Bf.oregon.hogr.Ltr.051016

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Berke | Farah

LLP

ttorneys at Law

1200 New Hampshire Ave. NW Suite 800 Washington, DC 20036 [email protected] 202.517.0585

www.berkefarah.com

Navigating the Law of Politics

May 10, 2016

The Honorable Jason Chaffetz, Chairman

The Honorable Elijah Cummings, Ranking Member

Committee on Oversight and Government Reform

2157 Rayburn House Office Building

Washington, DC 20515

Dear Chairman Chaffetz and Ranking Member Cummings:

I write on behalf of the State of Oregon (the “State”) and Ellen Rosenblum, the Attorney General

of Oregon. As you are aware, dating back to the 113th Congress, the State has been voluntarilycooperating and producing documents in response to inquiries from the Committee on Oversightand Government Reform (“Committee”). During this Congress alone, the State has produced

more than 40,000 documents in response to Committee requests. In light of recent depositionsconducted by Committee staff, we thought it prudent to also submit this letter into the record foryour review and consideration.

This letter serves to bring to the Committee’s attention the record built to date on documents andsworn testimony in litigation between the State, Oracle America, Inc., and others concerning the

State’s efforts to create a health insurance exchange compliant with the Patient Protection andAffordable Care Act. This record establishes the reason for the failure of the State’s healthinsurance exchange: Oracle committed to deliver a functional exchange by October 1, 2013,fully aware at the time that it was misleading the State about its commitments and capabilities.When the deadline arrived, Oracle could not meet its commitment, and it could not subsequentlyfix, after months of trying, the innumerable errors and breakdowns in its health insuranceexchange system.

Eighteen exhibits are attached to this letter. Many of these exhibits are documents the Statevoluntarily produced to the Committee. As the Committee is aware, the State has not producedany documents that Oracle designated “confidential” or “attorneys’ eyes only” during the courseof civil litigation in Oregon captioned Rosenblum et al. v. Oracle America, Inc. et al. On April

1, 2016, the Oregon Circuit Court issued an order removing Oracle’s “confidential” and“attorneys’ eyes only” designations from ten documents. For the Committee’s benefit, the State

also attaches several of Oracle’s documents that the Court ordered are not confidential. Inaddition, on May 5, 2016, Oracle removed the inappropriate “confidential” designations from

fifteen documents. The State also attaches one of these documents.

Oracle designated hundreds of thousands of documents “confidential” or “attorneys’ eyes only”in the Oregon litigation. Many reveal Oracle’s misrepresentations, errors, incompetence, and

mailto:[email protected]:[email protected]


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failures. It is impossible to form a full and complete picture of Oregon’s health insurance

exchange project without reviewing these documents. Under the terms of the protective order inthe Oregon litigation, however, the State cannot provide these critically important documents tothe Committee. In the event the Committee wishes to request these documents directly fromOracle, the State attaches an appendix listing the Bates numbers of several key Oracle

documents.

Executive summary

Between 2009 and 2011, Oracle repeatedly told the State — in letters, presentations, and face-to-face meetings and demonstrations — that it could deliver a fully functional health insuranceexchange (“HIX”) that complied with the Patient Protection and Affordable Care Act (“ACA”)in time to meet federal deadlines. The State relied on Oracle’s statements and, in 2011, hired

Oracle to build the State’s HIX. Over the course of the next two and one-half years, Oracle promised, again and again, that it was “committed” to implementing and able to deliver that HIX

by the federally-mandated launch date of October 1, 2013. Relying on those promises, the State

and Cover Oregon, the public corporation charged with administering the State’s HIX,eventually paid more than $250 million for Oracle products and services. Much of those fundscame from federal grants.

Despite Oracle’s promises, on October 1, 2013, Oracle’s HIX system was not ready for publiclaunch. Oracle’s system was riddled with thousands of bugs and errors that made public use

impossible. Public launch would have been irresponsible and would have caused long-termdamage to the State’s effort to encourage Oregonians to enroll in health insurance plans. Aninternal Oracle security review conducted more than a month after the system should havelaunched concluded that Oracle’s system failed “the ‘laugh test’”: It had more than three dozensecurity bugs, “basic errors,” “significant issues,” and “evidence of poor coding practices.” Even

after many more months of remediation, Oracle was unable to produce a system suitable forrelease to Oregon’s citizens. An independent review by Deloitte concluded that it would cost anadditional $45 million and take two years for Oracle to make its broken system usable.1 ByApril 2014, the Cover Oregon Board, consistent with the recommendation from an independent panel of industry experts, had no choice but to abandon the majority of Oracle’s technology andtransition to the federal exchange.

