JOHN MILLER ASKS KEY QUESTIONS REGARDING HEALTH CONNECTOR…PART 1
Winchester, MA – John Miller, a Winchester resident with deep ties to Massachusetts and three decades of diverse legal experience in the private sector, today released the first of many questions regarding the failed Health Connector web app: Has the Health Connector contract with CGI been terminated for Default or for Convenience?
“The contract between UMass and CGI contains both a T for C clause and a T for D clause,” said Miller, “If CGI is terminated for default, the contract requires CGI to cover the State’s additional costs in hiring a second contractor to do the job. The difference is $32 million dollars. That’s a lot of lunches!”
A Termination for Convenience (or T for C) is a contractual term for stopping a contractor’s work, not because the contractor failed, but because it is ‘convenient’ for the state to stop the work. In a T for C, the contractor gets paid for all of its efforts in attempting to perform the contract, up to the moment of the T for C.
A Termination for Default (or T for D) is a contractual term for stopping a contractor’s work because the contractor failed or breached the contract. In a T for D, the contractor is liable to the state for damages.
“The substitution of a Health Connector web app that worked, with an Obamacare replacement that never worked has put many Massachusetts citizens at risk and wasted many millions of taxpayer dollars. Citizens have been told that CGI has stopped work, and that the state is involved in sensitive negotiations with CGI.
Recently, the Governor declared that the failure of the prior state contract has created an ’emergency.’ This ’emergency’ has since led to a no-bid state contract for $100 million more taxpayer dollars, to be spent in just six months.
In this instance, Miller says “it is clear that placing the competition at the University of Massachusetts Medical School led to non-standard, non-competitive processes that put taxpayer dollars at high risk.”
CGI’s original contract – CGI was building the new web app for the online marketplace – was a fixed-price contract for $68 million. As of last Fall, Massachusetts taxpayers had paid $15 million of the $68 million.
State officials have been very quiet on the status of their discussions with CGI. Press sources report that one of the contract parties – UMass Medical School -is no longer participating in the discussions with CGI.
“This whole situation makes little legal sense. The AG should be leading these negotiations, protecting the people of this state from the loss of hundreds of millions of dollars,” said Miller. “The Governor’s decision to declare an emergency, and to then hire a replacement contractor without competitive bids, creates a substantial legal risk that the state will never recover damages on the first contract.”
Miller went on to add that “Before moving on to another contractor, good legal practice would be for UMass Medical School to answer a tough question – with legal advice from the AG. Do the facts of this case call for a T for D or a T for C?”
Miller added: “Hurrying, especially in situations like these, almost always makes things worse from a legal point of view. The political desire to move on shouldn’t trump sound legal analysis. Hiring a new contractor for $32 million more than the CGI price is not just expensive. It reduces the chance the state can recover that $32 million.”
If the state has moved on, the consequences add up quickly, millions paid on the original contract, millions spent enrolling citizens by hand, and $100 million to be paid on the second contract. All with a substantial technical risk of failure.
Was there an alternative? Miller thinks so. “Why was the original web app ever taken down without conclusive confirmation that the new app worked? Stand the old web app up again, temporarily. This should be a low-cost alternative. And, surely, the federal government would grant a waiver in this ’emergency’.”
The people of this state deserve more out of the AG’s Office – the people’s law firm.