Lessons in Contract Management from HealthCare.gov
Launched in October 2013, HealthCare.gov is a healthcare exchange website created by and operated under the United States federal government. Completely disregarding the politics behind the website, it stands as an important case study in both project management and contract management.
Given the January 2014 news that the U.S. government has decided to end its contract with CGI Federal, the company behind HealthCare.gov, there is renewed interest in the contract management that took place for this project. In this article, we will take a look at the lessons in contract management from the healthcare exchange website.
Lesson 1: Size Matters
According to the Washington Post:
HealthCare.gov, built by 55 contractors, is one of the most complex pieces of software ever created for the federal government. It communicates in real time with at least 112 different computer systems across the country. In the first 10 days, it received 14.6 million unique visits, according to the Obama administration.
These stats are sure to instill fear in any project manager. Imagine trying keeping together all of the steps involved with just one of the contractors, now multiply that times fifty-five. The main takeaway is that size matters in contract management, and you need a professional contract management system to deal with a project of this magnitude.
There are two main reasons to use a contract management system with big projects like these. First, managers need to be able to connect from anywhere at anytime. Remember that is a system that serves several time zones, ranging from Hawaii to the East Coast, your contracts need to be accessible from several places at all times. Second, trying to untangle all the emails back and forths would be a nightmare without a system to manage them efficiently. A more refined approach would be to upload documents directly to a contract’s file library. There is no way that can happen with paper-based systems or lower-grade software.
Lesson 2: Email Exchanges Should Be Part of Contract Management
If you live by email, you’ll die by email, or at least that is what appears to have happened to CGI Federal, according to released email documents. Managers and decision-makers need to realize that emails are enforceable contracts and, as such, emails must be an integral part of the contract management lifecycle.
Particularly, when parties raise concerns about deadlines, budgets and KPIs outlined in contracts, managers should go back to the original contract clauses to assess the situation and the right course of action. According to the Washington Post, a final checklist before its October launch indicated that 41 out of 91 tasks that CGI was responsible for finishing were not complete.
In several email exchanges, CGI indicated that they were highly confident that they would finish those tasks. After the dust settled, several questions were raised:
- Were the CGI officials aware of the implications of their responses, according to the contract clauses?
- Did the CGI officials keep a consistent email and document history to prepare for a potential audit?
- Were there any red flags raised to the appropriate parties at CGI Federal as the company was falling behind its contractual promises?
Lesson 3: Contract Renewal Dates are Critical
While there is no doubt that CGI Federal was busy trying to complete the 91 tasks from their final launch checklist before the October 2013 launch, there is still the question of what was the company doing to prepare for the contract renewal date of February 2014.
The evidence appears to indicate that CGI Federal did not lay the proper groundwork to establish a smooth contract renewal. In fact, the situation seems to be so far out of control that the decision makers are considering contracting CGI Federal’s replacement on a sole-source basis and with just a 2-month transition period.
Managers should not forget the importance of renewal dates. Just like the incumbent contractor put so much effort into its initial pitch back in 2011, they should have put equal effort in preparing for the February 2014 review. What’s great about a contract management system is that it integrates those contract renewal tasks and assigns them to the appropriate parties as pre-requisite tasks are completed.
There are three important lessons from HealthCare.gov. First, a big project requires a contract management solution of an appropriate size. Second, email exchanges are an integral part of the contract management lifecycle, so they need to be incorporated into each contract. Also, email exchanges should be cross-checked against stipulated contract clauses. Finally, contract renewal dates are critical to the contract management process and need to be more visible through automated reminders and relevant tasks.
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