The response from Oracle was immediate and bellicose. Oracle sued Cover Oregon, demandingeven more money. Oracle coupled its lawsuit with a media campaign falsely claiming that itsHIX system worked and that Oregon’s former -Governor abandoned the working system for political reasons. Oracle’s public defense and attack on the State did not then, and does not now,

make sense, and there is no evidence to support it. Oregon’s former -Governor intended andconsistently endeavored to launch a functioning HIX to Oregonians. He had no incentive — political or otherwise — to abandon a functioning HIX in favor of public embarrassment and protracted litigation. Nonetheless, Oracle has relentlessly promoted its implausible story to the press, the courts, and this Committee.

1

Deloitte is an Oracle “Diamond partner” that “globally provides access to professionals who possess deep knowledge

across Oracle applications & technology” and “is consistently recognized as the leader in Oracle implementation -

related services.” See http://www2.deloitte.com/global/en/pages/technology/topics/oracle.html.


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Oracle’s own documents demonstrate that the HIX failed not because of politics or the State’smismanagement but because Oracle’s technology did not work. As one Oracle employeesuccinctly put it in a recently revealed document: “This implementation is so screwed up.”

Discussion

Oracle tells Oregon it can deliver a HIX “out-of-the-box.”

In 2009, the Oregon Department of Human Services (“DHS”) began a project to update itstechnology infrastructure for its social services programs, such as the Supplemental NutritionAssistance Program and Temporary Assistance to Needy Families. This became known as theModernization Project. The next year, DHS and the newly created Oregon Health Authority(“OHA”) began a project to build an online health insurance exchange to implement the ACA inOregon. This project became known as the HIX Project. DHS and OHA sought an outsidetechnology vendor to supply the technology for the HIX and Modernization Projects. From 2009until 2011, DHS and OHA evaluated several interested technology vendors. By the end of 2010,

Oregon had narrowed the potential vendors to two choices: Cúram Software and Oracle.

Oracle proposed that the State purchase its so-called “Oracle Solution for Oregon.” Accordingto Oracle, the “Oracle Solution” would meet Oregon’s needs for both the HIX and

Modernization Projects.2 The “Oracle Solution” was comprised of a set of discrete Oraclesoftware products that were supposedly “integrated” together “out-of-the- box”— that is, theycould meet Oregon’s needs as built, with only routine configuration and without custom code

development.3 The core programs in the “Oracle Solution” were Oracle Policy Automation(“OPA”), a tool for automatically determining whether individuals were eligible for health

insurance and other social programs, and Siebel, a Customer Relationship Management(“CRM”) database. Oracle told the State an “out-of-the-box integration” existed between OPA

and Siebel and there would be no need for “manual programming.”4

Oracle repeatedly told the State that its products could meet the State’s needs “out-of-the- box.”In February 2011, DHS distributed a vendor questionnaire listing more than 200 technologyrequirements necessary for the HIX and Modernization Projects. DHS asked Oracle and Cúramto score their own ability to satisfy each of the technology requirements on a scale of 1 to 4. Ascore of 4 meant that the vendor’s technology could meet the requirement “out-of-the- box” withroutine configuration. Oracle scored more than 95% of the requirements with a 4.5 Only 5% ofOregon’s project requirements would require customization.6

2

Ex. 1 at pgs. 1, 6-7.3

For example, in a February 2009 letter from Oracle to the State, Oracle wrote: “Oracle’s [commercial off -the-shelf]software meets the current and future needs [of] DHS’s case management requirements with out -of-the-box

functionality.” In a 2011 slide presentation, Oracle emphasized its “comprehensive integrated technology” and “pre-

packaged integrations.” Ex. 2 at pgs. 40-41.4

Ex. 1 at pg. 31.5

Ex. 3.6

Oracle understood that the implementation of the ACA would involve changing requirements as the federal

government developed regulations for state-based health insurance exchanges. In a 2010 paper presented to DHS,

