Accenture plc (ACN) has been selected as the lead contractor for the development of the Obamacare enrollment website. Accenture will replace CGI Federal, a subsidiary of CGI Group Inc. (GIB), which previously developed healthcare.gov for The Centers for Medicare and Medicaid Services. The initial phase of the contract is valued at approximately $45.0 million
The decision to discontinue CGI’s services was primarily due to error messages and slow speeds, which marred the website in its initial days. Moreover, the disruption hampered the process of completing applications online. As a result, insurance sign-ups were delayed in 36 U.S. states, which created a political crisis.
The federal government has reportedly not renewed the CGI contract, which is set to expire on Feb 28, 2014 and had an option to extend work for another 18 months.
Accenture’s services will help the federal government to gear up for the second open enrollment period due in Oct 2014. Its technical expertise will be utilized to offer extensive support for the marketplace application, enrollment and eligibility functions, and various other processes related to enrollment.
Accenture will also develop large scale public websites to offer improved healthcare.gov services and deliver critical health information to a larger number of healthcare providers in a cost-effective manner.
Accenture’s rich industry expertise is expected to enable it to manage the grand scale of the Obamacare program. Of late, the company has also been able to improve its customer base, bookings and performance in the insurance, banking and healthcare sectors. This also reflects strong demand for Accenture’s services, which is in turn favorable for its long-term growth prospects.
However, increasing competition from companies like Cognizant Technology Solutions Corp. (CTSH) and IBM Corp. (IBM), a strained spending environment and exposure to Europe remain concerns.
Currently, Accenture has a Zacks Rank #2 (Buy).
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