Report: Government Picks HP Over Verizon Terremark To Run Healthcare.gov Website


Hewlett-Packard, fresh off a fiscal fourth quarter that exceeded Wall Street's expectations, just got another dose of good news.

The U.S. Department of Health and Human Services decided over the summer not to renew its web-hosting contract with Verizon's Terremark unit, which had been handling "key elements" of the Healthcare.gov website, The Wall Street Journal reported Wednesday.

[Related: HP CEO Whitman: 10 Take-Aways From Q4 Earnings]

According to the report, HHS instead awarded a $38 million contract to HP's Enterprise Services unit to run the web hosting for Healthcare.gov, which is the main onramp for the federal government's Affordable Care Act enrollment system. HP Enterprise Services primarily consists of assets from its $13.9 billion acquisition of EDS in 2008.

It could take months to move the Healthcare.gov website from Verizon Terremark's data center to HP's data center, sources told The Wall Street Journal. The Obama administration has pledged to have Healthcare.gov working for most users by the end of November, but work related to the transition will continue beyond that, according to the report.

Since its Oct. 1 launch, the Affordable Care Act enrollment system's flagship site healthcare.gov has been plagued with glitches and downtime. While the government initially said the problems were due to unexpectedly high traffic, the issues were later attributed to underlying software and server capacity problems.

Verizon is part of the Obama administration's so-called "tech surge" to fix the problems with Healtcare.gov, an effort in which Oracle and Red Hat are also reportedly involved.

HP's industry standard server sales jumped 10 percent in the fourth quarter, after dropping 11 percent last quarter. This comes on the heels of a five percent rise in worldwide server shipments during HP's third quarter, which broke a string of 8 consecutive quarterly shipment declines.

HP is now being given a chance to help fix the well-publicized issues with the Healtcare.gov website. Despite the industry-wide decline in PC and printer sales, this is a golden opportunity for HP to show its stuff in enterprise infrastructure, which is an area of strength for the Palo Alto, Calif.-based computing giant.