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Cost of Rescue Continues to Rise

8:01 AM, Feb 25, 2014 • By JERYL BIER
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Details of the rescue in the fall of 2013 continue to dribble out via months-old contracts and modifications posted online.  The Centers for Medicare and Medicaid Services (CMS) exercised two contract modifications in quick succession in October/November to increase the cloud computing capabilities needed to improve the performance of the website and the federal data hub.  The modifications cost the government $13.9 million, increasing the value of the Terremark Federal Group contract to over $60 million, up from $37.3 million barely a month before.

This $14 million increase was on top of an $8.7 million modification awarded to Terremark the day before launched on October 1 after testing revealed that the website was completely inadequate to handle expected traffic.  As THE WEEKLY STANDARD first reported at the time, CMS admitted then that the original "task order did not have a specific concurrent user performance requirement."  Paperwork justifying the new increases gives further insight into the failure of CMS and its contractors to accurately anticipate the needs for

The modification would have been $1.3 million higher, but due to an "outage" in October, a credit of $1.3 million was calculated by CMS and Terremark to reduce the total amount of the modification from $15.2 million to $13.9 million.  About $8.9 million of the total was attributed to additions to the original contract for "software to support the cloud environment, firewall upgrades, virtual machine compute and storage, and professional services."  The remaining $6.2 million was for "open market services" not included on the original contract schedule.  While a large portion of the $6.2 million covered cloud computing and network services and products, over $1 million was for hourly compensation for Senior Information Architect professional services, including over $500,000 for "after hours" work, or overtime:

Another casualty of's woes in the fall appears to have been timely paperwork.  Although the modifications took place in October and November, the first signatures on the  Justification documents accompanying the modification are dated January 28, 2014, two or three months after the modifications were exercised.  The final signature, that of Tim Love, Chief Operating Officer (COO) of CMS, was added last on February 19.  Love was not even hired as COO until January, replacing Michelle Snyder who retired at the end of 2013.

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