text: “Now, this is real simple,” President Obama told a crowd at Prince George’s Community College, in Maryland, in late September. “It’s a Website where you can compare and purchase affordable health-insurance plans, side by side, the same way you shop for a plane ticket on Kayak … same way you shop for a TV on Amazon. You just go on, and you start looking, and here are all the options.” 
   
   As we all now know, the bug-infested Website healthcare.gov turned out to be anything but “real simple.” After the site’s disastrous October 1 launch, the administration organized a frantic rescue effort shepherded by Jeffrey Zients, who is to become Obama’s chief economic adviser in January, and on December 17, the administration tapped Microsoft executive Kurt DelBene to lead the effort to build out the rest of the Website. The site is working better (but as of this writing still not perfectly) for consumers, though the complications it has unleashed for President Obama will be even harder to fix. The New York Times called the broken Website a “crisis that suddenly threatened his presidency,” and according to a CBS News poll, Obama’s job-approval rating has plunged to an all-time low. Americans’ approval of the Affordable Care Act has also dropped to its lowest level since CBS News began polling support for the law. 
   
   The story of how the Obama administration and the Centers for Medicare and Medicaid Services (CMS), the agencies tasked with implementing the Affordable Care Act got it so wrong is still unfolding. Much of the blame has to fall on an insular White House that didn’t want to hear about problems, and another chunk has to land on CMS, which instead of hiring a systems integrator, whose job it would have been to ensure that all the processes feeding into healthcare.gov worked together, kept that role for itself. As anyone who has worked with the federal government on such projects knows, it is utterly inept when it comes to technology. “The government continues to struggle with how best to acquire the expertise to integrate technology,” says Stan Soloway, the C.E.O. of the Professional Services Council, which represents contractors who work with the government. Soloway has a scary stat, which is that of the 80,000 information-technology workers in the federal government, for every one person under 30, there are 10 people over 50. 
   
   That lack of expertise explains why in building healthcare.gov, the government turned to industry contractors; in particular, to CGI Federal, a subsidiary of CGI Group, a Canadian company. To those uninitiated in the dark art of government contracting, it seems scandalous that CGI, a company most Americans had never heard of, a company that is not located in Silicon Valley (where President Obama has plenty of Internet superstar friends who could have formed a dazzling brain trust to implement his signature legislation) but rather in Montreal, could be chosen as the lead contractor for the administration’s most important initiative. While right-wing news outlets have focused on the possible relationship between Toni Townes-Whitley, senior vice president for civilian-agency programs at CGI Federal, and Michelle Obama, both of whom were 1985 Princeton graduates, CGI’s selection is probably more an example of a dysfunctional system than it is a scandal. “A lot of the companies in Silicon Valley don’t do business with the government at that level [the level required for federal contracting],” explains Soloway. “It is very burdensome, and the rules make it very unattractive.” Indeed, government contractors have to meet a whole host of requirements contained in a foot-thick book, including cost accounting and excessive auditing, to prove that they are not profiting too much off the American taxpayer. Hence, there tends to be a relatively small, specialized group of companies that compete for this work, even on such critical matters as healthcare.gov. 
   
   In this context, the selection of CGI, which has had a long relationship with the U.S. government through the companies it has acquired—among other projects, CGI also ran recovery.gov, the Website for all data related to the Recovery Act—doesn’t seem so odd. Back in 2007, CGI was one of 16 companies given an umbrella contract to do unspecified systems work for CMS. These so-called indefinite-delivery/indefinite-quantity, or ID/IQ, contracts exist throughout the federal government. Companies compete to be on the list, and then when a specific task arises, they compete again to be awarded that task; but because the list of competitors is predetermined, the process is shorter. When the Obama administration selected a main contractor for healthcare.gov, they decided to use the prequalified contractors, rather than starting afresh, in order to save time, according to Bloomberg. CGI was chosen as the lead contractor for the Website over three other bidders: IBM, QSSI, and Computer Sciences Corporation. According to congressional testimony, CGI stands to be paid $292 million for its work on healthcare.gov. 
   
   CGI’s lack of visibility before healthcare.gov wasn’t a reflection of the size of the company or how much work it does. With a market value of roughly $11.6 billion, CGI, after the decline of BlackBerry maker RIM, boasts of being Canada’s biggest technology company. (All figures in this story are in Canadian dollars; one U.S. dollar is worth about 1.07 Canadian dollars at the present time.) In truth, companies like CGI are more body shops than true technology companies, and the projects they take on require a lot of grunt work by a lot of low-level employees. CGI employs almost 70,000 people, who are embedded in businesses and governments around the globe. Its U.S. clients have included the military, the F.B.I., Pennsylvania’s Medicaid Medical Assistance program, and at least 40 state governments. 
   