Oracle said its “solution” would “meet requirements and anticipate future ones”: “Oracle has worked hard with

federal and state/local Health and Human Services organizations to ensure that Oracle solutions meet requirements


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As the State prepared to make its final decision on the selection of an IT vendor, Oracle plainlyadvised Oregon that it could deliver a functional HIX: “Oracle’s Health and Human Services

solution can serve as the foundation that enables Oregon to achieve its goals and vision in beingan innovator and a market leader by providing a Healthcare Insurance Exchange … for itscitizens within the State of Oregon.”7 Oracle consolidated and reaffirmed its statements in a

three-day series of product demonstrations in May 2011, at which Oracle responded to questionsfrom the Oregon stakeholders. The demonstrations appeared to show Oracle’s productsfunctioning together “out-of-the- box” to accomplish the State’s goals.

Oregon purchased the “Oracle Solution” in reliance on Oracle’s statements about its

products and its ability to make them work together to satisfy Oregon’s requirements.

Oregon relied on Oracle’s statements and, on May 23, 2011, decided to purchase the “OracleSolution.” DHS and OHA issued a 38-page report explaining that decision. The report makesclear that Oracle’s assurances that the “Oracle Solution” would meet the State’s needs “out-of-the- box” were key factors motivating the State’s decision. The report notes that the “Oracleteam took the time to adequately demonstrate to the evaluation team the ‘out of the box’capabilities of its solution.” The report then explains that Oracle “repeatedly reiterated that

everything being presented was core functionality that comes ‘out of the box’ to its clients.” Thecomplete report contains more than 20 references to Oracle’s claim that its solution wasfunctional “out of the box.” The report also shows that the State relied on Oracle’s responses to

the State’s vendor questionnaire. DHS and OHA pointed out that “Oracle’s response to our

q uestionnaire indicated only about 5% of business requirements will require customization.”And the report indicates the State relied on Oracle’s May 2011 demonstrations to conclude that

the “Oracle Solution” functioned “out of the box”: “Oracle’s vendor demonstration did a good job of showing how flexible the solution is out of the box.”

The State signed its first contract for the purchase of Oracle products and services on June 30,

2011.8 Over the following three years, the State, Cover Oregon, and Oracle entered dozens ofcontracts governing Oracle’s work on the HIX and Modernization Projects. Altogether, Oregon

and Cover Oregon paid more than $250 million for Oracle products and services. Much (but notall) of this money came from federal grants and matching funds.

Oracle knew at the time that its promises were false.

Even as it promised Oregon that it could deliver a HIX “out-of-the- box” with only routineconfiguration, Oracle knew that its promises were false. A former Oracle employee explainedthat Oracle’s assurances to Oregon simply were not true: “There was no existing enterprisearchitecture for HIX. There was no solution. Again, what Oracle sold was a set of tools, not a

and anticipate future ones.” Oracle went on to tell Oregon that it would be prepared for the Affordable Care Act’s

requirements as they were released and f inalized: “Oracle anticipates using this same strategy for the requirements of

H.R.3200/H.R.4872. As of now, only a fraction of these requirements have been released and finalized. Oracle team

members are actively assessing the health bill requirements and will continue [to] work with government leaders on the

path forward.” 7

Ex. 1 at pg. 6.8

The State initially contracted for Oracle products and services through Mythics, Inc., a third-party re-seller. The

State later entered contracts directly with Oracle beginning in November 2011.


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solution. That solution still had to be designed.”9 The former employee also explained thatOracle’s representation that an “out-of-the- box integration”10 existed between OPA and Siebelwas “false.” According to the former employee “[t]here’s no prepackaged integration with OPA.Hundreds, hundreds and hundreds of hours wer e spent [on Oregon’s HIX Project] integratingOPA with WebCenter and with Siebel. There just – the notion that it’s – you just push a button

and it’s integrated is false.”

The employee was clear that Oracle’s claims that it could meet Oregon’s needs “out-of-the- box”were untrue. After reviewing Oracle’s responses to the vendor questionnaire, the formeremployee explained that Oracle’s products could not do what Oracle said they could do “out-of-the- box”:

There is no out-of-the-box ability to access eligibility information.There is no out-of-the-box capability to do enrollment. There is noout-of-the-box capability to do metrics. There is no out-of-the-boxcapability to access exchange information. There is no out-of-the- box capability to access employer data or consumer data orindividual data or provider data or consumer data.

