Watchdog: Follow the Money

Accenture's success has come despite checkered federal contracting history

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Watchdog,Richard Pollock,Barack Obama,Follow the Money,Healthcare.gov,Accenture

Accenture sparked headlines when it won a $91 million sole-source contract to fix the deeply flawed healthcare.gov website, but it was business as usual for the consulting firm.

More than $1 billion of the $4.5 billion in federal information technology contracts awarded to Accenture since 2009 were the results of noncompetitive procurements, according to USAspending.gov, a federal spending database.

The company's federal IT contracting successes have continued year after year, despite a series of embarrassing scandals.

In 2007, for example, the Department of Justice charged that Accenture received hundreds of thousands of dollars in "cash and other things of value" from partner companies related to contracts with more than 20 federal departments, agencies and commissions, and even the Supreme Court.

Accenture settled out of court with DOJ, paying nearly $64 million to the government, but neither denied nor admitted any wrongdoing.

But that $64 million represented hardly a blip in the flow of federal IT contracting dollars.

The company's annual contracting revenues rose from an average of $664 million during the George W. Bush administration to $904 million under President Obama. Nearly one out of every four dollars of Accenture's government technology agreements since 2009 is from noncompetitive contracts.

“It does make you question whether the government can hold certain contractors accountable and whether certain companies have monopolies in getting federal government business,” said Scott Amey, general counsel of the Project on Government Oversight, a nonprofit watchdog group.

The company is among the top 25 IT providers to the U.S. government, according to the Washington Technology Top 100. Washington Technology is a media group that follows and ranks technology firms that serve federal agencies.

The Centers for Medicare and Medicaid Services, which awarded the sole-source healthcare.gov rescue contract, won't say much about why officials there chose Accenture.

In making the decision, CMS said only that it "determined that four companies potentially met the needs and held informal meetings with the four companies. After meeting with the four, CMS selected [Accenture] to perform this work."

Accenture is a foreign-based company, like CGI Federal, the IT company it supplanted in running healthcare.gov. CGI's parent company is based in Canada.

Accenture is led by Pierre Nanterme, the company’s chairman and chief executive officer. He joined the company in 1983 and became a partner in 1993.

Nanterme graduated from the École Supérieure des Sciences Économiques et Commerciales, a business school in Paris. He was awarded the insignia of Chevalier (Knight) of the Legion of Honour in France in 2010.

Accenture was incorporated in Bermuda until 2009, when it transferred its incorporation to Ireland. Its worldwide corporate headquarters now is in Dublin.

The company's links to Obama go back at least to 2007 when Accenture leased an entire floor of its U.S. headquarters in Chicago to his first presidential campaign. The luxurious space provided a view of Lake Michigan.

The case that resulted in the $64 million settlement stemmed from a 27-page federal complaint that detailed a decade-long pattern of dishonest dealings with the government.

The complaint claimed Accenture fraudulently inflated prices, rigged bids and received kickbacks from suppliers for selling certain products to the government.

The company, for example, received $747,439 in "cash and other things of value ... in return for Accenture's favorable treatment in the Government procurement process" from Hewlett-Packard between 2002 and 2005, and received similar kickbacks from other companies.

Justice Department officials charged in the complaint that Accenture had repeatedly violated the False Claims Act and the 1986 Anti-Kickback Act.

A number of defense and intelligence agencies were among the federal entities affected by contracts with Accenture that came under fire, including the Defense Logistics Agency, the Army and Air Force, the Defense Intelligence Agency, the National Security Agency and the Transportation Security Administration.

Others named by DOJ included the Departments of State, Education, and Housing and Urban Development, as well as the IRS, U.S. Postal Service, the Federal Elections Commission, Federal Deposit Insurance Corporation, the Smithsonian Institution and the Supreme Court.

Tony West, the U.S. assistant attorney general who handled the Accenture case, said after the complaint was settled that “kickbacks and bid rigging undermine the integrity of the federal procurement process.”

For its part, Accenture said then, “This settlement will not restrict Accenture’s current or future business with the U.S. federal government in any way."

In addition, Accenture spokesman Jim McAvoy said this:

“The DOJ pursued suits against more than 20 technology companies, claiming the industry’s practice of alliances was not properly disclosed in federal contract bids.  To avoid the additional time and expense of litigation, Accenture agreed to settle.  Since then, a half-dozen agencies have reviewed the DOJ initial claims, determined there was no issue and awarded contracts to Accenture, including the U.S. Department of Justice itself.”

Accenture hit what appeared to be an obstacle to new contracts soon after the settlement with the Justice Department when the Department of Education posted a notice to government vendors saying it planned to replace Accenture as prime contractor for its federal student aid programs.

The student aid program contract was a sole-source contract and Accenture's most lucrative, bringing in $163 million to the company in 2011.

Education department officials said they would post a formal solicitation for new bids “within 30 days” on FedBizOpps, a federal procurement solicitation site.

“This acquisition will succeed the current contract held by Accenture,” the public notice said.

But the promised formal solicitation never came. The public notice was quietly withdrawn in January 2012 and education department officials renewed the contract with Accenture.

Amey said that although he did not know what happened behind closed doors, he was nevertheless troubled by that sequence of events.

“Did they consider making that move after the company was in hot water with the Department of Justice? And then, as things cooled, decided, for whatever reason, economics or basic politics, they could still use the old Accenture contract without having to move forward with the new contract for the same work,” Amey said.

The company has been paid $289 million by the education department since the 2011 settlement.

Accenture also had problems with the Postal Service. A June report by the USPS inspector general said Accenture "has demonstrated an absence of business ethics" and recommended that postal officials "consider Accenture for suspension or debarment and review existing contracts to determine whether the contracts warrant termination.”

Postal officials declined to do so, however, saying that “management considered the evidence submitted and determined that suspension or debarment of Accenture was not warranted.”

Tom Schatz, president of the nonprofit Citizens Against Government Waste, said the USPS example illustrates that the government often continues contracts with contractors even when they display poor business ethics.

“It’s a sad commentary on the deficiencies in our procurement system,” Schatz said. "Why should it continue business with such a contractor? What prevents the contractors from doing it again?”

Accenture's success has also continued despite a March 2009 Obama memorandum to executive branch agencies discouraging the use of sole-source contracts.

“Excessive reliance by executive agencies on sole-source contracts ... creates a risk that taxpayer funds will be spent on contracts that are wasteful, inefficient, subject to misuse, or otherwise not well designed to serve the needs of the federal government or the interests of the American taxpayer,” Obama said in a memo.

Amey wonders if Obama's memorandum is being followed.

“When you hear they had an opportunity to end a sole-source contract and decided to rescind that and continue to use a noncompetitive contract at such a high level, it makes you question whether the administration is following through on its promise,” he said.

 
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