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Beware Midas’s Touch
Taxpayers pay for an Obamacare contractor whose employees have “little or no work to do.”


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Last year, the Obama administration gave a British-based company called Serco a contract worth up to $1.336 billion to manage paper applications for Obamacare. But this week, a local television station broke the story that Serco’s taxpayer-funded employees in Missouri were being paid to do nothing.

Don’t say you weren’t warned. Serco has a Midas touch, at least in the way that King Midas ruined what he came into contact with and still ended up with a pile of gold.

The Missouri story is just one case in point: A current Serco employee said that hundreds of taxpayer-funded workers spent their days “staring at computer screens with little or no work to do,” reported Chris Nagus of St. Louis’s KMOV-TV.

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That source told Nagus: “There are some weeks that a data-entry person would not process [a single] application. . . . They’re told to sit at their computers and hit the refresh button every ten minutes, no more than every ten minutes — they’re monitored — to hopefully look for an application. Their goals are set to process two applications per month, and some people are not even able to do that.”

In a follow-up report, a different former employee recounted to Nagus how employees would fall asleep at their desks and whittle away the hours playing Pictionary and word games — all at the U.S. taxpayer’s expense.

Nevertheless, the original whistleblower claims that “Serco, as a contractor, gets paid for the number of people that they employ. So they want us there even if we’re not doing anything.” The Department of Health and Human Services’ invoicing instructions for this contract instructed Serco how to bill for direct labor costs.

Nagus has said that this story is still developing, noting that Serco manages two other similar Obamacare-application facilities in other states.

As I reported last fall, there were myriad warning signs that Serco may not be the most desirable company to choose. Here are some of its historic highlights:

Serco is currently under criminal investigation by the British Serious Fraud Office. An audit found that Serco, along with another company, may have been overbilling the British government by up to $80.8 million.

Serco also failed to report these allegations to the U.S. government, even though American companies with a foreign parent are required to provide such notification, according to a Reuters report.

The London police have investigated Serco for allegedly falsifying documents for another government contract.

Serco also had a contract with the National Health Services in the United Kingdom. A 2013 British audit found that 252 times within a six-month period, Serco had made “unauthorized changes to performance data” to make its performance look better than it actually was.

According to the Guardian, a six-year-old British boy with a burst appendix died after his parents were told by an employee at a Serco-run phone service to put him to bed instead of take him to the doctor’s office.

In 2009, the British government outsourced its biggest pathology lab to a joint venture by Serco and two hospitals. Since then, there were at least 400 so-called “clinical incidents,” including the mislabeling or loss of blood and tissue samples.

Several women have claimed they were sexually abused and coerced at Yarl’s Wood, a British immigration detention center run by Serco. The company also paid an undisclosed sum last year to a Pakistani woman who said she was sexually assaulted there.

Last year, three Serco guards at Yarl’s Wood were fired after allegations of “sexually inappropriate behavior.”

In Australia, Serco runs immigration-detention facilities. In 2011, a leaked Serco training manual instructed employees how to kick, punch, baton-strike, and hit the pressure points of inmates. Inspections have also found severe overcrowding at these facilities. And in several instances, Serco has failed to submit required reports to the Australian government.

When news about the British Serious Fraud Office investigation broke last year, the Obama administration chose to defend its choice of Serco, claiming that the company was “highly skilled” and had “a proven track record in providing cost-effective services to other numerous other federal agencies.” It’ll be interesting to see what excuses are floated now for this entirely predictable, avoidable debacle.

— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity. She is also a senior fellow at the Independent Women’s Forum.



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