In fact, according to the former employee, Oracle’s representations about the “integrated” nature

of the components of its “solution” were not just false, but Oracle’s products were “reallycounter-designed to integrate well.”

Furthermore, an internal Oracle email establishes that Oracle’s May 2011 demonstrations to theState showed a system that Oracle “had never demo’d before.” According to the email the May

2011 demonstrations “spanned uncharted territory” and Oracle’s sales staff relied on “creative presentation techniques and demo tricks” to make its pitch.11 The evidence shows that Oraclesold Oregon an “Oracle Solution” that did not exist.

Oracle launched a “planned … behind-the-scenes efforts” to convince the State and Cover

Oregon not to hire a systems integrator.

Oracle sold Oregon a set of products that were not integrated and did not work together “out-of-the- box,” yet also convinced Oregon not to hire an independent systems integrator to manage theProjects and implement Oracle’s software.

Oregon originally planned to hire a “systems integrator” to implement Oracle’s products.Oracle, however, discouraged Oregon’s plan. According to the former Oracle employee, Oracle advanced a “ planned . . . behind-the-scenes effort” to convince Oregon that “a SystemsIntegrator would just cause . . . delay.” Internal Oracle email supports the former employee.

According to an Oracle Senior Director, Oracle needed a strategy to prevent Oregon from hiring

a systems integrator. The Senior Director wrote: “We have a risk that a new SI [Systems

9

The Oregon Attorney General launched an Oregon False Claims Act investigation in the summer of 2014. As part

of her investigation, the Attorney General issued civil investigative demands. These quotes are drawn from a transcript

obtained pursuant to the Attorney General’s investigation.10

See, e.g., Ex. 1 at pg. 31.11

Ex. 4 at pgs. 3-4. Oracle produced Exhibit 4 to the State in the state-court litigation. Oracle initially designated the

document “attorneys’ eyes only.” On April 1, 2016, the court ordered Oracle to remove Oracle’s improper

“attorneys’ eyes only” designation from the document.


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Integrator] could displace or reduce our role significantly. It isn’t clear to me what we can do

about this other than pray that they keep deferring the SI selection. But since hope is not astrategy, this topic deserves some discussion.”12

Oracle’s “planned … behind-the-scenes effort” paid off. The State decided not to hire a systemsintegrator to manage the Projects. Oracle’s false representations that the “Oracle Solution” wasintegrated and satisfied requirements “out-of-the- box” were key factors in the State’s decision towithdraw a planned solicitation for a systems integrator to manage the Projects. In a presentation prepared in September 2011, the State noted that “Oracle is a highly configurable platform” andconcluded that “[b]ased on the ability to configure the Oracle suite, Oregon is re-evaluating theoriginal System Integrator RFP.”

Once Oregon decided not to hire a separate systems integrator, Oracle became the de facto systems integrator. Both the State and Cover Oregon hired Oracle Consulting Services (“OCS”),

a division of Oracle, to implement the HIX and Modernization Projects. The State hired Oracleto provide a Project Manager and Oracle staff served as business analysts and assisted with thedevelopment of business requirements. Oracle even provided the State with a Chief Technology

Officer to oversee technological development. Although Oracle was careful not to publiclyidentify itself as the system integrator, an internal email forwarded to State staff showed thatOracle referred to OCS as the “Oregon Systems Integrator” internally.

Oracle promised to deliver a fully functional HIX to Cover Oregon by the federally

mandated “Go Live” date of October 1, 2013.

In 2011, the Oregon legislature created “Cover Oregon,” an independent public corporation

charged with administering Oregon’s health insurance exchange. In the spring of 2013, Cover

Oregon took over responsibility for launching Oracle’s health insurance exchange system.Oracle understood that the objective was to “create a fully-functional, web-accessible, self-

service health insurance exchange.”13

Federal law mandated that state-based exchanges launchon October 1, 2013, and Oracle assured Cover Oregon that it would meet this mandatory “GoLive” date. On May 20, 2013, an Oracle Senior Vice President wrote to the Executive Directorof Cover Oregon “we are committed to the successful implementation of Oregon’s Health

Insurance Exchange at the highest levels in Oracle. I will continue to personally work with youand the team to achieve this critical GoLive on Oct 1st.”

