The Centers for Medicare and Medicaid Services (CMS) failed to follow regulations governing contracting management and oversight for at least 20 critical contracts related to the construction of the federal Obamacare website, Healthcare.gov, according to an audit by the Health and Human Services Office of Inspector General (HHS OIG).

The audit focused on 20 contracts worth over $605 million that were deemed “critical to the development, implementation, and operation” of Healthcare.gov.

The report concluded that in many cases, government officials failed to properly manage and conduct oversight over contracts. One reason for this was many officials had not received “Level-III certification” which the agency required of any employee that handled contracts over $10 million:

“Not all contracting officer’s representatives who managed contracts valued at $10 million or more had obtained Level-III certification.”

According to the report, CMS employees will not be fully certified until October 1, 2016.

As a result of inadequate training, officials failed to prepare contractor past performance evaluations as required by federal law, failed to authorize specific details of contracts in writing, and inadvertently created significant delays and performance issues. In one case, an unauthorized employee added work to a contract, which resulted in a $28 million cost overrun.

The poor management and oversight of contracts was a contributing factor in the disastrous performance of Healthcare.gov when it launched in 2013. In fact, a Government Accountability Office (GAO) report released in July 2014 concluded that CMS did not have “effective planning or oversight practices” over the project, despite billions of dollars of taxpayer money being spent.

CMS’s failure to competently complete the federal Obamacare website is still being felt by taxpayers today:

  • An August 10, 2015 report by HHS OIG found that Healthcare.gov is failing to verify applicant’s Social Security numbers, citizenship, and household income in order to properly distribute tax credits.


  • A July 16, 2015 audit released by GAO found that 11 of 12 test fake applicants received coverage for the entire 2014 coverage period despite many using fraudulent documents, and others providing no documentation at all. From these 11 test applicants alone, erroneously Healthcare.gov paid $30,000 in tax credits.


  • A June 16, 2015 report released by HHS OIG found that $2.8 billion worth of subsidies and payments had been made in 2014 without verification.


  • A May 11, 2015 report by the Treasury Inspector General for Tax Administration (TIGTA) found that the IRS was failing to verify whether individuals had even bought health insurance before distributing tax credits.


In the most recent audit, HHS OIG issued a series of recommendations to improve management and oversight of contracts, including that CMS “comply with federal regulations and contract terms.” The agency agreed with these recommendations.