CGI: HealthCare.gov Not Their
First Government Contract
I saw a post yesterday about Valerie Jarrett’s daughter Laura and her husband, Tony Balkissoon, working for CGI. Neither works for them but in looking into
it, I found some very interesting information about CGI.
The HealthCare.gov website and the
Exchanges are not CGI’s first contracts with the US Government. They have been involved with HUD since
1999. CGI holds many contracts with
HUD. Check out this article By Lydia
DePillis of the Washington Post.
“CGI Federal landed the
Healthcare.gov contract. Here’s how it fights for the ones it loses.”
CGI Federal, arguably the key
contractor behind the construction of HealthCare.Gov, has come under a fair
amount of scrutiny over the past few weeks for its federal health-care
practice. But that’s far from its only contract.
HUD: Just another source of CGI’s
contracts. (Lydia
DePillis)
Consider Section 8 rental
subsidies. For CGI, the business of handling the low-income housing program
started back in 1999, when the Department of Housing and Urban Development —
under pressure to downsize its in-house operations — started outsourcing the
job to public housing authorities around the country. The housing authorities
would subcontract with IT providers like CGI Federal, which mopped upmore than
25 percent of the $200-300 million or so in fees that came from HUD every year.
CGI, the biggest of all the subcontractors, provides the infrastructure and
support to route housing subsidies to landlords and monitor for compliance with
HUD rules.
The relationship between
contractor and subcontractor is very close. At the Assisted Housing Services
Corporation of Ohio,
California Affordable Housing Initiatives, andNorth Tampa Housing Development
Corporation, many staff actually list themselves on LinkedIn as CGI employees.
The Ohio
group’s state director, for example, identifies himself as a “Manager of
Consulting Services in CGI Federal’s Healthcare Compliance Group, focused on
business process outsourcing for the Department of Housing and Urban
Development.” The California group‘s state director calls himself the same
thing, adding that he has “quickly adapted staffing strategies to changing
industry conditions in order to maintain and improve competitive position,” and
has experience “analyzing and interpreting Federal policy and managing the
impacts on operations.” The Columbus Metropolitan Housing Authority executive
named as the Ohio
group’s contract administrator was a CGI director of consulting services until
2011.
So while the “instrumentality” set
up by the housing authority is a separate legal actor, it effectively functions
as a joint venture with CGI.
“What CGI and a number of other
firms have done is they’ve gone in to work with these local housing authorities
and said, ‘you’re eligible for this contract, we can provide you with a lot of
help in administering these contracts, and share the fees with you,’” says
Garth Rieman, director of advocacy at the National Council of State Housing
Agencies, which is now competing with the local housing authorities for the
Section 8 contracts. “So it’s a moneymaking venture for the local housing
authority, to partner with these entities to win the contracts.”
In 2007 and 2009, however, HUD’s
inspector general found that contract administrators had been allowed to
overbill the program by tens of millions of dollars. In 2011, HUD decided to
rebid the contracts, setting a lower standard for the profit margin that
recipients would be allowed to take and a cap on the number of units any one
contractor could administer. When the new contracts were awarded — with a
savings of about $100 million, or one
third. over the previous set, – many of CGI’s partners lost out.
Instead of letting the awards
stand, the losers complained en masse to the Government Accountability Office,
prompting HUD to back off those awards and offer another solicitation. This
time around, HUD got rid of the cap on the number of units a subcontractor
could administer, but precluded out-of-state entities from landing a Section 8
contracts if there was a qualified local bidder, which cut into CGI’s business
model — some of the entities they worked with offered services to housing
authorities all around the region, and wanted to compete for contracts even
further afield. The GAOruled that the new process was a no-no.
HUD decided to ignore the GAO. So
the housing authority-affiliated entities appealed again, this time to the
Federal Court of Claims — the three that contract with CGI filed a joint
complaint, saying HUD’s award process was anticompetitive. In April, HUD won.
But the companies kicked it up yet another notch, to the Federal Court of
Appeals, where arguments were held last week. Until the litigation is resolved,
HUD can’t execute any of the new awards.
Meanwhile, the Ohio entity asked its state’s Congressional
delegation — where CGI does lots of business – to include an amendment in this
year’s ill-fated Transportation, Housing, and Urban Development appropriations
bill that would have forced HUD to keep the contracts available to out-of-state
entities, which CGI wanted. (The legislators asked HUD nicely to do so earlier
in 2012, to no avail).
Public records indicate that
during this time, every quarter from 2010 through 2012, CGI Group itself was
lobbying on “HUD housing management contracts.”
