Single Source Procurement: New York State of Health Program

Pursuant to New York State Finance Law § 163.10(b), The New York State Department of Health is presenting the following summary of relevant circumstances, and material and substantial reasons why a competitive procurement was not feasible.

The new York State Department of Health (Department) Office of Health Insurance Programs (OHIP), Division of Systems, requested and received an exemption from advertising in the Contract Reporter to amend contract number C027853A with Computer Sciences Corporation (CSC) to extend the contract term one (1) year (through May 31, 2017).

CSC was awarded the contract to design, develop, implement (DDI), operate, and enhance the State's health insurance exchange, now called the New York State of Health (NYSOH). "The Funding Availability Solicitation (FAS) for the Office of Health Insurance Programs New York State Health Benefit Exchange (NY-HX)" was released July 15, 2011 and the contract was approved by OSC on June 1, 2012. The term of the contract is June 4, 2012 through May 31, 2016.

The Department and CSC have been working diligently to arrive at acceptable terms and conditions for such an extension. The Department feels it is important to include additional requirements, including revised service level agreements (SLAs) to improve contract performance, should the Department decide to move forward with the five-year contract option specified above. It is the Department's opinion that while the first four years were heavily involved in the DDI activities necessary for the successful implementation of the NYSoH, the FAS and the resultant contract did not contain sufficient information to provide for an operational environment that could be well managed by the Department. The Department and CSC have been negotiating terms and conditions that define the operational responsibilities in greater detail than envisioned during the procurement, however, the parties have not been able to come to closure on all the details and related pricing.

The Department and CSC have agreed to a one-year extension period rather than the FAS period of five years. This one-year extension will provide the Department and CSC with the opportunity to fully develop the revised terms and conditions and associated pricing. The Department is investigating the possibility of a State takeover and operation of the NYSoH through a combination of ITS, HBITS and PBITS involvement. In addition to extending the contract term one year there is a need to increase funding for postage in contract year 4 to meet the demand. This proposed amendment will provide the additional funding needed by adjusting the amount of the existing line items without increasing the overall amount of the contract value.

While there remains an extensive list of projects to be developed and implemented, it is the Department's belief that based on the historical DDIO work performed, the proposed supplemental staff funding level for contract year 5 will provide a reasonable, sufficient funding level.

While operational, the NYSOH is still undergoing a high degree of development effort to accommodate planned phased development and changing regulations. Due to CSC's intricate knowledge of the current NYSOH application and architecture, it is challenging and adds risk to bring in new vendors for system development, including the risk of incurring significant delays that would result from the resultant learning curve. Where reasonable, the Department has sought alternative sources, such as for the notices solution (Amendment No. 3) where it solicited interest from State preferred sources. After following the Office of General Services State preferred source process it was found that the sources did not meet the Department's needs.

Procurement / Program Name New York State of Health
Contractor Name(s) Computer Science Corporation
Contract Period Period 6/4/12 – 5/31/16 extended to 5/31/17
Contract Number(s) C027853A