By Jeff Manning
Amid all the talk of investigating the Cover Oregon health insurance exchange debacle, The Oregonian has learned the federal government already conducted a review – and it’s an eye-opener.
A Feb. 27 review of the project by a federal IT SWAT team found that Oracle Corp., the project’s main information technology vendor, has refused numerous requests from Cover Oregon for basic information about the system it is paying for. The report indicates Oracle may have boosted billings by “throwing bodies rather than skillset” at problems.
Meanwhile, despite months of criticism of poor management, which led to top-level personnel changes, Cover Oregon still hasn’t fixed its oversight and remains largely impotent when it comes to holding Oracle accountable, the report said.
The report is significant in part because of the agency that issued it: the Centers for Medicare and Medicaid Services, which gave Oregon $305 million in grants to build its health exchange. The report is also significant because it provides an independent and relatively up-to-date snapshot of what’s gone on behind the scenes, providing clarity where officials’ public statements have been cryptic and contradictory.
The picture is not reassuring.
The report, which officials for the state and the exchange have never mentioned publicly, blasts Oracle for lousy work and the exchange for its equally subpar management. Because of the nebulous terms of Cover Oregon’s contract with Oracle, it has little ability to hold the IT giant accountable and oftentimes doesn’t know what its contractor is doing, the report said. It also endorses the state’s efforts to dump Oracle, saying “it is highly recommended to further identify a more appropriate” IT vendor.
“There is no visibility by (Cover Oregon) into (Oracle’s) activities,” the report said. “Therefore, there is a substantial dependency on (Oracle) for almost everything that is time sensitive.”
Oracle declined to comment. Cover Oregon spokesman Michael Cox said the report's information is dated and that the exchange has addressed its findings: "There really weren't any surprises," he added. "The report speaks to the status of where we were in January."
But the report has surfaced as state officials are sounding more pessimistic about
When the news first hit in late February that 100 Oracle programmers were leaving the Cover Oregon project, exchange officials portrayed it as good news: The team had made significant progress over the winter, the site was nearly complete and Cover Oregon could afford to downsize its team, they said.
The optimism was short-lived.
The experience of insurance agents and other consumer assisters, who gained access to the exchange last month, was disquieting. After decent early results, users began receiving an increasing number of error messages and other problems. It was bad enough that Cover Oregon officials decided there was no way they could give access to the general public.
For months, officials have hoped they would be able to the make the exchange accessible to the public before the end of the insurance open-enrollment period March 31. Now, it’s all but certain that won’t happen, state officials said..
On top of that, the exchange is parting ways with Oracle. It must decide whether to plow ahead with a new lead contractor or finally give up on the snake-bit project and move to the federal exchange or another state’s.
The report offers a withering critique of both Oracle and Cover Oregon, the public corporation formed by the state to manage the exchange. It paints a picture of a customer-contractor relationship turned on its head in which the contractor routinely refused the customers’ basic requests:
** Oracle has repeatedly failed to turn over reports requested by Cover Oregon covering programming changes, system performance, testing and more.
** Oracle’s work has shown “an overall lack of timeliness and quality.”
** Oracle has failed to cooperate with other contractors, and refused to report to Cover Oregon on its progress.
** The system’s architecture is flawed, leading to slow functioning and poor performance for consumers, and large portions “require major redesign or removal."
** Cover Oregon’s process for correcting bugs has led to defects resurfacing after they were thought to be corrected.
** The exchange software-development environment is not stable, “affecting testing, development and activities.”
** Cover Oregon still lacks a true project manager with authority to track Oracle and hold the company accountable.
** Cover Oregon remains excessively dependent on Oracle for system design and implementation, and many Oracle staff “do not have extensive knowledge and experience.”
The new report was largely based on a mid-January site visit. It was delivered Feb. 27, a day after a high-level Oracle contingent, led by company President and Chief Financial Officer Safra Catz, met with Gov. John Kitzhaber and his staffers. It wasn’t a goodwill mission. Catz threatened to move the entire Oracle team off the project if the exchange didn’t pay up some of the $69 million the company claimed it was owed for work performed since last fall.
Oregon had stopped paying Oracle in September, blaming the exchange’s problems on the company’s poor work and missed deadlines. Exchange officials said it expected the company to work as long as it took to produce a functional exchange.
Catz informed the Governor the arrangement was no longer acceptable to Oracle.
The company then negotiated for the ensuing two days with lawyers from Markowitz Herbold Glade & Mehlhaf, the Portland law firm representing the state in this dispute. The exchange agreed to pay Oracle $43.5 million. It withheld another $25.5 million and reserved its right to litigate and try to recover any or all of the $160 million Oracle has been paid or claims it is still owed.
So who could realistically take over the project in Oracle’s absence? That’s still unknown.
The exchange hired consulting giant Deloitte to conduct an “alternatives analysis.” That report is now done and is being evaluated by a committee made up of Cover Oregon board members and private-sector IT experts.
- Jeff Manning and Nick Budnick