CGI Federal, the company responsible for building the problem-plagued Web site for the Affordable Care Act, won the job because of what federal officials deemed a “technically superior” proposal, according to government documents and people familiar with the decision. 
 
 Not considered in the 2011 selection process was the history of numerous executives at CGI Federal, who had come from another company that had mishandled at least 20 other government ­information technology projects more than a decade ago. But federal officials were not required to examine that long-term track record, which included a highly publicized failure to automate retirement benefits for millions of federal workers. 
 
 By 2011, CGI Federal already had been cleared to do government work at the Centers for Medicare and Medicaid Services (CMS), the agency overseeing the rollout of the new health-care law. 
 
 The company had been included in a pool of pre-screened, approved contractors in 2007, during the George W. Bush administration, and only firms in that pool were later allowed to bid for the Affordable Care Act work. It was at that earlier time that the problems at American Management Systems, the Fairfax County IT contractor acquired by CGI, would have figured into the assessment of CGI Federal, contracting experts say. 
 
 In hindsight, one former CMS official said, the AMS record “could well have knocked [CGI Federal] out of the competition, and probably should have.” 
 
 View Graphic A look at the consumer's route through the HealthCare.gov website and the potential failure points. 
 
 In light of the bungled launch of the health-care Web site, critics have repeatedly asked how CGI Federal got the contract, and there has been widespread speculation on online news sites and blogs that the firm was selected because of political ties to the Obama administration. 
 
 But a review of internal documents and interviews with former and current federal officials show that the selection process was walled off from politics. 
 
 Career officials at CMS, working out of an obscure Baltimore-based contracting office, focused in 2011 on the proposals submitted by four bidders, examining technical competency and cost while giving relatively little attention to past performance. Since 2007, CGI Federal had won 17 other CMS jobs under the pre-screened contract, worth several hundred million dollars. 
 
 The review of CGI Federal concluded there was “no evidence of performance risk,” according to a CMS document, portions of which were read to The Washington Post by a person familiar with the contracting process. 
 
 CGI Federal won the $93 million contract, now worth $293 million, in September 2011. 
 
 At the time of the earlier selection process in 2007, CGI Federal was still relatively new to federal contracting. It had grown out of CGI Group’s acquisition in 2004 of AMS, which had a recent history of troubled projects, including a Philadelphia school computer system that sent paychecks to dead people and a Mississippi tax system so dysfunctional that a jury awarded a $474 million verdict against the firm. 
 
 Three former CMS officials said in recent interviews that the AMS problems should have raised red flags. 
 
 “Should CMS have recognized that ‘Okay, here’s CGI Federal. It’s a new company, but, oh, my God, it looks a lot like the AMS from yesterday’?” asked one former CMS official familiar with the contracting process who like others interviewed for this article spoke on the condition of anonymity to discuss internal procedures. “Yes. I would consider that dropping the ball.’’ 
 
 Tasha Bradley, a CMS spokeswoman, said in a statement that the agency “adheres by a long- 
 
 established contracting process where expert, career contracting officials evaluate and award contracts based on criteria outlined in the contract solicitation, including past performance, technical expertise and proposed contract value.” 
 
 CMS declined to comment on specific questions about how closely CGI Federal’s past performance was evaluated and whether that review looked at AMS. 
 
 Former AMS executives have defended that company’s performance, and CGI officials have rejected any comparison with AMS’s earlier failures. 
 
 CGI Federal has also defended its work on HealthCare.gov, despite an October launch that White House officials have acknowledged was disastrous. Federal officials have faulted the company’s performance, saying it missed deadlines, understaffed the job and overstated its progress. 
 
 People familiar with the project have said it was also hampered by administration mismanagement, fierce Republican opposition and political sensitivities that delayed policy and regulatory decisions. 
 
 The federal online marketplace that is selling health plans in 36 states under the 2010 health-care law has been functioning better in recent weeks, but officials are still working to fix lingering problems, including errors in enrollment records sent to insurance companies. CGI Federal remains intimately involved in the project, writing computer code in attempts to fix various aspects of the system. 
 
 Linda Odorisio, CGI’s vice president for global communications, said the company “continues to work closely with CMS and all of its vendor partners to deliver continuous enhancements in system performance and the user experience” on the Web site. 
 
 She added that CGI Federal “contributed to the significant improvements made to the system over the last two months, resulting in more than half a million Americans enrolling in just the first three weeks of December.” 
 
 Umbrella contract 
 
 In December 2006, CMS put out a request for proposals. The agency said it was seeking “world-class IT services” to improve and maintain the massive systems that run Medicare and Medicaid, according to contracting documents. Thirty-one bidders responded, including CGI Federal. 
 
