Serco's U.S. arm gets key $948M CMS extension

Serco Inc. receives a new $948 million contract to continue its eligibility processing services for CMS that will clear major headwinds for both the company and the Obamacare legislation.

Serco Group’s North American subsidiary has received a new potential five-year, $948 million contract to continue its health insurance eligibility processing services for the Center for Medicare and Medicaid Services.

The current contract for Reston, Virginia-based Serco Inc. ends on June 30 and the business was required to rebid for the work. Revenue over the past 12 months for the work totaled $210 million, the Serco Group parent said Wednesday.

This extension clears away a major headwind for Serco Inc. given the rebid requirement and concentration of sales for the subsidiary in a single contract. The prior contract represented 30 percent of Serco Inc.’s total $890 million in revenue last year.

CMS’ renewal of the contract also comes after a long period of uncertainty over whether the Affordable Care Act of 2011 also known as Obamacare would be repealed under a Republican-controlled Congress and White House with the election of Donald Trump to president.

Trump and other GOP congressional leaders fought hard to repeal ACA last year but did not succeed.

CMS awarded the new contract as a task order under the Alliant 1 Unrestricted contract. The order covers one base year followed by four one-year option periods.