies looking to grow.
Now, she's looking for what she jokes will be her second job: running a health IT company.
Speaking as part of a panel Thursday at the annual federal mergers and acquisitions outlook conference produced by Morrison Foerster and Ernst & Young, Morea explained her strategy, and why she’s so hot on health IT.
“There are some fabulous opportunities in health IT and some very interesting opportunities that cross the government and commercial markets,” she said.
Morea retired from CGI in 2011 after a 31-year career with the company and American Management Systems, which CGI acquired in 2004. It’s pretty much the only place she ever worked. During her career, she ran the company’s state and local business, its federal business and finally oversaw the U.S., Europe and Asia operations. Her organization had 15,000 employees and $2.5 billion in annual revenue when she retired.
So, if Morea is going to describe what she sees as growth opportunities, it’s probably a good idea to listen.
According to Morea, health IT is a $90 billion market that is growing and likely to grow faster. Here’s why:
- Everyone’s getting older.
- Enrollment is up for Medicaid.
- Regulatory and cost factors are colliding, which will drive need for change.
Morea is high on portals for both enrolling patients and for managing patient care, but analytics will be critical as well.
“Analytics will drive the future of health care and how it is delivered,” she said.
The administrative side of health care, what she called “the big, messy, expensive backroom,” also will benefit greatly from data analytics, she said.
Companies that can reduce risk and improve the quality of information will win in the health IT market, Morea said.
While she declined to comment when I talked to her after her sessions, about who she’s working with to secure funding to make acquisitions, it’s obvious that she's very interested in companies serving in the state and local market.
“State and local governments don’t shutdown,” she joked.
But it is a large, fragmented market, and “there are so many things to fix,” she said.
The crossover appeal between state and local, federal and commercial also is strong because the three markets are interested in many of the same solutions around consolidating systems, cloud computing, cyber and portals, Morea said.
I haven’t covered much of the state and local market, so it was interesting to hear her describe the market and why it has been a challenge for federal contractors to expand into it. Many have tried, lured by the large dollars available in the market overall, but how they buy can differ greatly from state to state.
“There is no FAR,” she said, referring to the Federal Acquisition Regulation.
On the plus side, the work can have higher margins and customers are “stickier.”
“State and local can be xenophobic,” she said. “They like to buy from people they know.”
The best strategy is buying a company already there. That moves you up the learning curve,” she said. “It’s hard to do it on your own.”
Posted on Oct 18, 2013 at 7:02 AM2 comments