 CMS used a procurement method that has become increasingly common over the past decade. The agency first awarded an umbrella contract to a group of firms, and those firms were then eligible to bid on future IT work. Experts say this saves the government time because it shortens the subsequent bid process. 
 
 In evaluating the bids, CMS was to scrutinize each company’s performance on previous contracts, according to an internal agency document obtained by The Post. The document described a “risk assessment” of cost control, on-time delivery and other factors. 
 
 Federal law requires that past performance be considered for all federal contracts worth more than $150,000, with limited exceptions. Federal regulations also say CMS should have considered the record of “predecessor companies,” such as AMS. Several former officials familiar with the 2007 selection said no concerns about CGI Federal were raised inside the agency. 
 
 AMS projects had run into trouble at the federal level and in at least 12 states, according to government audit reports, interviews and news accounts. The purchase of AMS was CGI’s entree into the U.S. government market, and AMS executives flocked to CGI Federal. Today, more than 100 former AMS employees are senior executives or consultants working for CGI in the Washington area. 
 
 One former CMS official said the agency especially should have examined the most publicized AMS failure, an effort to automate retirement benefits for millions of federal workers. AMS was fired in 2001 by the Federal Retirement Thrift Investment Board after going $60 million over budget, writing computer code that turned out to be useless and never delivering a workable system, according to government reports. 
 
 AMS had settled lawsuits arising from the project in 2003. “That should have stood out,’’ the former official said. 
 
 CGI Federal was ultimately chosen for an umbrella contract, worth up to $4 billion in future work, along with 15 other firms, including Lockheed Martin and IBM. 
 
 While it is unclear whether agency officials examined the AMS track record, former CMS officials said it probably would not have made much difference, because past performance has long been an overlooked component of federal contracting. 
 
 Deadline pressure 
 
 In the summer of 2011, the Obama administration was racing to figure out who would build the Affordable Care Act’s all-important Web site. “Time is of the essence,” said an internal CMS draft request for proposals, dated June 24, 2011. 
 
 With deadlines looming, officials limited the bidders to the winners of the 2007 umbrella contract. “There was very great time pressure,” recalled a former CMS official familiar with the process. “The feeling was we had a lot of big IT powerhouses and they knew our work.’’ 
 
 Four firms applied: IBM, Computer Sciences Corp., Quality Software Services and CGI Federal. 
 
 As is tradition, the selection process was strictly sheltered from political considerations and political appointees at CMS or elsewhere in the administration, according to numerous former and current CMS employees. 
 
 “I deliberately stayed out of contracting,’’ said Leslie Norwalk, the agency’s acting administrator under President George W. Bush. “If that had changed, I would have heard rumblings.’’ 
 
 Agency documents show that a career contracting officer, in the CMS Office of Acquisition and Grants Management, was in charge of awarding the contract for the Web site. The selection process focused on bidders’ business and technical proposals, which described the proposed cost, hardware and software required, proposed infrastructure design, security requirements, and key personnel. 
 
 The companies’ past performance was not a priority. The CMS document listed it as the second least important of seven technical evaluation factors. And the review would look only at past work under the 2007 umbrella contract, the document said. 
 
 While the review found no performance risk for CGI Federal, agency officials had not always been satisfied with the company’s work. In 2010, CMS rejected CGI Federal’s bid under the umbrella contract to perform work on four health IT systems, in part citing unspecified performance issues in carrying out an earlier contract, according to a Government Accountability Office ruling. CGI Federal protested the CMS decision, but the GAO upheld it. 
 
 And the review did not take into account problems that several other CGI projects had encountered, including years of delay and system failures on a state computer system in Hawaii. State auditors in 2010 partially faulted another CGI subsidiary, CGI Technologies and Solutions, for those issues. 
 
 CGI says its overall work is high-quality and nearly always on time and on budget, and the company has also had many successes. In the past two years, CGI Federal has been awarded contracts with at least 25 federal agencies. 
 
 Documents and interviews show that CGI Federal was selected because of what was deemed to be the company’s technical prowess, even though the price of the firm’s proposal was higher than that of at least of one competitor. ||||| “Now, this is real simple,” President Obama told a crowd at Prince George’s Community College, in Maryland, in late September. “It’s a Website where you can compare and purchase affordable health-insurance plans, side by side, the same way you shop for a plane ticket on Kayak … same way you shop for a TV on Amazon. You just go on, and you start looking, and here are all the options.” 
 