Between March and October 2013, Cover Oregon entered many contracts with Oracle forOracle’s products and services to complete the HIX. Under these contracts, Cover Oregon paidtens of millions for Oracle products and services. Cover Oregon and Oracle’s contractual

arrangement recognized the critical October 1 Go Live date and defined work after October 1,

2013 as “post production support.” During the spring and summer of 2013, Oracle assured Cover Oregon that it was meeting itscommitments. Throughout its work on the HIX, Oracle tightly controlled access to the technical

12

Ex. 5 at 2. Oracle produced Exhibit 5 to the State in the state-court litigation. Oracle initially designated the


“attorneys’ eyes only” designation from the document. 13

Oracle’s ORCP 23 D Amended Answer, Affirmative Defenses, and Counterclaims, filed in Rosenblum et al. v.

Oracle America, Inc., et al., Marion County Circuit Court Case No. 14C20043 (Or. Cir. Ct. Feb 22, 2016).


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development environments and did not permit State and Cover Oregon staff to have directvisibility into Oracle’s development process. In June, an Oracle technical manager purported to

demonstrate many of the central functional attributes of Oracle’s HIX system at a Cover Oregon board of directors meeting. The demonstration purported to reflect functionality for an exchangewebsite. The demonstration created the impression for Cover Oregon board members and staff

that development of the HIX system was on pace to launch on October 1, 2014.

In the summer, in consultation with Oracle, Cover Oregon cut scope from its original design and planned a “soft launch” to agents and community partners only on October 1, 2013. Relying onOracle’s representations of the status of development, Cover Oregon believed a public launchwould follow shortly thereafter. However, just before October 1, 2013, Cover Oregon stafflearned for the first time that Oracle’s HIX system was in serious trouble. In September, Oracleattempted to demonstrate the system’s functionality to key Cover Oregon staff. Thedemonstration was a disaster. Critical errors interrupted the demonstration. Essentialfunctionality needed to enroll Oregonians in health insurance programs was incomplete andfailed to operate. A similar demonstration in September for officials from the Centers forMedicare and Medicaid Services also revealed serious errors with the system. The Oracle

employee leading the demonstration could not successfully demonstrate that the system wascapable of processing user requests as simple as an address change.14

The HIX was not ready and did not launch to the public shortly after October 1, 2013, as Oraclehad assured Cover Oregon. While Oracle scrambled to fix its errors, the State and Cover Oregonwere forced to hire hundreds of temporary workers to manually enroll Oregonians in healthinsurance from paper applications and fillable PDF forms. Over the next several months, Oraclerepeatedly declared that the system was almost ready for the public. But, time after time,Oracle’s assurances proved false. In February 2014, an independent assessment by Deloitte

reported that it would take nearly two years and an additional $45 million for Oracle to repair its broken technology.15 In April of that year, after more problems surfaced, the Technology

Options Workgroup recommended adopting a less expensive and less risky solution.16 CoverOregon’s board voted to transition Cover Oregon’s qualified health plan enrollment functions to

the federally facilitated marketplace.

Oracle’s work failed to meet industry standards.

One reason Oracle failed to meet the October 1 deadline was simple: its work was substandard.In October 2013, Oracle dispatched its top technical experts, called the “A-Team,” to Oregon toattempt to fix the broken HIX. The A-Team’s review of Oracle’s work was scathing. In a November 2013 review of the system’s security, the A-Team found that Oracle’s coding “[f]ailsthe ‘laugh test’” and contained “basic errors,” “[e]vidence of poor coding practices,” “significant

issues,” and “40 security bugs.”

17

14

Ex. 6 at pg. 2.15

Ex. 7 at pg. 10.16

Ex. 8 at pgs. 9-10.17

Ex. 9. Oracle produced Exhibit 9 to the State in the state-court litigation. Oracle initially designated the document

“attorneys’ eyes only.” On April 1, 2016, the court ordered Oracle to remove Oracle’s improper “attorneys’ eyes

only” designation from the document as a whole, but permitted Oracle to redact three pages.


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Internal emails were even harsher. A senior A-Team member wrote in October 2013 that therewere “major functional issues” with Oracle’s software: “[M]ajor functional issues existincluding basic functionality like communication between components.”18 According to anOracle product expert in November 2013, a month after Oracle was supposed to have delivered afully functional HIX: “This implementation is so screwed up.”19 The expert wondered how

Oracle’s team “could design such a system.” In November, an A-Team member told a CoverOregon employee “that he had six gigs of Oracle standard coding practice on his laptop and hedidn’t see any of it in the build.”

