$1 Billion Obamacare Contractor Gives Employees Little or No Work; Will Media Care?

May 14th, 2014 10:39 AM

The government is paying private contractor Serco $1.2 billion over five years — and likely more, as will be seen later — to process paper Obamacare applications. In turn, according to a report by television station KMOV, Serco has hired and continues to pay a reported 1,800 workers who have virtually no work to do.

Massive waste like this should develop into a national story and create a journalistic swarm. If it does, it will be unusual, because the press has been avoiding stories which make President Barack Obama's "signature accomplishment" of state-controlled health care look bad like the plague. We'll see if it's different this time. The KMOV report follows the jump (HT Gateway Pundit's Progressives Today blog):

The KMOV report indicates that the company is still hiring. The final item in the video quote montage below probably explains why:


In July of last year, Sarah Kliff, then at the Washington Post, introduced readers to "Serco, the contracting firm that recently won a $1.2 billion health law contract." Kliff reported that as a result of the five-year deal, Serco planned "to hire 1,500 workers to handle any paper applications for health coverage under the Affordable Care Act."

In a system like Obamacare which has one period of high-traffic open enrollment per year, you would expect that the vast majority of those hired would have been taken in on a seasonal basis. But that is clearly not what has happened — and on top of that, Serco has hired even more employees than it originally said it would.

Based on what has been reported, it would seem likely that Serco is in a "cost-plus" contract with the government which guarantees a specific profit margin above costs incurred. If so, the more more taxpayer money Serco wastes by paying employees to do nothing, the higher its profit.

Cost-plus contracts are supposed to be illegal in federal contracting. Contractors have no incentive to control their expenses, and are in fact incentivized to engage in wasteful behavior. The guess here is that further digging will reveal that Serco is indeed in a cost-plus situation, and that some kind of waiver was granted to allow this to happen.

Stories like this which expose objectively scandalous and wasteful situations only turn into recognized scandals if they become widely known and cause others to continue to dig. A Google News search on "Serco" at 9:30 ET this morning indicates some progress on this front — including a tremendous column by the indefatigable Michelle Malkin, who detailed how Serco "is embroiled in scandal around the world."

That's extremely helpful, but the big question is whether the emotionally invested establishment press outlets will do what they should with the story, especially the Big Three networks. What news like this might do to Dear Leader has clearly trumped the journalistic import of news stories there for years.

Cross-posted at BizzyBlog.com.