 As we all now know, the bug-infested Website healthcare.gov turned out to be anything but “real simple.” After the site’s disastrous October 1 launch, the administration organized a frantic rescue effort shepherded by Jeffrey Zients, who is to become Obama’s chief economic adviser in January, and on December 17, the administration tapped Microsoft executive Kurt DelBene to lead the effort to build out the rest of the Website. The site is working better (but as of this writing still not perfectly) for consumers, though the complications it has unleashed for President Obama will be even harder to fix. The New York Times called the broken Website a “crisis that suddenly threatened his presidency,” and according to a CBS News poll, Obama’s job-approval rating has plunged to an all-time low. Americans’ approval of the Affordable Care Act has also dropped to its lowest level since CBS News began polling support for the law. 
 
 The story of how the Obama administration and the Centers for Medicare and Medicaid Services (CMS), the agencies tasked with implementing the Affordable Care Act got it so wrong is still unfolding. Much of the blame has to fall on an insular White House that didn’t want to hear about problems, and another chunk has to land on CMS, which instead of hiring a systems integrator, whose job it would have been to ensure that all the processes feeding into healthcare.gov worked together, kept that role for itself. As anyone who has worked with the federal government on such projects knows, it is utterly inept when it comes to technology. “The government continues to struggle with how best to acquire the expertise to integrate technology,” says Stan Soloway, the C.E.O. of the Professional Services Council, which represents contractors who work with the government. Soloway has a scary stat, which is that of the 80,000 information-technology workers in the federal government, for every one person under 30, there are 10 people over 50. 
 
 That lack of expertise explains why in building healthcare.gov, the government turned to industry contractors; in particular, to CGI Federal, a subsidiary of CGI Group, a Canadian company. To those uninitiated in the dark art of government contracting, it seems scandalous that CGI, a company most Americans had never heard of, a company that is not located in Silicon Valley (where President Obama has plenty of Internet superstar friends who could have formed a dazzling brain trust to implement his signature legislation) but rather in Montreal, could be chosen as the lead contractor for the administration’s most important initiative. While right-wing news outlets have focused on the possible relationship between Toni Townes-Whitley, senior vice president for civilian-agency programs at CGI Federal, and Michelle Obama, both of whom were 1985 Princeton graduates, CGI’s selection is probably more an example of a dysfunctional system than it is a scandal. “A lot of the companies in Silicon Valley don’t do business with the government at that level [the level required for federal contracting],” explains Soloway. “It is very burdensome, and the rules make it very unattractive.” Indeed, government contractors have to meet a whole host of requirements contained in a foot-thick book, including cost accounting and excessive auditing, to prove that they are not profiting too much off the American taxpayer. Hence, there tends to be a relatively small, specialized group of companies that compete for this work, even on such critical matters as healthcare.gov. 
 
 In this context, the selection of CGI, which has had a long relationship with the U.S. government through the companies it has acquired—among other projects, CGI also ran recovery.gov, the Website for all data related to the Recovery Act—doesn’t seem so odd. Back in 2007, CGI was one of 16 companies given an umbrella contract to do unspecified systems work for CMS. These so-called indefinite-delivery/indefinite-quantity, or ID/IQ, contracts exist throughout the federal government. Companies compete to be on the list, and then when a specific task arises, they compete again to be awarded that task; but because the list of competitors is predetermined, the process is shorter. When the Obama administration selected a main contractor for healthcare.gov, they decided to use the prequalified contractors, rather than starting afresh, in order to save time, according to Bloomberg. CGI was chosen as the lead contractor for the Website over three other bidders: IBM, QSSI, and Computer Sciences Corporation. According to congressional testimony, CGI stands to be paid $292 million for its work on healthcare.gov. 
 
 CGI’s lack of visibility before healthcare.gov wasn’t a reflection of the size of the company or how much work it does. With a market value of roughly $11.6 billion, CGI, after the decline of BlackBerry maker RIM, boasts of being Canada’s biggest technology company. (All figures in this story are in Canadian dollars; one U.S. dollar is worth about 1.07 Canadian dollars at the present time.) In truth, companies like CGI are more body shops than true technology companies, and the projects they take on require a lot of grunt work by a lot of low-level employees. CGI employs almost 70,000 people, who are embedded in businesses and governments around the globe. Its U.S. clients have included the military, the F.B.I., Pennsylvania’s Medicaid Medical Assistance program, and at least 40 state governments. 
 
 CGI is short for Conseillers en Gestion et Informatique, or Consultants to Government and Industry. It was founded back in 1976 by two Québécois, Serge Godin and Andre Imbeau. The publicity-shy Godin, now 63 and still active as the company’s chairman, became a billionaire this year, according to Slate, which called him a “classic tortoise” who had built his fortune with a “reliable, and more patient, business strategy than stumbling on the right tech at the right time.” He’s received numerous awards and honorary titles, including being inducted into the Canadian Business Hall of Fame, and he is a major owner of harness-racing horses. His daughter, Julie Godin, is the company’s executive in charge of human relations, and her father’s presumptive heir. 
 