Oracle technical experts brought in to fix Oracle’s failed system had particularly harsh criticismfor Oracle Consulting Services (“OCS”), the Oracle division charged with implementing the

HIX. An Oracle product expert reported that OCS was “rapoing [sic] the state [o]f Oregon onsomething that will never work well[.]”20 An Oracle A-Team developer stated that “OCS peopleout [sic] to be publicly flogged for delivering the project to such a tragic status...”21 He addedlater, referring to OCS, “my blood is boiling thinking of all the irresponsible fools who broughtthis project to this messy state...”22

An independent Cover Oregon contractor who conducted a review of Oracle’s development onthe HIX was equally severe. In an October 17, 2013 email to two senior Cover Oregon officials,he wrote: “The review shows that the Oracle development team’s quality of the work wasatrocious and that they broke every single development best practice that Oracle themselves havedefined. It is one of the worst assessments I have performed in my 18 years of Siebel work.”Less than a month later, the contractor wrote to Oracle: “Oracle has failed in every single aspect

of the project from project management, proper design and development all the way throughdelivery and deployment.”23

Cover Oregon’s quality assurance vendor also sharply criticized Oracle. In its September 2013

report, it wrote: “Oracle’s performance is lacking. Their inability to adhere to industry standards

and professional software and project management tenants warrants further review.”24

It addedthat “releases are not stable and fixes and features are appearing randomly in the releases. Inaddition, more items are breaking then are being repaired.”25 As explained in greater detail below, an independent report by Deloitte issued in February 2014, more than four months afterOracle had promised to deliver a fully functional HIX, identified 1,500 functional or performance defects.26 To this day, in the face of the clear evidence to the contrary, Oraclefalsely contends that it actually delivered a HIX, tardy but ready for launch, in February 2014.

18

Ex. 10. Oracle produced Exhibit 10 to the State in the state-court litigation. Oracle initially designated the


“attorneys’ eyes only” designation from the document.19

Ex. 11 at pg 1. Oracle produced Exhibit 11 to the State in the state-court litigation. Oracle initially designated thedocument “attorneys’ eyes only.” On April 1, 2016, the court ordered Oracle to remove Oracle’s improper

“attorneys’ eyes only” designation from the document. 20

Ex. 11 at pg. 3.21

Ex. 12 at pg. 1.22

Ex. 12 at pg. 1.23

Ex. 13 at pg. 2.24

Ex. 14 at pg. 28.25

Ex. 14 at pg. 10.26

Ex. 7 at pg. 10.


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After Oracle failed to deliver a functioning HIX, it blamed the State and Cover Oregon for

its mistakes and incompetence.

After failing to meet its promises to deliver a fully functional HIX by the October 1, 2013, Go-Live date, Oracle launched a campaign to blame Oregon for its failures. Oracle’s campaign is

based on two false claims: First, Oracle falsely claims that the HIX was fully functional byFebruary 2014. In fact, however, the HIX never worked — not in February and not ever. Anindependent analysis of Oracle’s HIX by Deloitte determined that it would cost tens of millions

and take nearly two years to fix Oracle’s shoddy work.

Second, Oracle falsely claims that former Oregon Governor John Kitzhaber and his consultantsconspired to hide the working HIX from the public and blame Oracle for its failure. An Oregoncourt has already rejected this untenable theory, calling it “totally unsupported by the evidence provided.” Oregon transitioned off of Oracle’s broken HIX technology not for political reasons

but because the technology did not work.

The HIX was never ready to launch to the public.

After the HIX failed to launch on the October 1, 2013 Go Live date, Cover Oregon asked Oracleto fix the system. Between October 2013 and June 2014, Oracle attempted to repair its faultysystem. Yet, despite months of work, and payment of tens of millions of dollars, Oracle wasnever able to deliver a functioning HIX suitable for launch to the public.