   CGI is short for Conseillers en Gestion et Informatique, or Consultants to Government and Industry. It was founded back in 1976 by two Québécois, Serge Godin and Andre Imbeau. The publicity-shy Godin, now 63 and still active as the company’s chairman, became a billionaire this year, according to Slate, which called him a “classic tortoise” who had built his fortune with a “reliable, and more patient, business strategy than stumbling on the right tech at the right time.” He’s received numerous awards and honorary titles, including being inducted into the Canadian Business Hall of Fame, and he is a major owner of harness-racing horses. His daughter, Julie Godin, is the company’s executive in charge of human relations, and her father’s presumptive heir. 
   
   CGI has been a big stock-market success. According to the Canadian newspaper Globe and Mail, CGI’s stock has risen an average of 25 percent annually for the last 25 years. At its peak in November, the stock was up almost 70 percent in 2013, and the problems of healthcare.gov seemed to be having no discernible impact. Slate said that that’s because healthcare.gov is such a small part of its business. At any rate, CGI just reported revenues of $10.1 billion in its fiscal year ended in September 2013, up more than 100 percent from a year ago. 
   
   Even before healthcare.gov, CGI was embroiled in its share of controversy about its work, from problems with Ontario’s online medical registry to difficulties with the Department of Taxation’s collection system in Hawaii. As CGI worked on healthcare.gov, government officials were frustrated with the company for missing deadlines, and Michelle Snyder, CMS’s chief operating officer, told colleagues, “If we could fire them, we would,” according to The New York Times. Both Marilyn Tavenner, CMS administrator, and Kathleen Sebelius, the secretary of Health and Human Services, testified in congressional hearings that CGI didn’t meet expectations. A CGI spokesperson says, “as a matter of policy, we do not discuss the specifics of our ongoing client projects.” 
   
   On Wall Street, there’s an entirely different sort of controversy brewing about CGI. Several smart investors—including well-known short-seller Jim Chanos, who runs Kynikos Associates—are betting against CGI, or shorting its shares, not because of the quality of its work but because of questions about its earnings. In September, Deutsche Bank analyst Bryan Keane downgraded CGI to a rare “sell” rating, citing quality-of-earnings questions. What he and others point out is that a number of questionable accounting tactics could be creating the illusion that CGI’s business is far more successful than it actually is. After the news broke in Newsweek that Chanos was shorting CGI, its stock fell more than 12 percent, although it’s begun to climb again. 
   
   CGI is what’s known as a “roll-up,” meaning that it was built by acquiring other businesses, or rolling them up. Indeed, since its founding in 1976, CGI has acquired more than 70 businesses. (“Please stand up if you’ve ever been acquired,” Godin asked a crowd at a company gathering last February, according to the Globe and Mail. Almost everyone in the room stood up.) In the U.S., CGI built its business with the 2004 purchase of American Management Systems, based in Arlington, Virginia, and the $1.1 billion 2010 purchase of Stanley Inc., another Arlington, Virginia–based company. Stanley’s biggest customer was the U.S. Army, and the Stanley deal, according to Cormark Securities analyst Richard Tse, was instrumental in entrenching CGI with the government. “They are quite embedded,” he told the Globe and Mail. “Stanley was an entity that was really effectively managing many of the back-office systems for government and military.” Most recently, CGI bought Logica, a management-consultancy company headquartered in the United Kingdom. ||||| CGI Federal, the company responsible for building the problem-plagued Web site for the Affordable Care Act, won the job because of what federal officials deemed a “technically superior” proposal, according to government documents and people familiar with the decision. 
   
   Not considered in the 2011 selection process was the history of numerous executives at CGI Federal, who had come from another company that had mishandled at least 20 other government ­information technology projects more than a decade ago. But federal officials were not required to examine that long-term track record, which included a highly publicized failure to automate retirement benefits for millions of federal workers. 
   
   By 2011, CGI Federal already had been cleared to do government work at the Centers for Medicare and Medicaid Services (CMS), the agency overseeing the rollout of the new health-care law. 
   
   The company had been included in a pool of pre-screened, approved contractors in 2007, during the George W. Bush administration, and only firms in that pool were later allowed to bid for the Affordable Care Act work. It was at that earlier time that the problems at American Management Systems, the Fairfax County IT contractor acquired by CGI, would have figured into the assessment of CGI Federal, contracting experts say. 
   