 CGI has been a big stock-market success. According to the Canadian newspaper Globe and Mail, CGI’s stock has risen an average of 25 percent annually for the last 25 years. At its peak in November, the stock was up almost 70 percent in 2013, and the problems of healthcare.gov seemed to be having no discernible impact. Slate said that that’s because healthcare.gov is such a small part of its business. At any rate, CGI just reported revenues of $10.1 billion in its fiscal year ended in September 2013, up more than 100 percent from a year ago. 
 
 Even before healthcare.gov, CGI was embroiled in its share of controversy about its work, from problems with Ontario’s online medical registry to difficulties with the Department of Taxation’s collection system in Hawaii. As CGI worked on healthcare.gov, government officials were frustrated with the company for missing deadlines, and Michelle Snyder, CMS’s chief operating officer, told colleagues, “If we could fire them, we would,” according to The New York Times. Both Marilyn Tavenner, CMS administrator, and Kathleen Sebelius, the secretary of Health and Human Services, testified in congressional hearings that CGI didn’t meet expectations. A CGI spokesperson says, “as a matter of policy, we do not discuss the specifics of our ongoing client projects.” 
 
 On Wall Street, there’s an entirely different sort of controversy brewing about CGI. Several smart investors—including well-known short-seller Jim Chanos, who runs Kynikos Associates—are betting against CGI, or shorting its shares, not because of the quality of its work but because of questions about its earnings. In September, Deutsche Bank analyst Bryan Keane downgraded CGI to a rare “sell” rating, citing quality-of-earnings questions. What he and others point out is that a number of questionable accounting tactics could be creating the illusion that CGI’s business is far more successful than it actually is. After the news broke in Newsweek that Chanos was shorting CGI, its stock fell more than 12 percent, although it’s begun to climb again. 
 
 CGI is what’s known as a “roll-up,” meaning that it was built by acquiring other businesses, or rolling them up. Indeed, since its founding in 1976, CGI has acquired more than 70 businesses. (“Please stand up if you’ve ever been acquired,” Godin asked a crowd at a company gathering last February, according to the Globe and Mail. Almost everyone in the room stood up.) In the U.S., CGI built its business with the 2004 purchase of American Management Systems, based in Arlington, Virginia, and the $1.1 billion 2010 purchase of Stanley Inc., another Arlington, Virginia–based company. Stanley’s biggest customer was the U.S. Army, and the Stanley deal, according to Cormark Securities analyst Richard Tse, was instrumental in entrenching CGI with the government. “They are quite embedded,” he told the Globe and Mail. “Stanley was an entity that was really effectively managing many of the back-office systems for government and military.” Most recently, CGI bought Logica, a management-consultancy company headquartered in the United Kingdom. ||||| When 200 of CGI Federal’s top managers gathered at the luxurious Nemacolin Woodlands Resort in southwestern Pennsylvania on a brisk day in early November 2009, they found time for business -- and high jinks. 
 
 During the two-day event, managers presented PowerPoint slides celebrating the phenomenal success of CGI Federal, a major technology contractor, in winning lucrative government contracts. Most attendees stayed in the resort’s Chateau Lafayette hotel, a replica of the Ritz-Carlton in Paris, and at a formal dinner under the elaborate chandelier in the ballroom, George D. Schindler, the president of CGI Federal, spoke of the company’s big profits that year and its bright future. 
 
 The fun came during a team-building exercise following a boozy lunch in conference rooms not far from the hotel’s Lady Luck casino. Managers were split off into small groups and asked to solve math-laden riddles. For each correct answer, they received a bicycle part. The goal was for the teams, around 20 or so, to assemble children’s pink and blue bicycles, then race their tasseled bikes up and down the carpeted corridors of the hotel. 
 
 “People were riding these bikes drunk through the hallways of the resort,” recalls one former manager who attended the event, while others were “duck-walking” the children’s bikes, which were too small for most adults to sit on. Amid “a lot of hooting and hollering,” the manager recalls, the hotel staff was laughing. “Some people were bombed out of their minds until 2 a.m. It was greed and opulence, and it was on the taxpayers’ dime.” 
 
 He was wrong about one thing: taxpayers didn’t pay directly for the event for CGI Federal, the American arm of Montreal-based CGI Group that is known these days as the main company behind the glitch-plagued Healthcare.gov website, the engine of President Barack Obama’s health care law. Through a lucrative government contract, CGI Federal is the principal contractor assigned the daunting job of building the federal online insurance marketplace -- a large, complex website intended to help millions of ordinary Americans obtain health insurance that instead has become a byword for technological failure. 
 
