Oracle says state wanted to take 'unacceptable risk' with health care website transition

It's the latest twist in the ugly public battle between Oregon and the vendor over a failed Obamacare software project

The blame game between Oracle and the state of Oregon is going into overtime, even before their dueling lawsuits over the disastrous Cover Oregon health insurance exchange website make it into court.

Cover Oregon went live on Oct. 1 last year, and like the federal site that's a centerpiece of President Barack Obama's health care reform legislation, immediately ran into major performance problems. Unlike, Cover Oregon never reached full functionality.

Both sides have flung lawsuits at one another, with Oracle seeking millions in unpaid fees and the state hoping to claw back whatever taxpayer money it can from the company.

While Oregon is now using to enroll people in private insurance plans, it also planned to salvage some of the Oracle technology created by the US$240 million project and use it for a Medicaid enrollment system.

Not any more. The plan now is to scrap Oracle's work entirely and use a Medicaid system developed by an as-yet unchosen state, according to a report this week in the Oregonian newspaper. Deloitte had been hired by Oregon to work on the transition and is continuing in that role.

A couple of factors weighed into the state's decision to fully part ways with Oracle, according to the Oregonian's report. For one thing, Oracle wouldn't approve a plan by the state to turn over hardware from data centers it has in Texas and Utah to Oregon. It was also determined that Oracle's technology wouldn't end up working well with other IT assets the state has, the report said.

But in a letter to an attorney for Oregon, which was seen by IDG News Service, Oracle general counsel Dorian Daley tells quite a different story.

First, Cover Oregon asked Oracle to continue running the Medicaid system in a production environment only, while eliminating the pre-production and test environment, according to Daley.

"This would mean that in the event of any required patches or updates, including critical security updates, the changes would have to be entered into the production environment directly, without testing," Daley wrote. "This is not a responsible option and Oracle will not run a system under those circumstances."

Without a pre-production environment as backup, any outages could result in data losses and significant downtime, Daley added.

Moreover, a backup system gives administrators the ability to check the impact of patches and other changes on the application before they are applied to the production environment. It's common for this sort of testing to "uncover unintended deleterious consequences to the application that must be repaired and retested," she wrote.

Oregon CIO Alex Pettit told Oracle in a letter that Cover Oregon would like to "recover possession" of the Exadata servers being used for the production environment, according to Daley.

While not stated explicitly, Pettit's letter suggested that the state wants to use the servers now running the pre-production environment and use them to run the production environment needed for what Deloitte is doing, Daley added. Oregon "evidently did not budget for the new servers it now requires," she wrote.

After Oracle made its objections to Oregon's requests, Cover Oregon made a number of alternative proposals, "none of which are acceptable," Daley said. Among these were suggestions that Oracle move the system off Exadata and onto commodity hardware, which isn't technically viable since the same configurations aren't possible, she wrote.

Cover Oregon also proposed running the pre-production environment "on hardware already leased and used by the state," which would be a violation of Oracle's privacy and data security policies, Daley added.

Oregon has some options, which include having Deloitte manage the production environment instead of Oracle, or buying new hardware for it from other vendors, Daley said. Oracle is also willing to discuss how to lower Oregon's costs for Oracle's management services, and even to terminate its services contract early so the state can find another provider, she added.

A Cover Oregon spokeswoman didn't respond to a request for comment on Daley's letter, which wasn't mentioned in the Oregonian's report.

"The State's apparent decision to now move off the system entirely is puzzling and will cost the state even more time and money, but that, too, is par for the course," Oracle spokeswoman Deborah Hellinger said via email. "It seems every decision the State makes is politically motivated as evidenced by the fact that the State's legal counsel is apparently briefing the press before briefing Oracle."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is

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Tags business issuesit strategyhardware systemsCIO rolesoftwareIT managementinvestmentsOracleDeloitteservicesDorian Daley

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Chris Kanaracus

IDG News Service
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