Finally, there’s also a
whistleblower lawsuit from a former CGI employee – who’d been recruited from HUD
after overseeing the very Section 8 contracts CGI won — alleging that he was
fired after refusing to go along with fraudulent plans to work around the
bidding process. CGI denies the accusations, but has so far failed to get the
case thrown out.
Those are the lengths to which a
company — in this case, partnering with a local non-profit entity that it needs
to land the contract — will go to preserve government work. In private
enterprise, of course, a losing bidder usually just figures they’ve lost, and moves
on. In federal contracting, with enough lawyers, it’s possible to improve your
chances of getting that business back.
“It is not unusual for a
contractor to protest and to pursue all avenues, including the courts, to seek
remedy when they feel like the government hasn’t followed its own rules,” says
Neil Couture, director of Government Procurement Law and Business Programs at
George Washington School of Business. “Especially in a strategically important
area, with large dollars, or new technology.”
In response to questions about the
current status of CGI’s partnerships with housing authorities, CGI spokeswoman
Linda Odorisio said: “CGI’s systems and consulting services have been
recognized by federal, state and local agencies as a key tool in helping public
housing agencies operate more efficiently and effectively.”
Technically, it’s possible for CGI
to also work with the statewide housing agencies that would be advantaged if
HUD wins at the Court of Appeals,
and hang on to the business it’s so carefully developed. But according to
Rieman, whose organization represents those agencies, CGI has preferred to work
with local entities — who may see the contract more as a business proposition
than a way to serve residents.
“Does the system make sure that the
entity administering the program has a full enough public purpose and
affordable housing mission to ensure that the services are being done with that
intent, and not just a narrower profit making enterprise with a private sector
firm?” Rieman asks. ”Our view is they are taking all steps necessary to
preserve their opportunity to participate in this program in the way that they
want to.”
Laura A. Jarrett
Laura A. Jarrett - Lawyer Profile
Laura A. Jarrett U.S. Court of Appeals
219 S. Dearborn St., Ste. 2722 Chicago, Illinois (Cook Co.)
Experience & Credentials
University - Amherst College,
B.A.
Law School - Harvard
Law School,
J.D.
Admitted - 2010
ISLN – 922000387
Note: Valerie B. Jarrett
is Laura A. Jarrett’s mother, the
senior adviser for the Barack Obama
administration, a member of the Commercial
Club of Chicago, and her great uncle is Vernon E. Jordan Jr.
R.
Eden Martin is the president of the Commercial
Club of Chicago, and counsel at Sidley
Austin LLP.
Michelle
Obama was a lawyer at Sidley Austin
LLP.
Barack
Obama was an intern at Sidley Austin
LLP.
Anthony (Tony) Balkissoon - Lawyer Profile
Anthony Balkissoon is an Associate at Sidley Austin LLP
One S. Dearborn
St. Chicago, Illinois
(Cook Co.)
Experience & Credentials
Practice Areas - Intellectual
Property Litigation; Patent Litigation
University - University of Toronto,
B.S.
Law School - Harvard
Law School,
J.D.
Admitted - 2010
ISLN - 921650667
Vernon E. Jordan Jr. is Valerie B. Jarrett’s great uncle, an
honorary trustee at the Brookings Institution (think tank), a senior
counsel for Akin, Gump, Strauss, Hauer
& Feld, LLP, a director
at the American Friends of Bilderberg (think tank), and a 2008 Bilderberg
conference participant (think tank).
Klaus Kleinfeld is a trustee at the Brookings
Institution (think tank), a trustee at the Conference Board, and a 2008 Bilderberg conference
participant (think tank).
Michael E. Roach
is a trustee at the Conference Board,
and the president & CEO for the CGI
Group Inc.
CGI Group Inc.
was the Obamacare contractor that
developed Healthcare.gov web site.
Obamacare
is Barack Obama’s signature policy
initiative.
Foundation
to Promote Open Society was a funder for the Brookings Institution (think tank), and the Committee for Economic Development.
George
Soros is the chairman for the Foundation
to Promote Open Society.
Cyrus F.
Freidheim Jr. is an honorary trustee at the Brookings Institution (think tank), and a member of the Commercial Club of Chicago,
Akin,
Gump, Strauss, Hauer & Feld, LLP is the lobby firm for the Boeing Company.
W. James
McNerney Jr. is the chairman & president & CEO for the Boeing Company, and a member of the Commercial Club of Chicago.
Commercial Club of Chicago,
Members Directory
Please note: This link for the
members of the Commercial Club of Chicago can no longer be found.
Barbara G. Fast
was the VP at the Boeing Company, and
the VP for the CGI Group Inc.
Donna
S. Morea was the EVP for the CGI
Group Inc., and a trustee at the Committee
for Economic Development.
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