Throughout the spring of 2014, Cover Oregon reviewed and tested Oracle’s HIX system. Again

and again, the system failed to meet Cover Oregon and the State’s minimum expectations. OnFebruary 5, 2014, Cover Oregon invited five volunteers from the public to try to use Oracle’ssystem to enroll in a health insurance plan. Only one succeeded.27

Notes from a February 27, 2014 Cover Oregon leadership meeting showed that technology errorsincreased by 2,000 in the previous week. Notes from another meeting showed a 20-30% failurerate for applications submitted by community agents and partners (“CPAs”)28 in the last week inFebruary. And notes from yet another show that in early March, the “error rate is 22% and has

been increasing daily.”

By email of February 27, 2014, then-Cover Oregon director Bruce Goldberg summarized hisassessment of the Oracle- built website’s functionality. He said that the website had “manydefects impacting performance of the system (how fast it runs and how many people can use it),the functionality of the system (inaccuracies for eligibility, shopping and enrollment) andsecurity,” and that it could only “process[] eligibility and enrollment at about 50 percent on

[users’] first try.”29

27

Ex. 15 at pg. 1.28

Because Oracle’s HIX was not usable by the general public, Cover Oregon relied on specially trained CPAs to input

paper or phone applications into the non-public backend of the system. The CPAs had access to Cover Oregon and

Oracle’s technical staff and training manuals to help them navigate around bugs and errors in the system. As discussed

above, even these specially-trained CPAs operating on the backend of the system encountered unacceptable error

rates.29

Ex. 16. Despite Dr. Goldberg’s assessment that the website was not working, Oracle has misquot ed one sentence of

this email for the opposite proposition. That sentence says that Cover Oregon’s measure of “system readiness” is


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Meeting notes reveal that on March 19 the system had 8,000 errors “left to work.” The notesalso showed that “IT Errors … increased greatly[.]” On April 7, Cover Oregon officials noted

that a quarter of applications submitted by Cover Oregon and its CPAs dropped data when theytried to save and exit. It was for these reasons, among many others, that Cover Oregon’s interim

Chief Information Officer, who voluntarily submitted to a deposition before Committee counsel,

testified in a state court deposition that “Cover Oregon concluded that the system was not stable… did not accurately determine eligibility and was … functionally inconsistent.” He concludedthat Oracle’s HIX “was not suitable for general public use.”

The Chief Information Officer’s conclusion was also supported by Deloitte’s assessment ofOracle’s HIX system. In January 2014, Cover Oregon hired Deloitte to provide an independent

analysis of Oracle’s work. Deloitte’s preliminary report concluded that if Cover Oregon stayedthe course with Oracle, it would take nearly two more years to implement a functional system ata cost of an additional $45 million.30 Deloitte’s review also showed that as of February 2014,Oracle’s work had 1,500 functional or performance defects.31

Deloitte’s analysis also demonstrated that Oracle’s initial assurances to the State were false.

Although Oracle said that it could deliver a system that was integrated and “out-of-the- box,”Deloitte noted that Oracle’s system was “extensively customized.”32 Another Deloitteassessment, completed later that spring, showed that the system Oracle had attempted to buildwas not integrated, not out-of-the-box, and required significant customization. Deloitte foundthat “[t]here is extensive custom Java code” supporting the OPA component. It also noted that“OPA is difficult to maintain” and a large amount of scripting was necessary to integrate Siebel

and Oracle’s website software, WebCenter.

Oracle’s videos prove that Oracle’s HIX was never ready to launch.

In June 2014, without Cover Oregon’s knowledge, Oracle secretly recorded a series of videos

intended to show a functioning HIX website. The videos do not show an actual Oregonian usingthe HIX system. Instead, the videos record trained Oracle employees, who understood how tonavigate around errors in the system, moving through a limited range of scenarios. Even withonly a few Oracle employees using the system, Oracle’s videos demonstrate an unacceptable rateof failure and confirm Cover Oregon’s decision not to launch.

In some cases, the videos show the system crashing entirely:33

whether “the system can function with a 90+ percent of accuracy for 90-95 percent of the population.” Oracle

mischaracterizes this sentence as saying that the Oracle-built website was functioning at this level. Goldberg’s email

plainly does not say this. Rather, it sets the standard by which the system should be judged.30

Ex. 7 at pg. 10.31

Ex. 7 at pg. 10.32

Ex. 7 at pg. 10.33

Image taken from the actual video.