   In hindsight, one former CMS official said, the AMS record “could well have knocked [CGI Federal] out of the competition, and probably should have.” 
   
   View Graphic A look at the consumer's route through the HealthCare.gov website and the potential failure points. 
   
   In light of the bungled launch of the health-care Web site, critics have repeatedly asked how CGI Federal got the contract, and there has been widespread speculation on online news sites and blogs that the firm was selected because of political ties to the Obama administration. 
   
   But a review of internal documents and interviews with former and current federal officials show that the selection process was walled off from politics. 
   
   Career officials at CMS, working out of an obscure Baltimore-based contracting office, focused in 2011 on the proposals submitted by four bidders, examining technical competency and cost while giving relatively little attention to past performance. Since 2007, CGI Federal had won 17 other CMS jobs under the pre-screened contract, worth several hundred million dollars. 
   
   The review of CGI Federal concluded there was “no evidence of performance risk,” according to a CMS document, portions of which were read to The Washington Post by a person familiar with the contracting process. 
   
   CGI Federal won the $93 million contract, now worth $293 million, in September 2011. 
   
   At the time of the earlier selection process in 2007, CGI Federal was still relatively new to federal contracting. It had grown out of CGI Group’s acquisition in 2004 of AMS, which had a recent history of troubled projects, including a Philadelphia school computer system that sent paychecks to dead people and a Mississippi tax system so dysfunctional that a jury awarded a $474 million verdict against the firm. 
   
   Three former CMS officials said in recent interviews that the AMS problems should have raised red flags. 
   
   “Should CMS have recognized that ‘Okay, here’s CGI Federal. It’s a new company, but, oh, my God, it looks a lot like the AMS from yesterday’?” asked one former CMS official familiar with the contracting process who like others interviewed for this article spoke on the condition of anonymity to discuss internal procedures. “Yes. I would consider that dropping the ball.’’ 
   
   Tasha Bradley, a CMS spokeswoman, said in a statement that the agency “adheres by a long- 
   
   established contracting process where expert, career contracting officials evaluate and award contracts based on criteria outlined in the contract solicitation, including past performance, technical expertise and proposed contract value.” 
   
   CMS declined to comment on specific questions about how closely CGI Federal’s past performance was evaluated and whether that review looked at AMS. 
   
   Former AMS executives have defended that company’s performance, and CGI officials have rejected any comparison with AMS’s earlier failures. 
   
   CGI Federal has also defended its work on HealthCare.gov, despite an October launch that White House officials have acknowledged was disastrous. Federal officials have faulted the company’s performance, saying it missed deadlines, understaffed the job and overstated its progress. 
   
   People familiar with the project have said it was also hampered by administration mismanagement, fierce Republican opposition and political sensitivities that delayed policy and regulatory decisions. 
   
   The federal online marketplace that is selling health plans in 36 states under the 2010 health-care law has been functioning better in recent weeks, but officials are still working to fix lingering problems, including errors in enrollment records sent to insurance companies. CGI Federal remains intimately involved in the project, writing computer code in attempts to fix various aspects of the system. 
   
   Linda Odorisio, CGI’s vice president for global communications, said the company “continues to work closely with CMS and all of its vendor partners to deliver continuous enhancements in system performance and the user experience” on the Web site. 
   
   She added that CGI Federal “contributed to the significant improvements made to the system over the last two months, resulting in more than half a million Americans enrolling in just the first three weeks of December.” 
   
   Umbrella contract 
   
   In December 2006, CMS put out a request for proposals. The agency said it was seeking “world-class IT services” to improve and maintain the massive systems that run Medicare and Medicaid, according to contracting documents. Thirty-one bidders responded, including CGI Federal. 
   
   CMS used a procurement method that has become increasingly common over the past decade. The agency first awarded an umbrella contract to a group of firms, and those firms were then eligible to bid on future IT work. Experts say this saves the government time because it shortens the subsequent bid process. 
   
   In evaluating the bids, CMS was to scrutinize each company’s performance on previous contracts, according to an internal agency document obtained by The Post. The document described a “risk assessment” of cost control, on-time delivery and other factors. 
   
   Federal law requires that past performance be considered for all federal contracts worth more than $150,000, with limited exceptions. Federal regulations also say CMS should have considered the record of “predecessor companies,” such as AMS. Several former officials familiar with the 2007 selection said no concerns about CGI Federal were raised inside the agency. 
   
