So far the state of Oregon has paid Oracle at least $43 million dollars for a website primarily intended for residents to use to enroll for healthcare insurance under the Affordable Care Act. The site was initially due for delivery on October 1, which now has been pushed back on numerous occasions because the site doesn’t work. In fact, by all accounts, it’s an outright disaster.
The most recent missed deadline was announced on December 5, according to a report from KOIN TV.
“Cover Oregon’s former director, Rocky King — who took a long-term medical leave of absence last week — had said the online system would be ready Monday for insurance agents and community groups that have contracts with Cover Oregon, and then Dec. 16 for all individuals. King was replaced by Goldberg, who is the director of the Oregon Health Authority…
“Both those deadlines will be missed. In an email to KOIN Monday, Cover Oregon spokesman Michael Cox alleged that the Dec. 9 and Dec. 16 dates were ‘targets set by Oracle, not deadlines set by Cover Oregon.’”
This last missed deadline would have occurred after the site would be of any use for Oregon residents seeking medical coverage for 2014. It’s now estimated that the site won’t be operational until at least the end of January. Meanwhile, the state has scrambled to hobble together a labor intensive workaround using paper forms which are being processed manually, requiring an additional expenditure of $4 million for 400 temporary workers.
Inquiring minds want to know why. Why Oracle? Why so much money?
I’m no Malcolm Forbes when it comes to money nor am I any kind of hotshot coder. To try to wrap my head around the situation, I arranged for a telephone conference with Josh Barratt, who’s the Chief Architect for the upscale hosting company Media Temple. It turned out he wasn’t privy to any inside information, but his years of experience working on large website projects meant he had plenty of insights to offer.
“Oracle wouldn’t be my first choice but it sounds like they put it up for a bidding process and when everyone saw how complicated the project was, Oracle’s the only one that hung in there.”
Indeed, the site is complicated. Maybe too complicated. Many press reports have mentioned the ambitiousness of the project.
Unlike other states that were happy to merely have a website to help guide their residents through the unknown territory that is the Affordable Care Act, Oregon wanted to put all of their health care eggs into this one Internet basket. In addition to insurance for individuals, they wanted the site to handle business health insurance as well as Medicaid and just about every other interaction a resident may need to have with the government concerning healthcare. That level of complexity is part of the reason why the site has cost so much money and one of the reason’s why it’s not yet operational.
The other reason is Oracle.
The folks from Larry Ellison’s Redwood City fiefdom understood the enormity of the project from the getgo. They also knew to expect more complexity to be added as development was taking place, especially since federal regulations were still in flux when they took on the project. This being the case, one might assume they would put their best people on the job, which doesn’t seem to be the case.
“It’s hard to judge the quality from the outside, but if you look at their front end website, there are a lot of things they didn’t do. When you look at their technology practices, even the ones we can see from the outside, it’s obvious they didn’t put their ‘A’ team on this. So, yeah, I do think that Oracle didn’t do a good job and they probably shouldn’t have taken it in the first place, because they’ve taken on something it would be impossible to do a good job on.”
This would seem to be a very important cautionary tale for anyone considering hiring Oracle for a major project. They’ve already taken at least $43 million from Oregon, with some sources putting the figure at closer to $90 million, yet they don’t bother to send their best people to design and build the project. Is that any way to treat a $40 million dollar client, even a government one?
It’s unclear whether Oracle stands to continue to profit on the Cover Oregon site after it’s operational, from licensing fees, long term support and the like. Although it appears as if Oregon will end up with ownership of the custom code being written specifically for them, we can probably assume that the site utilizes components from the proprietary Oracle stack which will, at the very least, require licensing and support contracts, perhaps in the neighborhood of millions annually.
That’s if a fully functional Oracle built site ever goes live. Right now, it would probably surprise no one if the state decided to drop the Oracle project altogether and find another solution. In September, Cover Oregon quit making payments to Oracle and is currently sitting on over $18 million in Oracle invoices.
According to Media Temple’s Barratt, this project would be quite expensive even if costs weren’t being dictated by Oracle’s inflated price list. Not only is the site unbelievably complex, the fact that it concerns healthcare bring a whole host of other issues to the table.
“There might be regulations which can raise your cost because you have to do things in a more careful, deliberate way. You have to have people that have the expertise to even know what those regulations are–in how you’re going to get the data and so forth. It’s not as simple as getting a bunch of programmers in a room and paying them a reasonable wage and pizza. You need to get people that are trained more. At least get people who can be training as well. People who know how to build high traffic web sites.”
That being said, however, the money that Oregon is shelling out is still incredibly high, even for a project of this magnitude. Said Barratt, “If somebody had just built a team around this, they probably would have spent $40 million in the first ten years.”
Part of the problem, Barratt said, is that government agencies “don’t think like start-ups.” As a general rule, they’re headed either by career civil servants or by elected officials, often with little or no business background. This can lead to decisions that even the most inexperienced businessperson probably wouldn’t make, especially when under the seductive spell of a well trained sales crew.
“The contract was badly written. It was basically just time and materials. There were no significant delivery penalties. Basically, Oregon paid Oracle to work really hard on this project, but they didn’t pay them really to finish the product, which is the alternative way that you can structure a lot of these contracts. There’s really no downside to Oracle if they don’t ship.”
Even though Oregon will evidently end-up with ownership of the code written specifically for this project, it’s hard to imagine that the site will utilize open source components such as databases, as Oracle has never met an open source project it likes, even those they own. However, if the site were built using existing open source components, tied together with custom code to make everything function as needed, Oregon would truly own their site, which they could release under the GPL or some other open source license. Barratt points out that this would bring many far-reaching benefits.
“Especially for a state exchange type thing like this, where there’s multiple states solving the same problems, it’s even better if they build it in open source because you can get community feedback on your practices and other states and government agencies can leverage your work and collectively save even more money. I’m very fond of the idea that all taxpayer funded code development should be open source, because it’s my code and it’s your code. It’s our code.”
For now, though, Oregon is stuck with a very expensive white elephant and most of its residents will not be able to take advantage of the benefits of the Affordable Care Act until 2015.
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