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U.S. drops contractor for work on Obamacare website

Posted at 6:10 PM, Jan 10, 2014
and last updated 2014-01-10 18:10:12-05

(CNN) — The Obama administration has cut ties with CGI Federal for its work as the main contractor on the Obamacare website, a source familiar with the decision told CNN.

The contract was up and not renewed, the source said.

The Centers for Medicare and Medicaid Services, the federal agency charged with overseeing development of the website, said in a statement that it was working with its “contract partners” to ensure a “mutually agreed upon transition.”

The flawed launch of the website in October was a big political setback for President Barack Obama.

Fixes since have resulted in improved performance of the online portal, where consumers can shop for health coverage.

The politically charged health care law, the Affordable Care Act, aims to allow millions of Americans without coverage to access insurance.

More than 2 million people had signed up so far under Obamacare at the end of 2013 with about half enrolling through the federal marketplace, officials said.

A number of states also have their own portals and other programs to sign people up for coverage.

CGI couldn’t immediately be reached for comment.

It was lead contractor for building the problematic front-facing side of, a job with an original two-year contract valued at nearly $100 million.

The company came under fire following the webstie’s difficult launch as users experienced major problems accessing the site, creating profiles and selecting insurance plans.

During testimony before Congress in October, CGI Senior Vice President Cheryl Campbell denied any wrongdoing by her company, telling legislators that it was not “unusual to discover problems” in a system with so many concurrent users that would need to be addressed after going live.

As part of Obamacare implementation, CGI is also performing exchange work in California, Colorado, Hawaii, Illinois, Massachusetts, Kentucky, New Mexico and Vermont, according to the company’s website.

Officials in several of those states have also expressed dissatisfaction with CGI’s performance.

Based in Canada, CGI presents itself as the world’s fifth largest independent IT and business process services company.

The company has experience in health care IT as a partner to some of the Canadian Ministries of Health and as a provider of secure electronic medical records in Europe.

Its U.S. government contracting branch, CGI-Federal, has done more than $2.5 billion in business with more than two dozen government agencies since 2001, according to a search at

This includes nearly a billion dollars of work with the Health and Human Services Department, CMS’s parent agency, as well as the Pentagon.