When the state signed a $36 million contract with tech giant CGI last week, the Shumlin administration said it took significant legal measures to hold the firm accountable for implementing the state’s new health insurance exchange.
The decision to contract with CGI comes after three major information technology projects went belly up or stalled this past year. One major reason some IT systems didn’t meet the state’s goals, said Richard Boes, commissioner of the Department of Information and Innovation, is that the contracts didn’t assign vendors appropriate levels of responsibility.
This time, officials say, it’s going to be different. So different, said state officials, that negotiations with one firm fell through when it wouldn’t take on the level of liability the state demanded. The administration has not disclosed the name of the firm for potential legal reasons.
“The previous vendor that we had been working with was unwilling to accept the state’s legal terms and conditions, which were really important to us considering the recent trouble we’ve had with IT vendors,” said Robin Lunge, Vermont’s director of Health Care Reform.
The state wants to make sure that federal dollars, which are funding 100 percent of the project, are protected by a firm that is willing to take on a high level of liability for the system it’s building, said Lunge.
“Hopefully we won’t have to sue a vendor,” she said. “But if we did, we would want to make sure we could recover federal taxpayers’ full cost.”
The state used a process called “piggy backing” to hire CGI. Vermont is one of 17 states implementing a state-run exchange, and state officials looked at existing contracts and bids in other states to find a vendor.
CGI is building the federal exchange and exchanges in Massachusetts, Colorado and Hawaii. What grabbed the Shumlin administration, said Lunge, was that the firm was already meeting the desired legal conditions in other states.
The other legal factor that comes into play with the CGI contract is punctuality, as the state is crunched for time to meet federal law.
“There are certain deadlines we’ll need to meet for the federal government, and we wanted to make sure that the vendor was held accountable to those deadlines. If they were to not produce on time, they would have to reduce their fee by a certain amount,” said Lunge. “The purpose of this is to not be punitive but to really provide a financial incentive to get the work done on time and keep it moving forward. It’s frequently used in contracts like this where time is of the essence.”
Some of the details regarding these financial disincentives must be ironed out this month.
Melissa Boudreault, CGI vice president of state health solutions, was meeting with Vermont official on Tuesday. She was one of the architects behind Massachusetts’ health care reform and 2006 implementation of the state’s exchange, called the Health Connector. She will help oversee the construction of Vermont’s exchange
As a former policy maker, she said, she’s very cognizant of the federal deadlines at play. While she didn’t make any promises, she said her team would do its best to deliver the state’s exchange on time.
One thing that will make her job easier, she said, is that the state is building its exchange on top of Oracle software that is widely used across the country.
“We’re going to put a wrapper around that,” said Boudreault.“We’re going to take advantage of what’s already in place and put tools and functionalities through the portal so the piece that will be visible to the public will sit on top of what’s already here.”
Every exchange CGI is building varies based on a given state’s demands and pre-existing IT infrastructure, but they all share commonalities called for by the Medicaid Information Technology Architecture, or MITA. This architecture establishes a framework for states and IT companies to configure medical IT infrastructure using off-the-shelf software.
Many of the IT solutions Vermont needs for its exchange already exist, said Boudreault. CGI is tasked with tailoring them to meet the needs of the Green Mountain State.
Clarification: Vermont is one of 17 states creating a state-based exchange, and the District of Columbia is also creating its own exchange.