Outsourced Contract for Botched Obamacare Website Is a Warning Against Privatizing Public Goods


The bumpy rollout of, the federal health insurance enrollment website designed by corporate IT giant CGI, has been widely covered by the media as a case of government incompetence. Yet as an analysis by The Guardian shows, this debacle is in fact the latest example of the dangers of privatizing vital functions of government and contracting away our public goods.

Writing for The Guardian, Moira Herbst explains:

"Government outsourcing to private contractors has exploded in the past few decades. Taxpayers funnel hundreds of billions of dollars a year into the chosen companies' pockets, about $80bn of which goes to tech companies. We've reached a stage of knee-jerk outsourcing of everything from intelligence and military work to burger flipping in federal building cafeterias, and it's damaging in multiple levels. […]

"The revelation here is that an overdependence on outsourcing isn't just risky in terms of national security, extortionate at wartime, or harmful because it expands the ranks of low-wage workers; it's also messing with our ability to carry out basic government functions at a reasonable cost."

According to The Guardian, CGI won an open-ended $94 million contract to develop, but its costs have since tripled to nearly $300 million. This massive transfer of public wealth to a private company has given CGI and its shareholders a windfall, but to what end? The public is left with a botched website and new barriers to accessing health insurance. Instead of cutting jobs in the public sector and reducing the federal workforce to dangerously low levels, the Obama administration could have created public jobs to build a transparent, open-source system accountable to the people—and for only a fraction of the public money wasted on outsourcing.

Whatever happens with Affordable Care Act enrollment in the coming weeks, should serve as a cautionary lesson against outsourcing public functions and privatizing public goods. Public budgeting must be conducted not to serve powerful private interests, but to fund public services that meet our needs and ensure our rights. We have a right to transparent, easily accessible information about decisions that affect our lives, a right to meaningful participation in those decisions, and a right to hold our government—and private actors—responsible for meeting our needs. The “contractor-industrial complex” stands in the way of public spending that puts people, not profits, first.