On July 16 of this year, Sarah Kliff posted a prescient piece on the Washington Post’s Wonkblog. The post, “Meet Serco, the private firm getting $1.2 billion to process your Obamacare application,” reported that 90 percent of Serco’s U.S. business is with the federal government and that the 25-year-old firm pretty much owes its existence to government contracting. In this case, Serco won a contract that will pay it $114 million in 2013 and that eye-popping number of $1.2 billion over the next five years. According to one outside study, it’s the largest single contract for implementing the Affordable Care Act, or as it’s both affectionately and derisively known, Obamacare. But in a city where everyone loves to talk but apparently few listen much, the piece must have mostly gone unread. The implementation, as we now know, has been a disaster.
Kliff also noted that Serco’s experience is in paper-pushing, not healthcare. Serco is a British company, but has been doing business in the U.S. for nearly a quarter century. Serco lobbyist Alan Hill emphasized to Kliff that the U.S. arm operates as a separate company with a strict firewall, given the sensitive nature of its operations, which include processing millions of visa applications for the State and Homeland Security departments.
But Serco is also a company with a checkered present. In July, Britain placed its contracts with Serco Group and another firm under parliamentary review for charging for prisoner-related services it did not provide. The Serious Fraud Office has now launched an inquiry into the overcharging on electronic tagging contracts for offenders, following the claims by the justice secretary. In August, police were called in to investigate fraudulent behavior by Serco staff—falsifying documents under a seven year £285 million contract that calls for delivering prisoners to court on time. Last month, Serco CEO Chris Hyman resigned weeks before the launch of a government investigation into the alleged fraud.
Of course, Serco isn’t the only large IT contractor working on the Affordable Care Act website. The second largest, according to the same study, is CGI, a Montreal-based multinational. Others include Booz Allen Hamilton, which infamously employed Edward Snowden, the alleged thief of vital NSA papers.
On October 10, the House Committee on Energy and Commerce wrote to Michael Roach, president and CEO of CGI, asking why the company had testified that “the marketplace implementation had achieved ‘all’ of its key milestones and that CGI was confident individuals would be ready to enroll on October 1.”
In Canada, CGI is facing scrutiny. Last year the province of Ontario abandoned a CGI-managed effort to start a diabetes registry because CGI reportedly failed to complete the project on schedule.
The Center for Medicare and Medicaid Services has yet to release a full list of contractors working on the ACA website, but the Sunlight Foundation, a Washington watchdog group, reviewed contract award information from USASpending.gov and FedBizOpps.gov, and identified 47 organizations that won contracts from Health and Human Services or the Treasury Department to manage, support, or service the implementation of the Affordable Care Act.
Sunlight’s analysis of the contracting program and the contract winners was not optimistic. It noted that the administration turned the task of building its futuristic new health care technology planning and programming over to legacy contractors with deep political pockets.
Still, neither the contractors nor the administration were new to Web design. All are at fault for the imbroglio.
In House hearings, contractor after contractor complained it didn’t have enough time to adequately design the site or to conduct the necessary end-to-end testing. And while some blamed other contractors for messing up, most of the finger-pointing was at the Department of Health and Human Services. Among the complaints: RFPs were delayed; key, and some supercritical, change requests were late; and HHS officials ignored contractors’ reports that the site wasn’t ready.
For its part, Administration officials disregarded criticism that some of the contractors had checkered histories. Responding to reports that Serco was facing a series of major inquiries in the UK, Brian Cook, a spokesman for the Centers for Medicare and Medicaid, said, “Serco is a highly skilled company that has a proven track record in providing cost-effective services to numerous other (U.S.) federal agencies.”
The hard-to-believe takeaway is that just about no one, least of all the administration, was ready on launch day.
For a summary of the contracting data compiled by the Sunlight Foundation, go to http://reporting.sunlightfoundation.com/2013/aca-contractors/.
Udayan Gupta is a New York-based writer and communications adviser, specializing in oral narratives and history. He is currently the Family Office columnist for WSJ Money and a contributor to Institutional Investor and Global Finance.
The Unhealthy Truth About Obamacare’s Contractors
On July 16 of this year, Sarah Kliff posted a prescient piece on the Washington Post's Wonkblog. The post, “Meet Serco, the private firm getting $1.2 billion to process your Obamacare application,” reported that 90 percent of Serco’s U.S. business is with the federal government and that the 25-year-old firm pretty much owes its existence to government contracting. She also noted that Serco's experience is in paper pushing, not healthcare. Nonetheless, Serco won a contract that will pay it $114 million in 2013 and that eye-popping number of $1.2 billion over the next five years.