Breaking News Emails

Get breaking news alerts and special reports. The news and stories that matter, delivered weekday mornings.
 / Updated 

A rushed team at the Department of Health and Human Services failed to plan properly or watch over contractors hired to set up and run the online health insurance exchange, setting it up for its spectacular blowout when it rolled out last October, according to a report to be released Thursday.

And unless HHS acts, more problems could happen this year, the report warns.

Federal officials had just three and a half years to design, build and launch the online marketplace from the time the Affordable Care Act was signed in March 2010 to the time it had to be ready in October 2013, and the rush job fell apart, the nonpartisan General Accountability Office said.

To make matters worse, HHS’s Centers for Medicare and Medicaid Services (CMS), the agency that runs the site, threw good money after bad, the GAO says in the report, obtained by NBC News.

“The Centers for Medicare & Medicaid Services (CMS) undertook the development of and its related systems without effective planning or oversight practices, despite facing a number of challenges that increased both the level of risk and the need for effective oversight,” the GAO report reads.

“The Centers for Medicare & Medicaid Services undertook the development of and its related systems without effective planning or oversight."

The failed rollout was a disaster for President Barack Obama, who had made the Affordable Care Act the defining legislation of his presidency. The exchanges are the centerpiece of the law, known widely as Obamacare. They’re the main route for getting millions of Americans covered by health insurance and, presumably, under the care of the doctor.

Obama personally apologized, CMS fired the main contractor, CGI, and brought in a team of troubleshooters to fix the site, which was working by December. The federal government extended enrollment deadlines, and the latest estimate suggests that 10 million people got newly insured either on the exchanges or via the expansion of Medicaid.

But the disaster gave Republican critics plenty of ammunition, and the same critics were quick to jump on the GAO report.

“Today’s GAO report confirms our worst fears — hundreds of millions of taxpayer dollars were wasted to build a website that didn’t work all because of bureaucratic incompetence. Simply put, the Administration put contractors ahead of American taxpayers when it came to the rollout of by signing a blank check to big business,” said Sen. Orrin Hatch, R-Utah, who is ranking minority member of the Senate Finance Committee.

The report will be the centerpiece of a hearing Thursday in front of the House Energy and Commerce Committee.

The lack of oversight also led to cost overruns, the GAO said in the report. “From September 2011 to February 2014, FFM [federally facilitated marketplace] obligations increased from $56 million to more than $209 million. Similarly, data hub obligations increased from $30 million to nearly $85 million.

"Hundreds of millions of taxpayer dollars were wasted to build a website that didn’t work all because of bureaucratic incompetence."

“Because of unclear guidance and inconsistent oversight, there was confusion about who had the authority to approve contractor requests to expend funds for additional work. New requirements and changing CMS decisions also led to delays and wasted contractor efforts.”

CMS rolled out the site without testing it completely — something the agency has owned up to — but then failed to call the contractors onto the carpet when they continued to make errors. “In September 2013, CMS program officials became so concerned about the contractor’s performance that they moved operations to the (Exchange) contractor’s offices to provide on-site direction,” the GAO report notes.

Finally, CMS hired a new contractor, Accenture, for $91 million in January 2014, but costs continued to soar.

“As of June 2014, costs on the contract had increased to over $175 million due to changes such as new requirements and other enhancements, while key (marketplace) capabilities remained unavailable,” the report reads.

“CMS needs a mitigation plan to address these issues. Unless CMS improves contract management and adheres to a structured governance process, significant risks remain that upcoming open enrollment periods could encounter challenges.”

In comment, HHS agreed with most of the points and notes it fired CGI,the first contractor. “CMS disagrees with GAO’s assertion in the draft report that there has been ‘continued cost growth’ since the Accenture agreement was finalized.

“These reflect new requirements and additional functionality rather than cost overruns.”

HHS said it had learned from its mistakes and was working to make things better.