 American taxpayers are among the main drivers of earnings at CGI, whose stock market value is $11.6 billion. For its recently-ended fourth quarter, the company’s revenue grew nearly 53 percent, to $2.38 billion. That put its total revenue for its fiscal 2013, which ended in September, at more than $9.8 billion, with nearly $442 million in profits. 
 
 CGI Federal and its parent company, CGI, do behind-the-scenes work, often with “Top Secret” clearance, for hundreds of American and foreign government agencies -- from the U.S. Nuclear Regulatory Commission and State Department to the Kyrgyzstan Border Service and World Anti-Doping Agency. But the questions swirling around the company go beyond how it mangled the showpiece reform of Obama’s presidency. Some investors and analysts are expressing concerns about potentially aggressive bookkeeping, weak disclosure practices and corporate governance issues. 
 
 See all of the best photos of the week in these slideshows 
 
 In recent months, Deutsche Bank and at least one hedge fund, 683 Capital Management in New York, have been asking if the company is double-counting revenues. Mike Yerashotis, an analyst at Veritas Investment Research, an independent equity research firm in Toronto, writes in recent research notes that investors should have a “healthy degree of scepticism” about CGI’s earnings. Yerashotis, a chartered financial analyst, cites a “red flag” around complex accounting issues, including deferred revenues, contract losses and work in progress. 
 
 Other issues predate the Obamacare debacle. In November 2011, a whistle-blower sued the company, claiming that an internal CGI Federal “Rat Pack” planned a “shell-company scheme” designed to get around U.S. Housing and Urban Development restrictions on subcontractors processing federally subsidized low-income housing payments -- effectively defrauding the U.S. government. In an 2010 email, a CGI manager drolly dubbed the scheme the “flying nun,” a reference to the 1960s television sitcom featuring actress Sally Field as a nun with a shady past. CGI Federal manages more than 25 percent of the nation’s Section 8 low-income apartments and houses, earning some $50 million a year from the business. 
 
 “Wheeling ’n Dealin’” 
 
 CGI had humble beginnings, and those early years provide some clues as to how CGI Federal ended up getting ripped in headlines for the Obamacare flop. 
 
 Established by Serge Godin, now the company’s executive board chairman, in Quebec City in 1976, CGI began with small local projects, including a contract for data-processing at an Alcan aluminum smelter in Godin’s French-speaking hometown of Saguenay, a town of nearly 144,000 residents 285 miles north of Montreal. 
 
 The nascent field of information technology was on the verge of booming, and Godin jumped in, expanding CGI’s workforce, gobbling up smaller Canadian technology companies and landing contracts with Bell Canada, the National Bank of Canada and Quebec’s pension plan. 
 
 But Godin, who grew up one of nine children and now owns a champion harness-racing horse named ‘Wheeling ’n Dealin’, had bigger plans. He had long dreamed of jumping the border to get into the lucrative U.S. market. In 2004, after decades of smaller acquisitions of Canadian companies, he got his chance: CGI snapped up a faltering Fairfax, Va.-based technology and consulting company called American Management Systems for $858 million in cash. AMS, eventually renamed CGI Federal, was founded by five former Defense Department officials who had worked under Defense Secretary Robert McNamara during Kennedy and Johnson. 
 
 The deal was a turning point for CGI, doubling its size in the United States overnight. More importantly, it gave CGI -- until then generally locked out of bidding on U.S. federal contracts due to U.S. restrictions on foreign contractors -- a valuable U.S. subsidiary it could use to court American agencies for business. CGI, whose initials stand for Conseiller en Gestion et Informatique, began using the phrase “Consultants to Government and Industry” in corporate materials. 
 
 Riding its self-described “buy and build” strategy -- and determined not to be a Salieri to the Mozart of Accenture -- CGI Group in 2010 bought Stanley Associates, an Arlington, Va.-based contractor to the nation’s defense and intelligence agencies. The $1 billion deal doubled again CGI’s U.S. operations and made Godin, who owns some 31 million shares in the company, including a majority of CGI’s voting stock, a billionaire, according to securities filings. Still, there was a divide between Montreal-based CGI Group and its fast-growing U.S. subsidiary CGI Federal, as the parent company’s “hand’s off” approach largely left the growing U.S. subsidiaries to their own devices. “Montreal wasn’t really involved in Federal’s business,” says a former executive. 
 
 Godin stepped down as chief executive of CGI Group in 2006, handing the day-to-day responsibilities to Michael E. Roach, but he still wields enormous power over the company, according to current and former insiders. 
 
