It failed because they went with the lowest bidder
It didn't fail because they went with the lowest bidder. This was apparently a "sole source" contract. They just added another task onto an existing contract.
Meet CGI Federal, the company behind the botched launch of HealthCare.gov
CGI's business model depends on embedding itself deeply within an institution.
"The ultimate aim is to establish relations so intimate with the client that decoupling becomes almost impossible," read one profile of the company. ...
CGI Federal's winning bid stretches back to 2007, when it was one of 16 companies to get certified on a $4 billion "indefinite delivery, indefinite quantity" contract for upgrading Medicare and Medicaid's systems. Government-Wide Acquisition Contracts — GWACs, as they're affectionately known — allow agencies to issue task orders to pre-vetted companies without going through the full procurement process, but also tend to lock out companies that didn't get on the bandwagon originally. According to USASpending.gov, CGI Federal got a total of $678 million for various services under the contract — including the $93.7 million Healthcare.gov job, which CGI Federal won over three other companies in late 2011.
It's also true that CGI Federal began lobbying as it started winning government work. According to OpenSecrets.org, it has spent $800,000 since 2006 lobbying on several different tax and appropriations bills.
Feds reviewed only one bid for Obamacare website design
Rather than open the contracting process to a competitive public solicitation with multiple bidders, officials in the Department of Health and Human Services' Centers for Medicare and Medicaid accepted a sole bidder, CGI Federal, the U.S. subsidiary of a Canadian company with an uneven record of IT pricing and contract performance.
CMS officials are tight-lipped about why CGI was chosen or how it happened. They also refuse to say if other firms competed with CGI, or if there was ever a public solicitation for building Healthcare.gov, the backbone of Obamacare’s problem-plagued web portal....
There is no evidence CMS issued any public solicitation for the Obamacare website contract. The Examiner asked both CMS and CGI for copies of any public solicitation notice for the Healthcare.gov task orders. Neither CMS nor CGI furnished any such public notice.....
The ID/IQ system provides a fast-track contract approval process, but it is much less likely than competitive bidding to secure high quality at a reasonable cost.
“Whenever you have limited competition, but certainly with a sole source or a one-bid offer, the government has to question whether it is going to get the best product at the best price,” said Scott Amey, general counsel for the Project on Government Oversight, a nonprofit watchdog organization that monitors federal contracting.
Both USAspending.gov, which tracks federal spending, and the FFATA Subaward Reporting System, which specifically tracks contracts, refer to CGI as the lone bidder for the Obamacare website design award.
Each site describes the CGI contract award as the product of “full and open competition,” but CGI is the only bidder listed.
I can't find the link at the moment, but apparently this company is "favored" within the administration.... for some reason.