From The Oregonian
Few legal settlements are satisfying. The $100 million deal between Oregon and Oracle to square differences over the state’s failed insurance exchange, announced Thursday, is no exception. But it is a wise and sobering outcome in the face of a high-stakes trial in which the state could have lost everything while paying an estimated $1.5 million a month to advance its fight against Oracle.
As it stands, Oregonians and American taxpayers will take it in the shins for more than $160 million over the spectacular failure known as Cover Oregon. That’s disgraceful.
But Oregon managers had paid Oracle $240 million, much of it in federal funds, to help create Cover Oregon before tossing it in the trash in favor of a tweaked, off-the-shelf federal health insurance exchange. Heads rolled. Bruce Goldberg of the Oregon Health Authority, an overseer, stepped down. Former Gov. John Kitzhaber, embroiled simultaneously in the Cylvia Hayes drama, stepped down — but not before insisting the state sue Oracle to reclaim fees. Oregon’s official ire over the situation reached the stratospheric level of its embarrassment: The Department of Justice sought more than $6 billion in a suit that accused Oracle and several of its executives of committing fraud, filing false claims and, even, racketeering.
Those are high stakes — and a high bar to prove in court. And they were accompanied by many fingers wagging in the blame game. With a settlement in hand, however, nobody will ever quite agree on who’s most at fault.
But it is known that Oregon, with a poor record of information technology project success, had decided it would be its own contractor in developing the massive and complex Cover Oregon website. And it failed in timing and coordinating the project’s many personalities, among them state project leaders who were at odds with each other — even about whether the website was sufficiently functional to launch. Oregon Rep. Mike McLane, R-Powell Butte, summed it up well on Thursday in a statement: “While Oracle clearly made mistakes, there is no escaping the fact that the state, too, shares blame for the failure of Cover Oregon. From the very beginning, the project was mismanaged and wracked by the failures of our bureaucracy.” Oracle, meanwhile, was left to run up a tab as it saw fit.
Democratic Gov. Kate Brown, who succeeded Kitzhaber, deserves credit for dissuading the Justice Department from fighting on — at potentially deeper cost to taxpayers and by prolonging the toxic Cover Oregon hangover. It wasn’t easy, apparently.
Jeff Manning of The Oregonian/OregonLive reported that Attorney General Ellen Rosenblum had at one point refused Brown’s directive to settle, an action Oracle saw as unconstitutional. As things dragged on, meanwhile, it was a fine day for lawyers. By this summer, Manning reported, Oregon had spent more than $16 million at the firm Markowitz Herbold and three other firms hired to handle different aspects of the case. The ironic result of the settlement is that the bulk of its terms comes in the form of services and software to be provided by the vilified Oracle.
Fine. The hard lesson is that state government leaders do not get to be cavalier, even cocky, in deciding they automatically know how to do what they have never done before. Oregonians do deserve aspirational visions from leaders; Cover Oregon might have been one. But Oregonians also deserve the confidence that newfangled projects will be managed prudently and transparently, with metrics for success built in at the front end. In this sense, Cover Oregon was an organizational debacle with Oracle at the center.
Nobody’s innocent. Everybody pays. The settlement, however unsatisfying, is proof of it.