 Former executives say the company still very much reflects his unusual management philosophy. CGI has a slim policy manual and relatively little in-house training for its staff -- unusual for a company that now has 69,000 employees across 400 worldwide offices. Under a “make your own job” ethos, CGI Group generally does not give employees job descriptions or job titles; instead, it lumps their skills into a database and requires them to find their own projects within the company. As part of that “manage yourself” mandate, CGI doesn’t even track sick days, and its three-week “bench policy” requires an employee to find a new project in that time-frame or risk being fired. Most employees are identified as “consultants,” and are compensated through profit-sharing plans. All that traces back to Godin’s favorite saying: “Nobody ever washes a rental car” -- if you own it, you will take care of it. 
 
 “Everyone is kind of self-employed,” says Gordon Divitt, a senior executive consultant at CGI in 2007 who was chief information officer at Interac, a Canadian ATM company for which CGI ran technological plumbing. “You’ve got to manage yourself, which is very unusual at a company this size.” Godin, he says, espoused “a philosophical approach, rather than a traditional hierarchical approach.” 
 
 Many big corporations have “mission statements,” essentially feel-good boilerplate outlining their raison d’etre. CGI has a “Constitution,” with “chapters” laying out “Fundamental Texts.” The unusual manifesto-style document, available on CGI’s website and referenced in securities filings, extols what the company has long called “The CGI Dream: ...to create an environment in which we enjoy working together and, as owners, contribute to building a company we can be proud of.” “Serge believes CGI is truly unique,” says a person close to Godin. 
 
 Despite its atypical management philosophy, CGI Federal sought to cultivate a more mainstream image, in line with that of competitors like Accenture, Cap Gemini and IBM’s government-contracting division. CGI Federal staffed up on former government managers and executives from the Environmental Protection Agency and other agencies. In 2008, it created the CGI Institute for Collaborative Government -- a think-tank with policy specialists at George Mason University, Johns Hopkins University and Virginia Tech. 
 
 The institute reflects CGI’s growing vision of itself as being embedded in the government agencies it serves. Mark Abrahamson, the former executive director of IBM Center who served as an informal consultant to the CGI iteration, says contractors like CGI “get really attached to their mission -- they think they’re working for the public good and providing a public service.” A senior technology executive familiar with CGI puts it more bluntly: “They think they’re part of the government.” 
 
 AMS provided most of the executive and managerial manpower at CGI Federal, which almost overnight had a new book of federal contracts with the Department of Health and Human Services, Los Angeles County and other agencies. At the helm was Schindler and his team -- the ardent cyclists at the Nemacolin event in November. In January, the company promoted Schindler to president of U.S. and Canada for CGI Group, giving him a larger role overseeing CGI Federal within the parent company. 
 
 But with its history of botched federal contracts, including a $60 million screw-up for the Federal Retirement Thrift Investment Board, the overseer of retirement accounts for 4.6 million current and former federal employees, AMS has also supplied some headaches. 
 
 These days, says one insider briefed on the matter, CGI “doesn’t want to be associated with the AMS culture.” Asked about cultural differences, a CGI Federal spokeswoman said that there weren’t any and called both companies “introverted” and “heads down.” Asked to elaborate, the spokeswoman pointed to the “lack of advertising” by both companies. 
 
 But Peter Bourke, an American consultant who helped the two companies integrate, saw something different. “With the merger, both companies had the interesting challenge of merging two different cultures,” he writes in a CGI “case study” on his website. 
 
 The Double-Dip Sundae 
 
 Last year, CGI got into the Asian and European markets when it acquired Logica plc, an Anglo-Dutch technology firm, for $2.7 billion -- its biggest acquisition, one that made it the world’s fifth largest information-technology company. Robert Atkinson, president of the Information Technology and Innovation Foundation, a lobbying group, thinks CGI’s sights are set even higher: “What they would like to be is a Lockheed Martin -- the largest government contractor” in its industry. 
 
 Before this deal, most CGI employees were in Canada and the United States, with some in India, but it now had access to many more educated, lower-cost technology workers in Hyderabad and Bangalore. 
 
 With CGI’s global reach expanding, one Logica business the company jumped into was a Dutch crime-watch service called Burgernet, a “citizen’s network” that resembles a neighborhood watch group on technological steroids, with deep ties to the state. In a promotional video for Burgernet, two hoodlums on a red moped in the outskirts of Amsterdam snatch a brown purse from a woman pushing a baby in a stroller. A bystander witnessing the crime whips out his cell phone and calls a special Dutch government center to report the theft. A blond-haired dispatcher quickly texts a “keep-an-eye-out-for-these-guys” message to local shopkeepers and residents, and loops in the police. Calls fly back and forth, as “Pot,” a white-coated butcher, and “Mr. Smit,” a young man glancing out his apartment window, ring the center to report sightings. 
 