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Moreover, the videos did not record performance on a completed, functional production-readyenvironment as would be used by the public if the website had been launched. The HIX systemwas required to handle 10,000 concurrent users. The videos demonstrate a single user.Furthermore, the Oracle employees who recorded the videos frequently paused the recordings

when they experienced difficulty, and there is no way to know whether they communicated toothers or took other action to cure problems while the recording was paused. The videos werecreated months after open enrollment closed and nine months after the October 1, 2013 launchdate.

No evidence supports Oracle’s claim that former-Governor Kitzhaber and his aides

conspired for political reasons to hide a functioning system from the public.

Oracle has also advanced the illogical theory that former-Governor Kitzhaber and his aidesconspired to hide a fully functional HIX system from the public. No evidence supports thistheory. In February 2015, Oracle sued several of former-Governor Kitzhaber’s consultants,including Patricia McCaig, claiming that they had interfered with the launch of HIX system. AnOregon court rejected Oracle’s theory and dismissed the lawsuit with prejudice just months later.The court found Oracle’s “arguments totally unsupported by the evidence provided.”34

The Court went on to explain that Oracle’s lawsuit was supported primarily by “insinuations inlieu of facts.” Oracle, the court wrote,

has presented an attempted prima facie case supported primarily by out-of-context snippets of email communication andinsinuations in lieu of facts. There is no demonstrated causalimpact of any [of the consultants’] actions on the deterioratingrelationship between [Oracle] and Cover Oregon. There is no

demonstrated interference in the governance of Cover Oregon byany defendant, including Ms. McCaig, notably the only defendant[Oracle] claimed had actual direct contact with a Cover Oregondecision-maker. [Oracle] has failed to convince this court that it

34

Opinion and Order. Oracle America, Inc. v. Looper et al., Multnomah County Circuit Court Case No. 15cv04705

(Or. Cir. Ct. July 27, 2015) (Kantor, J.).


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has any probability of prevailing on its claim of [intentionalinterference with economic relations].35

The court also took Oracle to task for arguing — without any evidence —that Oregon’s AttorneyGeneral, an independently elected public official, decided to sue Oracle based solely on the political machinations of the former Governor’s advisors.36

Emails between Governor Kitzhaber and his advisors show that, far from conspiring to hide afunctioning website, they were worried about what to do if Oracle could not get the websiteworking. For example, an email from Governor Kitzhaber to his chief of staff on March 22,2014, laments the “technology failure” of an inoperable public website and insists that their“TOP PRIORITY is to have a fully functional public website that is reliable, easily understood,

and which can maximize the ability of Oregonians to … enroll in coverage.”37

An email from Governor Kitzhaber to his chief of staff the following day emphasized theimportance of “making our IT platform/enrollment system work.”38 Governor Kitzhaber’sinternal emails reveal his serious concern that the Oracle-built website did not work and wouldnever work. They disprove Oracle’s nonsensical theory that Governor Kitzhaber dumped afunctioning website for political gain.

Not only is Oracle’s theory disproved by the documentary evidence, it makes no practical sense.

Former-Governor Kitzhaber wanted to launch a functioning HIX to Oregonians. If, as Oracleclaims, the HIX worked, Governor Kitzhaber had every incentive — politically and practically — to launch it.

Conclusion

Oracle cannot support its after-the-fact justifications for its “atrocious” work with any evidence.

The State and Cover Oregon could not launch a fully functional state-based HIX to Oregoniansin 2013 and 2014 for the simple reason that, despite its repeated assurances, Oracle’s technology

did not and could not work as intended. The “Oracle Solution” was not integrated, it was notflexible, and it could not meet Oregon’s requirements “out-of-the- box.”

When the State planned to hire a systems integrator, Oracle pushed hard to convince Oregonofficials that one was not needed, and Oracle itself assumed that role. When Cover Oregon toldOracle it had to launch the HIX by October 1, Oracle promised that it would come through. Andwhen it failed to live up to its promises, and was unable to correct its errors, Oracle blamedOregon for those failures and demanded even more money. All told, Oracle collected hundredsof millions in taxpayer money and delivered little.

35

Id. 36

Id. 37

Ex. 17 at pg. 2.38

Ex. 18 at pg. 1.


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We appreciate the Committee’s attention to this matter.

Very truly yours,

Elliot S. Berke

Enclosures


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APPENDIX A

ORACLE_STATE_00382061









Bf.oregon.hogr.Ltr.051016

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