Policy: Technology

Canadian firm hired to build troubled Obamacare exchange site

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A Canadian tech firm that has provided service to that country's single-payer health care system is behind the glitch-ridden United States national health care exchange site healthcare.gov.

CGI Federal is a subsidiary of Montreal-based CGI Group. With offices in Fairfax, Va., the subsidiary has been a darling of the Obama administration, which since 2009 has bestowed it with $1.4 billion in federal contracts, according to USAspending.gov.

The "CGI" in the parent company's name stands for "Conseillers en Gestion et Informatique" in French, which roughly translates to "Information Systems and Management Consultants." However, the firm offers another translation: "Consultants to Government and Industry."

The company is deeply embedded in Canada’s single-payer system. CGI has provided IT services to the Canadian Ministries of Health in Alberta, British Columbia, New Brunswick, Quebec and Saskatchewan, as well as to the national health provider, Health Canada, according to CGI's Canadian website.

As Canada’s No. 1 IT provider, the company states on its website that “95 federal departments, agencies, and crown corporations and most of Canada’s provinces partner with” the firm.

The U.S. Department of Health and Human Services awarded CGI $55.7 million to launch Healthcare.gov, its central Obamacare health exchange website. Over the full five years of the contract, CGI could receive as much as $93.7 million.

Earlier this year the U.S. Government Accountability Office criticized the pace of development and testing for Healthcare.gov.'s IT system and noted that it was missing important milestone deadlines.

Consumers have encountered widespread problems since Obamacare's website went live on Tuesday. The system has crashed, pages do not open and many citizens complain they cannot register.

HHS is by far the single largest federal contractor of CGI, showering it with $645 million in contracts. The Defense Department pays the Canadian company $254 million, the EPA $58 million and the Justice Department $36 million.

The General Services Administration, which oversees many government buildings, has contracts with CGI valued at $35 million, according to USASpending.gov.

In comparison, in 2008, under President George W. Bush, CGI contracts totaled only $16.5 million for all federal departments and agencies. 	

Serge Godin founded the firm in Montreal in 1976. One of Canada's billionaires, Godin was named in 2011 by Canadian Business magazine as one of that nation's 100 richest individuals.

As chairman, Godin leads a corporate colossus with a market capitalization of $8.9 billion. His company is worth $1 billion more than another major Canadian tech firm, BlackBerry, formerly known as Research In Motion, according to the Globe & Mail in January. The company employs 11,000 in Canada and 69,000 worldwide, operating in 40 countries.

According to Forbes, last year Godin received an annual compensation package worth $4.6 million. He personally owns 31.9 million shares of CGI stock worth more than $1 billion.

Capitalizing on a weak European economy and a strong Canadian dollar, last year CGI purchased Logica PLC for $2.6 billion, its largest acquisition. The company has announced the layoff of more than 1,000 employees.

CGI shares are publicly traded on the Toronto and New York stock exchanges. Since March 2013, its stock has rocketed from $23 per share to $37.

RBC Capital Markets, of the Royal Bank of Canada, upgraded CGI from "perform" to "outperform" expectations.

Update: This article has been corrected to reflect the name of the company. It is CGI Federal, not GCI Federal.

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