recommended reading

Obamacare Cloud Contract Will End Up Costing 10 Times Its Original Value


The Obama administration has extended and roughly doubled the value of a contract with Verizon’s cloud division to host, manage and secure backend data for and state Obamacare marketplaces because of a delay in moving that data to a new host, according to contracting documents.

The Centers for Medicare and Medicaid Services will pay the cloud division Terremark up to $58 million to store and manage Obamacare data for an additional seven months while it prepares to move that data to a separate Health Insurance Marketplace Virtual Data Center managed by HP Enterprise Services.

The contract extension, described as a “logical follow on,” would roughly double the $60 million the government had already agreed to pay Terremark for hosting services as of December 2013. That was when officials completed a series of repairs and upgrades to the troubled system, which suffered from severe outages and other usability problems during its first two months online.

The final Terremark price tag of roughly $120 million is more than 10 times the original $11 million value of the contract when CMS first awarded it in 2011. The contract had grown to $46 million as a result of 10 separate modifications by the time launched in October. Two additional modifications brought the price tag to roughly $60 million by the time repairs were complete in December.

CMS has justified the contract expansions by noting that “at the time of the contract award, the scope of cloud computing needs to support the implementation of insurance exchanges was unknown,” and that “CMS believed if the additional services were not added urgently, the exchanges would not function as designed and citizens would continue to have issues using the marketplace.”

The government contracted with HP to be Terremark’s successor as Obamacare data host in July 2013 but the transition was delayed by months of repair work following’s troubled launch in October. The HP contract is valued at $38 million.

CMS also posted three additional modifications to the Terremark contract on Thursday for a firewall upgrade and several other additional services. Those modifications totaled about $2.5 million.  

Get the Nextgov iPhone app to keep up with government technology news.

(Image via ra2studio/

Threatwatch Alert

Network intrusion / Stolen credentials

85M User Accounts Compromised from Video-sharing Site Dailymotion

See threatwatch report


Close [ x ] More from Nextgov

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security


When you download a report, your information may be shared with the underwriters of that document.