 The scenario, set to dramatic, campy music, is a striking example of how CGI, like most federal contractors, views the deep intertwining of business and federal agencies. CGI touts Burgernet (the name has nothing to do with hamburgers--it refers to the Dutch word for “citizen”) as “a great success,” with more than 1.3 million people in 382 cities and towns across the Netherlands signed up. 
 
 Logica is a very good business, in other words, but is it as good as CGI says it is? 
 
 In the past 15 months, CGI has three times made accounting adjustments to the deal adding up to $1.1 billion, according to an analysis of securities filings by Yerashotis, who covers the company for Veritas Investment Research in Toronto. 
 
 The adjustments mean CGI can record an additional $1.1 billion in pre-tax earnings, from related increases in revenue and decreases in expenses. That is something investors like, because earnings are a key driver of a company's stock price. But Yerashotis, who first flagged the issue last March, argues in a Nov. 14 research note that the economic picture behind CGI's earnings may be different: that the adjustments will not produce a corresponding amount of cold, hard cash -- a key metric to the health of corporate earnings. 
 
 Yerashotis suggests that while the move appears to be legal, it might make CGI’s earnings -- and share price -- appear stronger than they really are. 
 
 In a Nov. 14 research note, Bryan Keane and Ashish Sabadra, equity analysts who cover CGI for Deutsche Bank and have a “sell” rating on the stock, wrote that “we continue to question the quality of the company’s earnings,” and 683 Capital, a hedge fund in New York, has similar questions, according to a person briefed on the matter. The fund declined to comment. 
 
 Skeptical analysts have honed in on increases for accounting purposes regarding money related to contract work Logica has completed but for which it has not yet submitted bills -- so-called deferred revenue. Making the increases allows CGI to shrink that liability as Logica gets paid, and record a corresponding increase in income -- even though there is no corresponding additional cash coming in from those contracts because Logica already accounted for that revenue prior to its acquisition by CGI. In his research note, Yerashotis flags that gap, noting that over its last fiscal year, CGI’s earnings before interest and taxes nearly doubled, while its free cash flow appears to have increased by only 58 percent. 
 
 The disconnect could potentially dim prospects for shareholders, who probably know that CGI has never paid a dividend on its stock. 
 
 In their report, the Deutsche Banks analysts ask if CGI is effectively “double-counting revenues.” Deutsche Bank declined to make Keane or Sabadra available for questions. 
 
 None of that seems to worry most equity analysts. In recent weeks, more than a dozen brokerage firms have raised their target price on CGI’s stock. Scott Penner, who covers the company for TD Securities and is also a chartered financial analyst, has slammed the Veritas and Deutsche Bank analyses. Logica’s accounting prior to its acquisition, Penner wrote on Sept. 3, “was clearly a more aggressive way of recognizing revenue… yet Veritas (and now this broker)” -- meaning Deutsche Bank -- “spins it as CGI being more aggressive.” 
 
 A spokesperson for Ernst & Young in Montreal, which audits CGI, did not return calls requesting comment. 
 
 Asked about the accounting questions, Lorne Gorber, CGI’s senior vice president for global communications and investor relations, says doubters “don’t know our company. These guys are outliers… they’re looking at complex accounting issues, and investors have to wait and see” as the integration of Logica is completed “and assume the progress we’ve made will stand for itself.” 
 
 Rescued by The Flying Nun 
 
 In early 2010, CGI Federal managers in Fairfax, Va., caught wind of some potentially devastating news: HUD, one of its biggest government clients, was considering limiting the number of Section 8 low-income houses and apartments for which any one federal contractor could process payments. The biggest threat was the agency’s plan to put out to bid contracts that CGI Federal -- and others -- already held, and to limit profit margins at winning contractors to 10 percent. 
 
 At the time, CGI ran the technology governing payments for 25 percent of the nation’s Section 8 stock -- 275,000 multi-family houses and apartments. Working with local public housing authorities, as required under HUD rules, CGI Federal had generated up to $50 million a year in fees from processing Section 8 payments and performing annual inspections, among other tasks, and CGI wanted more of that business -- as much as three-quarters. At stake amid the HUD limits was $625 million in revenues over four years, according to a confidential April 8, 2010 memo. 
 
 Section 8 housing is largely a grim business in blighted urban areas. Nonetheless, CGI Federal’s profit margins on the business were large. According to a confidential three-page internal document obtained by Newsweek and dated January 28, 2010, they ran as high as 51.7 percent, more than four times the 10 percent profits cap that HUD wanted. Another worrisome point for CGI Federal: HUD’s Inspector General found that some public housing contractors, including those affiliated with CGI Federal, had over-billed the Section 8 program by tens of millions of dollars. 
 
