Nearly one-quarter of CGI Group’s $1.3 billion in revenues last year came from the U.S. government, which included $90 million to build the ObamaCare website, Healthcare.gov. Unfortunately, overruns have taken that number up to $112 million, and could exceed $196 million by the time the website is fully operational and functioning properly as was promised back in October.
Cost overruns aren't unusual for CGI, or for several other information technology (IT) companies assisting with the website, including Seedco and Verizon Communications. As noted by Jennifer Hickey, writing at Newsmax.com, each of these “received contracts despite having histories of failure, fines and even fraud allegations” in previous work done for the government. It appears that, once hired, IT companies stay hired, regardless of their performance.
Seedco, one of the IT contractors working on the ObamaCare website, had dispersed federal funds for New York City, designed to create jobs during the recession. A whistleblower brought to light that Seedco had inflated the number of jobs it had created, in order to meet the terms of its contract. The New York Times first exposed the Seedco fraud in the summer of 2011, and in December 2012, Seedco agreed to pay $1.7 million to the federal government for falsely claiming to place some 1,400 New Yorkers in jobs.
This was just three years after Denver’s decision to terminate a similar contract with Seedco for failing to meet its job-creation goals. It suffered the indignity of a public exposure of its inability to perform by Denver auditor Dennis Gallagher, who wrote: “It seems to me that, three years into the relationship with the city, Seedco performs as if it were a start-up rather than the effective and efficient entity it is supposed to be. Three years is a long time to get geared up to do work.”
Computer Sciences Corporation (CSC), another Healthcare.gov IT firm, paid nearly $100 million to settle a class-action lawsuit over making “false or misleading statements or omit[ting] to disclose material facts” over its financial reporting on a $5.4 billion electronic records contract with the United Kingdom’s National Health Service earlier this year. In its annual report, the company took a $1.5-billion writedown on that contract, and in the process noted also that the Securities and Exchange Commission (SEC) was investigating the company for certain “accounting issues.”
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