You got to wonder if folks who depend on ACS for services are at all worried about the Cerberus buyout in the works. Given the number of government contracts ACS has, you hope that someone in D.C. is paying attention. After all, look what happened at Walter Reed. Cerberus-owned IAP Worldwide Services was responsible for operation and administrative support at the Walter Reed Medical Center during the scandal involving substandard treatment of veterans. According to Congressional testimony, IAP’s arrival at Walter Reed in early 2007 (after winning a five-year $120 million contract in January of 2006) was accompanied by a reduction in medical and support staff at the facility, implicating the firm in the scandal at the military hospital.
We, at least, will be watching.
Which brings us to a second point. Taxes. If this deal follows the pattern of most PE deals, the ACS buyout will generate some hefty profits for Cerberus—all taxed not as income at 35 percent, but at the much lower 15 percent capital gains rate. (To learn more about PE and taxes, read our report “Behind the Buyouts” at behindthebuyouts.org)
Since almost half, OK 41 percent, of ACS’s revenues come from government contracts, it seems fair that Cerberus execs should pay their fair share to the federal treasurer.
