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8/11/2014
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Oracle Fires Back: Oregon Obamacare Exchange

In a lawsuit against the state, Oracle claims it is the victim of a smear campaign designed to obscure the state's project management failures.

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Tired of being a punching bag, Oracle Corp. is hitting back at the State of Oregon over claims that the software company and the contractors it provided were responsible for the failure of the state's health insurance exchange to produce a functioning self-service website.

According to the lawsuit filed Friday, the state has been using a smear campaign to deflect attention from its own project management failures -- particularly constantly changing, never-finalized requirements that sabotaged the software development process. In addition to suing for unpaid consulting and licensing fees, Oracle used the filing to defend its reputation. "When the press reported that the exchange was not accessible for consumer self-service on October 1, 2013, public officials chose not to give a measured, fully informed response," the filing says. "Cover Oregon and public officials could have done two things in the face of those press reports: (a) own up to the management and technical challenges they had encountered and commit to a plan for resolving them; or (b) blame someone else. They chose the latter, and they fixed their sights on Oracle."

Independent investigations have cited the state's excessive reliance on Oracle as the turnkey provider of software and consulting services for the insurance exchange as one of the underlying causes of project failure. The software infrastructure for the project included Oracle Policy Automation, Siebel CRM, as customized and combined through the Oracle Enterprise Architecture. However, the project's auditors also put a large share of blame on the state for the way it managed the project. One of the main points Oracle hammers home is that it never had either the authority or the responsibility to act as the system integrator on the project. Though Oracle was a major player in the project, it was not the only contractor or technology provider, and the accepted best practice would have been for all of them to report to an integrator that could have acted as the general contractor.

The state elected not to hire a system integrator, instead choosing to assign that responsibility to its own personnel -- whom Oracle says were not up to the challenge. Project oversight responsibilities were actually split among several state organizations -- and shifted partway through the project from the Oregon Health Authority to the Cover Oregon organization created to run the exchange -- adding further confusion.

[Long-distance healthcare: A cure for many ills? Read Telehealth Gains Momentum In Obamacare Era.]

"Without a fixed scope for the project -- the equivalent of architectural blueprints -- no contractor could reasonably be expected to agree to work on a fixed-fee basis," Oracle states. Only the state organizations "could resolve the uncertainties regarding the overall scope and structure of the massive project, and because only Cover Oregon and the state agencies could demand changes in the project, those entities properly bore the inherent risks associated with failing to resolve them in a timely way."

Oregon Gov. John A. Kitzhaber, MD, has called for the state to sue Oracle, alleging that sloppy work by its contractors was a major cause of the insurance exchange's downfall. However, an analysis of the legal issues by The Oregonian newspaper concluded that Oregon would face an uphill battle to make the charges stick in court. Oracle also notes that the state has yet to file a lawsuit, suggesting that Kitzhaber's bluster is mostly about politics and public relations.

An enthusiastic backer of the expansion of access to health insurance under the Affordable Care Act, Kitzhaber made Oregon one of the first states to commit to creating its own online health insurance exchange and set ambitious goals for the project. Yet even though several other states that built their own insurance websites also failed to live up to expectations, Oregon alone failed to process a single self-service application online (instead funneling all applications through intermediaries). The federal HealthCare.gov exchange also failed to perform adequately for months after open enrollment began in October 2013, but it recovered in early 2014 after an intensive rescue by a SWAT team of developers.

Oregon now plans to abandon the online system created by Oracle and rely primarily on HealthCare.gov to provide the health insurance exchange services for its residents when open enrollment resumes in November.

Oracle claims that it didn't have to be that way. "By February 2014, a health insurance exchange website existed that included the citizen self-service functionality," Oracle's filing claims. "Cover Oregon did not disclose that information to the public and did not open the working self-service portal for individuals, for unexplained reasons of its own." State officials have said the software was still too buggy for public release and never rose to an acceptable level of quality.

The real bone of contention is over the cause of the bugs and the general dysfunction surrounding the project. Oracle leans heavily on reports filed while the project was under way by Maximus Inc., a contractor that the state retained specifically to monitor the project and the risks associated with it. Maximus kept reporting that the project faced a high risk of failure, and that state officials were not coordinating their oversight effectively.

