Oracle slaps Oregon with a lawsuit over troubled Obamacare website

Oracle slaps Oregon with a lawsuit over troubled Obamacare website

Oracle blames 'bureaucratic dysfunction' for the disastrous Cover Oregon project

Oracle has sued Oregon for breach of contract, seeking more than US$20 million in fees the state is withholding for its work on Cover Oregon, a troubled insurance exchange website developed as part of President Barack Obama's health care policy overhaul.

The move is a preemptive strike by Oracle against Oregon, whose governor, John Kitzhaber, has advocated suing Oracle.

Oracle had already claimed Oregon officials were conducting a "smear campaign" meant to hide their own shortcomings. The vendor fleshed out that allegation at length in its complaint, which was filed Friday in U.S. District Court for the District of Oregon.

"Oracle worked at Oregon's direction on [Cover Oregon]," and the software has helped hundreds of thousands of Oregonians enroll in health insurance or Medicaid, the complaint states. "That, however, is a fact most Oregonians do not understand."

When problems with the site were reported upon its Oct. 1, 2013, go-live date, "public officials chose not to give a measured, fully informed response," the complaint adds. Instead, they decided to "blame someone else," namely Oracle, according to the filing.

"While flogging Oracle publicly, Cover Oregon continued privately to ask for Oracle's help," it adds. "(Indeed, it continues to this day to seek Oracle's technical help with the project)."

A key bone of contention in the dispute centers around the fact that Oregon hired Oracle on a time-and-materials basis, with the state serving as its own systems integrator.

"That decision was akin to an individual with no construction experience undertaking to manage the processes of designing and building a massive multi-use downtown skyscraper without an architect or general contractor," Oracle said.

Another alleged flaw in the state's approach: It decided to build Cover Oregon at the same time it was embarking on a major IT modernization project for other aspects of its health and human services operations.

Overall, the Cover Oregon project suffered from widespread "bureaucratic dysfunction," with various state agencies unable to work effectively together, it adds. State officials also wouldn't heed repeated warnings that the project was in trouble, Oracle alleges.

Other problems included a propensity by state officials to "change their minds frequently about the work they wanted performed," with Oracle programmers asked to make on-the-spot changes to code, according to the complaint.

What seems clear is that Cover Oregon's issues reached Oracle's attention at a high level. The company assigned chief corporate architect Edward Screven, a longtime Oracle employee who reports directly to CEO Larry Ellison, to work on righting the ship, albeit ultimately to no good end.

Oracle's lawsuit reproduced a testy email exchange between Screven and Cover Oregon CTO Garrett Reynolds.

A number of Oracle employees working on-site reported that Reynolds stated he had given himself administrator privileges and made changes to the production environment on his own, without following proper procedures, Screven wrote in an email.

"If you have made such changes, please send a written description of each change, including when you made it," Screven said. "Also, please do not make any more changes. [E]ven trivial changes can result in confusion that leads to serious mistakes down the road, and even an expert can make mistakes."

Reynolds' response to Screven was terse.

"I thought Cover Oregon paid for and owned the system ...," he wrote. "Thanks."

Earlier this year, Oregon officials decided to move its exchange to the federal website, rather than complete the Cover Oregon project.

Oracle maintains it hasn't been paid in full for its product and is seeking at least $23 million in restitution for the work it performed, along with additional damages.

A spokesperson for Kitzhaber didn't immediately respond to a request for comment on Monday.

But Kitzhaber spokeswoman Melissa Navas told the Oregonian newspaper that Kitzhaber "is aware of the lawsuit and isn't surprised by it." The state's attorney general will review the complaint "and continue to pursue legal remedies on behalf of the State," Navas added.

"The Oracle lawsuit does not affect Cover Oregon as we move forward to ensure Oregonians can enroll in health insurance in November," a Cover Oregon spokeswoman said via email. "It also doesn't affect Cover Oregon daily operations or customers in any way."

Oracle "is making a pretty strong case" for itself in the complaint, said analyst Michael Krigsman, CEO of consulting firm Asuret and an expert on why many IT projects struggle and fail.

The lawsuit represents a few important things for Oracle, Krigsman added. "It's the money, it's their reputation, and number three is to send a signal to the market that they're not simply going to roll over, they're going to take an aggressive stance in this type of situation," he said.

That's not to say Oracle is entirely without fault, Krigsman added. Independent reports on Cover Oregon have found fault with both Oracle and state officials.

"With these complex IT projects most of the time it's virtually impossible to say that blame or responsibility lies completely on one side or the other," he said. "The two sides are very intertwined during the execution of the project."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags serviceslegalsoftwareIT managementOracle



Kiwi channel comes together for another round of After Hours

Kiwi channel comes together for another round of After Hours

The channel came together for another round of After Hours, with a bumper crowd of distributors, vendors and partners descending on The Jefferson in Auckland. Photos by Maria Stefina.​

Kiwi channel comes together for another round of After Hours
Consegna comes to town with AWS cloud offerings launch in Auckland

Consegna comes to town with AWS cloud offerings launch in Auckland

Emerging start-up Consegna has officially launched its cloud offerings in the New Zealand market, through a kick-off event held at Seafarers Building in Auckland.​ Founded in June 2016, the Auckland-based business is backed by AWS and supported by a global team of cloud specialists, leveraging global managed services partnerships with Rackspace locally.

Consegna comes to town with AWS cloud offerings launch in Auckland
Veritas honours top performing trans-Tasman partners

Veritas honours top performing trans-Tasman partners

Veritas honoured its top performing partners across the channel in Australia and New Zealand, recognising innovation and excellence on both sides of the Tasman. Revealed under the Vivid lights in Sydney, Intalock claimed the coveted Partner of the Year 2017 (Pacific) award, with Data#3 acknowledged for 12 months of strong growth across the market. Meanwhile, Datacom took home the New Zealand honours, with Global Storage and Insentra winning service provider and consulting awards respectively. Dicker Data was recognised as the standout distributor of the year, while Hitachi Data Systems claimed the alliance partner award. Photos by Bob Seary.

Veritas honours top performing trans-Tasman partners
Show Comments