The accounting and consulting firm KPMG LLP has landed a $26 million nonbid contract to add new functions to the state Department of Human Services’ KOLEA computer system to meet federal demands that the state quickly comply with the national Affordable Care Act, or Obamacare.

The state has already contracted with KPMG for $144 million in mostly federal funds to develop and maintain the KOLEA system, which was designed to replace the obsolete system for determining who is eligible for Medicaid and other medical assistance programs. The new system was also needed to meet complex new requirements imposed under the Affordable Care Act.

The new $26 million KPMG contract is part of the fallout from the collapse of the state effort to operate a nonprofit called Hawaii Health Connector to implement the Affordable Care Act.

Gov. David Ige said earlier this year that the state was out of compliance with Affordable Care Act requirements and is at risk of losing $1 billion a year in federal Medicaid funds unless the administration fixes the problems. The federal government is now demanding the state execute a corrective action plan to meet the Affordable Care Act requirements for Hawaii by this fall.

As part of the effort to come into compliance, the Ige administration announced in May that the state will shift to the federal Healthcare.gov system to enroll residents for coverage under the Affordable Care Act. That means the state must add features to the KOLEA system to allow it to efficiently “interface,” or exchange data, with the federal system.

That shift in strategy will be costly because it involves shifting functions from Health Connector to various state departments, and means the state no longer needs a computer system that was built specially for Health Connector.

Health Connector spent $87 million in federal funds on its own computers and related consulting, including assembling a system called HHIX that was also designed and built to process Obamacare applications for the Connector. With the decision to use Healthcare.gov for enrollment, HHIX is now “redundant” and will be abandoned, said Jeffrey M. Kissel, executive director of Health Connector.

“Accordingly we will be decommissioning the technology and archiving the data once the reporting and administrative requirements for 2015 are met,” Kissel said in an emailed response to questions. Health Connector plans to spend another $3 million to $3.5 million to archive data from HHIX before retiring it, Kissel said.

Interaction between the state’s KOLEA system and the Health Connector’s HHIX system has been a problem from the start. The state auditor in January reported that file transfers between KOLEA and HHIX did not work and “would be difficult to fix.”

Those communication problems between the two computer systems eventually forced the Health Connector and DHS to develop a complicated alternate method for moving data between them, and Health Connector and DHS officials have each blamed the other agency’s computer system for those problems.

Kissel said testing of Health Connector’s HHIX system by a consultant “demonstrated that the Connector had its side of this process ready to function, but for reasons I can’t address, DHS did not.” Department of Human Services officials, however, have argued the problem was with Health Connector.

DHS Director Rachael Wong said in a written response to questions that she and Kissel “both agree that anything in the past is history and want to affirm that the Hawaii Health Connector, DHS, and other state agencies are working together to transition to a state-based marketplace using the federal platform. We have a shared goal to continue to provide access to health coverage for quality care for Hawaii residents.”

The federal corrective action plan requires that all work under the new $26 million KOLEA contract be completed in time for the next open enrollment period in November. Although the corrective action plan “was the result of the Connectorʻs non-compliance with federal requirements, the Department (of Human Services) is being forced to make system changes within the same time frame,” according to a DHS request for an exemption from the state’s competitive procurement requirements.

That means there was not enough time for competitive bidding by other vendors who would be able to handle the work, and the state must use KPMG for the job, according to DHS. The department noted that KPMG did participate in a competitive procurement process in 2012 when it won the original KOLEA contract.

DHS has also awarded separate nonbid contracts to Deloitte Consulting for $300,000 for consulting serv­ices in connection with the latest KOLEA project, and to Public Consulting Group for $800,000 to conduct independent verification and validation testing and a security assessment of work done by KPMG under its new contract.

The state procurement officer approved the exemption from competition for all three contracts in June.

The Department of Human Services said the new interfaces between KOLEA and the federal system are on track to be completed by Nov. 1 and are currently undergoing testing.

Failure to comply with the federal requirements would place the state at risk for not meeting Medicaid requirements, which could jeopardize $1 billion in federal matching funding that helps provide health coverage for 330,000 Medicaid beneficiaries, according to the exemption request.

KOLEA, which stands for Kauhale On-Line Eligibility Assistance, first went live Oct. 1, 2013, and the Department of Human Services describes it as the first application in what will eventually be an information technology hub that will be made available to other state departments. However, the department says the latest effort to modify KOLEA to comply with federal requirements for Obamacare has “significantly delayed” development of the larger system.

Users of KOLEA initially complained that the new system for processing Medicaid applications would freeze while in use, lose applicant information or fail to upload documents that were required for verification.

Wong has acknowledged there were problems with the launch of the new system, but contends many of those flaws have been addressed. Wong said KOLEA processed an estimated 330,000 Med-QUEST or Medicaid applications or renewals, and said federal officials have expressed confidence in the new Hawaii system.