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- Jul 10, 2008
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Deloitte, a $74 billion cancer metastasized across America
You were never meant to hear the name "Deloitte" and you were never meant to know that the government has wasted $74 billion by working with them. Quietly, Deloitte is one of the largest contractors "building" American government IT systems. Medicaid enrollment, unemployment insurance, child welfare case management, food assistance eligibility. When you interact with a state benefits system, theres a decent chance Deloitte built it.
In building the 600m row (and growing) database for somaliscan, I sorted through literally millions of invoices, and once name continued to appear; Deloitte. California's unemployment fraud disaster that cost the state $32 billion? Built by Deloitte. Tennessee kicking 250,000 children off Medicaid? Built by Deloitte. The billion dollar software project in California that got cancelled after spending the budget? Ding ding ding, DELOITTE.
I decided to dig into federal contracts, state contracts, documented failures, lawsuits, audits, etc. I found a huge $40 billion tax payer farm.
The numbers
Over the past two decades, Deloitte has received roughly $30 billion in federal contracts and at least $10 billion more from states. This massive number wouldn't be an issue if Deloitte wasn't doing an irredeemably terrible job at providing the government with services. In every single state they've provided service (25) they had significant system failures. Wrongful benefit denials affecting hundreds of thousands, fraud vulnerabilities that cost the taxpayer BILLIONS, projects that ran 5x over budget before getting cancelled.
AND THEY KEEP GETTING HIRED BY THE GOVERNMENT.
California: Deloitte built the EDD system that processed unemployment claims. When COVID hit, the system couldn't handle the volume and also had no built in fraud detection. The state paid out over $31 billion in fraudulent claims. Auditors warned about the vulnerabilities for years, nothing was done. And after COVID, California RE-HIRED DELOITTE to FIX THE PROBLEMS.
Tennessee: After COVID in 2023, states had to re-check whether everyone on Medicaid was still eligible. TN's system, built by Deloitte, malfunctioned to a failure point and over 250,000 children lost coverage because the system processed them incorrectly.
CCMS (CA courts): In 2004, California hired Deloitte to build a unified court case management system. Budget was $260 million. By 2012, they'd spent $1.9 BILLION AND PROCESSED 102 CHANGE ORDERS. The state killed the project.
And the stories just keep adding up, across every single state contract Deloitte took, there are one or more catastrophic failures.
The Usual Suspects
I expected to find more obvious corruption when I started this. Bags of cash, quid pro quos, expose after expose. What I found is probably worse.
Deloitte spends about $1.35 million/year on federal lobbying. Their PAC gave $3.6m in the last election cycle, split evenly between parties. Theres a few million more in state-level contributions. These aren't huge numbers by DC standards, not enough to buy outcomes directly. Its honestly conservative in terms of spending.
The issue is the revolving door of government employees that move between Deloitte and the government agencies that award contracts. State health directors leave the government and join Deloitte, managers from Deloitte take up state IT departments. Hill staffers that worked on healthcare policy show up at Deloitte.
Forgive me as I dive into specific personnel to paint the picture:
Seema Verma ran a consulting company called SVC Inc. in Indiana. Gov Pence paid her $6.6 million to help design IN's medicaid expansion. When Trump/Pence won in 2016, Pence brought Verma to Washington as the CMS administrator controlling federal medicaid funds, CMS. CMS pays 90% of the cost when states build new Medicaid IT systems. Verma hired Mary Mayhew who lasted 3 months at CMS before becoming Florida's AHCA Sec. under Desantis. Mayhew oversay a $135 million Medicaid contract to Deloitte, the same company that built FL's unemployment system that was so broken it collapsed when covid hit. Deloitte got fined $8m for that, and was then rewarded a $135m contract. Mayhew left AHCA weeks after the contract was awarded to be the CEO of the Florida Hospital Association. The hospitals she would now lobby for are paid largely by...... MEDICAID. Seema Verma was also responsible for $200m in contracts going to Deloitte. Jennifer Ungru was AHCA's COS, left to run Desantis's healthcare transition team, then became... a lobbyist for Deloitte. Tom McCullion was DEO project manager who selected Deloitte for CONNECT (the reason for the $8m fine). He called the system poor and unstable. In 2019, AHCA hired McCullion as a $155/hour contractor to advise on medicaid contract bidding. He left and 5 months later, Deloitte won the $135m contract.
Theres a hundred stories just like those I covered, you get the point. To be clear, this is NOT illegal. Thats the problem. Deloitte is objectively terrible at doing whatever the government pays them way too much money to do. I cannot comprehend how you would spend $100 million building a medicaid management software or $1 billion on a court case management software that doesn't work, its inconceivable.
$74 billion comes from the $40 billion in contracts and my estimated $34 billion in direct losses, not including administrative costs, healthcare costs, fraud, IRS modernization, Texas energy fund failure, the real number of waste is probably significantly higher.
The rabbit hole goes much deeper than what I divulged in this article. Deloitte will fight very hard to maintain their government contracts and continue leeching off of the American taxpayer. I spent a long time trying to figure out why nothing changes, and the answer was almost depressing. Deloitte's systems are just baked into everything, a cancer metastasized into the bloodstream that feeds on tax dollars instead of glucose. I have a bit of evidence that might suggest payoffs, quidproquo, etc, but the truth is more difficult. Nobody in the government wants to fix it because the tax dollars keep flowing in.
The data
I've put everything I collected on https://www.somaliscan.com/investigations/deloitte
- State by state breakdowns, federal contracts by agency and year, timeline of failures, political contributions, revolving door, etc etc all on the web.
CSV's all available for download, all data is exportable. I dont know how to fix this but I know more people need to pay attention because nobody is and the contracts keep getting signed.