 In the face of this threat, some CGI Federal managers came up with an idea. “I don’t know whether this is possible or allowable, but can we create new entities for selected jurisdictions that are a joined (sic) venture of a PHA and a CGI subsidiary,” wrote Panos Kyprianou, a director of consulting services in CGI in a confidential email dated January 29, 2010 and obtained by Newsweek. “If this holds then we can get away with the unit restrictions as these entities will somehow be independent from CGI.” 
 
 In other words, could CGI set up entities it secretly controlled, put public housing authorities in front of them, and then hide behind them when bidding on Section 8 contracts? “In other words,” Kyprianou wrote, “can we hide behind a subcontractor?” 
 
 CGI already had close ties to some public housing authorities, into which it has effectively embedded its employees. One example: the Oakland branch of California Housing Initiatives Inc recently listed Andrew Hill of CGI Federal as its contact person on its website. The link has since been removed. 
 
 In his email, Kyprianou dubbed the proposal “flying nun” -- a reference to the 1960s sitcom about a seemingly virtuous nun with a dirty past. “The idea was to use shell companies to do the bidding, get the award and them fold them into CGI,” says one former manager. “Our business model was going to be screwed unless we used sleight of hand.” 
 
 Marybeth Carragher, a CGI vice president of consulting, replied to Kyprianou’s email that same day: “I was thinking exactly -- well almost exactly -- that scenario.” She added that she wanted to “mock up a few potential scenarios for working around” the proposed HUD restrictions. 
 
 CGI says in a statement that an alleged contracting scheme “never existed; nor was it ever contemplated.” 
 
 A spokesman for HUD in Washington, D.C. did not return calls requesting comment. 
 
 A Man Called HUD 
 
 Benjamin Ashmore, a former HUD manager hired by CGI Federal around 2009, alleges that he was fired in 2011 when he objected to behind-the-scenes proposals to skirt HUD restrictions. He filed a whistle-blower lawsuit in late 2011 that asserts CGI Federal devised a “director shell company scheme” -- a front for hiding behind public housing authorities. His lawsuit, which is wending its way through Federal District Court in Manhattan, also alleges that CGI violated Securities and Exchange Commission fraud rules. 
 
 CGI Group argues in court papers that no SEC violations are involved because its unit, CGI Federal, is not a publicly traded company, but a judge rejected that argument. 
 
 Ashmore’s complaint alleges that CGI created an in-house team of managers to address the HUD restrictions. Formally dubbed the “Rapid Action Team,” or RAT, the group openly called itself “The Rat Pack” in a undated slide that features photographs of CGI employees next to ones of Frank Sinatra, Sammy Davis Jr. and Hollywood’s other original Rat Pack members. 
 
 In a statement, CGI Group said that “the alleged contracting scheme that Mr. Ashmore describes never existed; nor was it ever contemplated.” 
 
 Ashmore, now the founder, president and chairman of the National Family Civil Rights Center, an advocacy group with offices in Washington, D.C. and New York, says that when he left HUD to join CGI, he was “impressed with CGI and excited to join the company. It was like being dazzled by the Emerald City from afar.” 
 
 He says things turned sour when he saw what he alleges was a shell-company scheme. “Being at CGI was like peering behind the curtain and realizing that the Wizard of Oz was just a charlatan… behind the curtain, greed, deception and profits replaced common sense and ethical obligations to clients.” 
 
 Asked about Ashmore’s lawsuit, Garber says simply, “we’ll let the courts do their work--that’s what the whistle-blower function is intended to do.”
– It turns out there were even more reasons the Centers for Medicare and Medicaid Services shouldn't have picked the free-wheeling and allegedly shady CGI Federal to build HealthCare.gov. When CGI was vetted back in 2007, it didn't have any obvious black marks on its record, the Washington Post explains. But CGI is a "roll-up" company formed by acquiring other companies—one of which, American Management Systems, was one giant black mark. AMS projects have hit trouble in at least 12 states as well as at the federal level, including a much-publicized 2001 failure to automate federal retirement benefits. The company went $60 million over budget on that one, yet produced nothing useful. More than 100 AMS alumni are now CGI executives or consultants. "Should CMS have recognized that ‘OK, here’s CGI Federal. It’s a new company, but, oh, my God, it looks a lot like the AMS from yesterday’?" asked one ex-CMS official. "Yes. I would consider that dropping the ball." But it didn't come up in 2007, and CMS never re-vetted the company, the Post's review of internal documents reveals. On the bright side, the review also reveals that the decision was politics-free, made purely because officials considered CMS' bid "technically superior." Vanity Fair, meanwhile, has an in-depth piece today on what many suspect is an accounting scandal brewing at CGI. It looks a lot like the company is using its acquisitions to mask financial problems, a quasi-legal practice known as creating a "cookie jar."