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Federal Government Keeps Bad Company

Wednesday November 6th, 2013   •   Posted by K. Lloyd Billingsley at 9:40am PST   •  

Britain’s Serious Fraud Office (SFO) has opened a criminal investigation into the contracts of the Serco company, which electronically monitored criminals who were dead or already in prison. The investigation will come of interest to Americans because the U.S. federal government awarded Serco a $1.25 billion contract to set up online health exchanges for Obamacare. Serco was tasked to determine eligibility for tax credits, Medicaid, and exemptions from tax penalties.

Cap-building_200HHS bosses touted Serco as “a highly skilled company that has a proven track record in providing cost-effective services to numerous other federal agencies.” The selection of Serco “met all of the requirements for a full and open competition, and the timing enables us to be ready for marketplace open enrollment starting on Oct. 1.” As Americans know full well, on October 1 not much was ready, but their privacy was at risk because the site was vulnerable to hacking. Interestingly enough, Serco also managed a U.S. Thrift Savings Plan for federal employees that jeopardized the confidential information of more than 120,000 participants.

In July, after Serco bagged the Obamacare contract, Britain’s SFO opened an investigation into the company for overbilling the British government by some $80 million. Serco was supposed to notify the U.S. government about that investigation but failed to do so. In August, the London police began investigating Serco over allegations that it falsified documents for prisoner transport. None of that dissuaded the U.S. government from adding $87 million to Serco’s contract in September, even though it was unclear what new work it would take on. In late October Serco’s multi-millionaire boss Chris Hyman stepped down, and on November 4 the SFO announced the criminal investigation of Serco. That will likely make little difference with the U.S. federal government, which remains eager to outsource work to incompetent foreign companies.

As we recently noted, the government of Ontario, Canada, dropped the contract of Conseillers en Gestion et Informatique, CGI Federal, Inc., because of poor performance on a medical registry for diabetes patients. That proved no obstacle for the U.S. federal government, which hired CGI to set up the Obamacare website, a failure CGI bosses could not explain.

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November 2013