In one section of its legal complaint, Oracle particularly points to infighting between the Oregon Health Authority (OHA) and Cover Oregon (CO):

For example, at one point, the OHA's chief information officer complained to Oracle personnel that Cover Oregon's efforts were "becoming highly disruptive to the Modernization effort," and that her team felt "they are being run over" by Cover Oregon. As a result, one organization would make decisions without taking account of implications of that decision for the work being performed for the other organization; the result was

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David F. Carr oversees InformationWeek's coverage of government and healthcare IT. He previously led coverage of social business and education technologies and continues to contribute in those areas. He is the editor of Social Collaboration for Dummies (Wiley, Oct. 2013) and ... View Full Bio

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prospecttoreza
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prospecttoreza,
User Rank: Strategist
8/18/2014 | 1:06:29 PM
Re: Put yourself in Oracle's shoes
Oracle signed a contract that it knew from the get go will flop. An Oracle consultant gets paid by an hour, and codes what it is told to. Oracle's management did read the contract, and knew what they are getting into - they are getting compensated for being yelled at. I feel bad for the Oregon citizens who had to shoulder the costs.
bwalker970
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bwalker970,
User Rank: Strategist
8/12/2014 | 6:24:28 PM
Re: Put yourself in Oracle's shoes
It will be interesting to see how this shakes out.  The project management problems they describe are not uncommon in eiither government work or private industry.  Bad projects exist everywhere and there is plenty of blame to go around.  The state can be cited for naively thinking that it had enough experience to take on the management of such a large technical project and for grossly underestimating the size of that project.  However, Oracle should have had the experience to know better and to push back when they saw the project going badly.  Shifting requirements are the canary in the coal mine of project management so when did Oracle's employees raise the alarm?  If the state's employees were exhibiting lax change control, why did Oracle's employees go along with it?  Did anyone at Oracle realize that their reputation was on the line even if they were not held legally liable for the results?  Oracle only has itself to blame if they negotiated away their ability to control the work and then failed to live up to the contract that they actually signed.  
Alison_Diana
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Alison_Diana,
User Rank: Author
8/12/2014 | 5:35:30 PM
Re: Why so many different portals to solve the same end goal?
Yes, one big debacle with Healthcare.gov -- but I guess that was finally resolved, more or less (although I haven't heard anything particularly reassuring about security) -- would have been more than enough! The answer, I think, lies in the political hash surrounding Obamacare and the related technologies. Since states have a big say in how to participate, it's not too surprising that some chose to fly solo for whatever reason. It would, however, have been much more efficient to design one national system from a technical and admin POV. 
Alison_Diana
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Alison_Diana,
User Rank: Author
8/12/2014 | 5:33:10 PM
Re: And politicians wonder ...
That's true: Government employees and elected officials don't own finger-pointing! I feel badly for Oracle, too, although each time one of these stories comes up -- about huge, expensive tech implementations without an assigned integrator to lead the project -- I wonder how neither Oracle nor Oregon figured that out at the beginning. I guess the allure of the contract was too big, but entering into this kind of pact without taking on the integrator role seems fated for failure. 
Todder
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Todder,
User Rank: Moderator
8/12/2014 | 2:39:29 PM
Why so many different portals to solve the same end goal?
Seems to me there's better economy of scale if State's used a common tool set versus customizing their own solutions. The entire roll-out was and still is kinda goofy, but from a planning, engineering, and implementation perspective this whole episode doesn't make anybody feel good about how tax dollars are spent.
pdembry950
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pdembry950,
User Rank: Apprentice
8/12/2014 | 12:54:36 PM
Rodney? Rocky? Which one is it?
Who exactly was the executive directory, Rodney King or Rocky King?
majenkins
IW Pick
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majenkins,
User Rank: Ninja
8/12/2014 | 12:02:47 PM
Re: And politicians wonder ...
I have spent more time in private industry than in governement work and it can get just as bad in the private sector. Plus dodging blame and scoring points is not restrictied to politicians. Or maybe it is better to say that not all politicians work in the public sector.
majenkins
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majenkins,
User Rank: Ninja
8/12/2014 | 11:58:28 AM
Re: Put yourself in Oracle's shoes
In any big project there is going to be some of this type of thing going on. And in the end both sides are always going to say the things the other side was doing were what really caused the failure. If it was as bad as Oracle claims then as someone said below they should have raised more red flags with more higher up stake holders and or "Got out of Dodge". Of course getting out of Dodge means you won't get paid.
Somedude8
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Somedude8,
User Rank: Ninja
8/12/2014 | 10:31:47 AM
But, I love to hate Oracle
I LOVE to hate Oracle! But Shifting Sands requirments definitely striked a chord with me. Seen it too many times, from tiny projects to massive. One of the skills that has come with time, experience and age is knowing when to start throwing red flags in front of stakeholders, and when to throw a white flag and get out of Dodge. Sure glad I wasn't involved in that project!
Lorna Garey
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Lorna Garey,
User Rank: Author
8/11/2014 | 4:34:37 PM
Re: Put yourself in Oracle's shoes
David, Definitely. The point about working without a blueprint is valid. Makes one sympathetic to the concept that IT as a discipline needs to mature to the level of civil or electrical engineering. Imagine if this level of disfunction went on in bridge construction? And the state could probably have built several bridges with what this fiasco cost.
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