   AMS projects had run into trouble at the federal level and in at least 12 states, according to government audit reports, interviews and news accounts. The purchase of AMS was CGI’s entree into the U.S. government market, and AMS executives flocked to CGI Federal. Today, more than 100 former AMS employees are senior executives or consultants working for CGI in the Washington area. 
   
   One former CMS official said the agency especially should have examined the most publicized AMS failure, an effort to automate retirement benefits for millions of federal workers. AMS was fired in 2001 by the Federal Retirement Thrift Investment Board after going $60 million over budget, writing computer code that turned out to be useless and never delivering a workable system, according to government reports. 
   
   AMS had settled lawsuits arising from the project in 2003. “That should have stood out,’’ the former official said. 
   
   CGI Federal was ultimately chosen for an umbrella contract, worth up to $4 billion in future work, along with 15 other firms, including Lockheed Martin and IBM. 
   
   While it is unclear whether agency officials examined the AMS track record, former CMS officials said it probably would not have made much difference, because past performance has long been an overlooked component of federal contracting. 
   
   Deadline pressure 
   
   In the summer of 2011, the Obama administration was racing to figure out who would build the Affordable Care Act’s all-important Web site. “Time is of the essence,” said an internal CMS draft request for proposals, dated June 24, 2011. 
   
   With deadlines looming, officials limited the bidders to the winners of the 2007 umbrella contract. “There was very great time pressure,” recalled a former CMS official familiar with the process. “The feeling was we had a lot of big IT powerhouses and they knew our work.’’ 
   
   Four firms applied: IBM, Computer Sciences Corp., Quality Software Services and CGI Federal. 
   
   As is tradition, the selection process was strictly sheltered from political considerations and political appointees at CMS or elsewhere in the administration, according to numerous former and current CMS employees. 
   
   “I deliberately stayed out of contracting,’’ said Leslie Norwalk, the agency’s acting administrator under President George W. Bush. “If that had changed, I would have heard rumblings.’’ 
   
   Agency documents show that a career contracting officer, in the CMS Office of Acquisition and Grants Management, was in charge of awarding the contract for the Web site. The selection process focused on bidders’ business and technical proposals, which described the proposed cost, hardware and software required, proposed infrastructure design, security requirements, and key personnel. 
   
   The companies’ past performance was not a priority. The CMS document listed it as the second least important of seven technical evaluation factors. And the review would look only at past work under the 2007 umbrella contract, the document said. 
   
   While the review found no performance risk for CGI Federal, agency officials had not always been satisfied with the company’s work. In 2010, CMS rejected CGI Federal’s bid under the umbrella contract to perform work on four health IT systems, in part citing unspecified performance issues in carrying out an earlier contract, according to a Government Accountability Office ruling. CGI Federal protested the CMS decision, but the GAO upheld it. 
   
   And the review did not take into account problems that several other CGI projects had encountered, including years of delay and system failures on a state computer system in Hawaii. State auditors in 2010 partially faulted another CGI subsidiary, CGI Technologies and Solutions, for those issues. 
   
   CGI says its overall work is high-quality and nearly always on time and on budget, and the company has also had many successes. In the past two years, CGI Federal has been awarded contracts with at least 25 federal agencies. 
   
   Documents and interviews show that CGI Federal was selected because of what was deemed to be the company’s technical prowess, even though the price of the firm’s proposal was higher than that of at least of one competitor.
target: – It turns out there were even more reasons the Centers for Medicare and Medicaid Services shouldn't have picked the free-wheeling and allegedly shady CGI Federal to build HealthCare.gov. When CGI was vetted back in 2007, it didn't have any obvious black marks on its record, the Washington Post explains. But CGI is a "roll-up" company formed by acquiring other companies—one of which, American Management Systems, was one giant black mark. AMS projects have hit trouble in at least 12 states as well as at the federal level, including a much-publicized 2001 failure to automate federal retirement benefits. The company went $60 million over budget on that one, yet produced nothing useful. More than 100 AMS alumni are now CGI executives or consultants. "Should CMS have recognized that ‘OK, here’s CGI Federal. It’s a new company, but, oh, my God, it looks a lot like the AMS from yesterday’?" asked one ex-CMS official. "Yes. I would consider that dropping the ball." But it didn't come up in 2007, and CMS never re-vetted the company, the Post's review of internal documents reveals. On the bright side, the review also reveals that the decision was politics-free, made purely because officials considered CMS' bid "technically superior." Vanity Fair, meanwhile, has an in-depth piece today on what many suspect is an accounting scandal brewing at CGI. It looks a lot like the company is using its acquisitions to mask financial problems, a quasi-legal practice known as creating a "cookie jar."