Accenture: Technology Recommendations, Kickbacks and Federal IT Pricing

Accenture agreed to pay $63,675,000 to settle allegations of kickbacks for technology recommendations, inflated federal IT pricing and rigged bids. The government alleged that the company received money for recommending hardware and software to federal buyers. For someone who knows how a vendor became the recommended choice, the case reaches a decision made before the government ever sees an invoice: whose interests the adviser was serving.

Two whistleblowers brought the qui tam case against Accenture LLP on the government’s behalf under the False Claims Act in the Eastern District of Arkansas. The Department of Justice announced the settlement on September 12, 2011. The government alleged that Accenture submitted false claims for payment, or caused them to be submitted, under numerous federal information technology services contracts.

Technology Advice With a Vendor’s Money Behind It

The company helping the government choose technology allegedly took kickbacks for its choices. The seller’s money was behind the adviser’s recommendation.

Inside a consulting or systems integration business, product recommendations are part of the route to a sale. If a payment rewards the recommendation, the commercial relationship can explain a choice that the technical presentation alone does not. An employee who knows the vendor arrangement may understand something the agency buying the recommended product cannot see.

The procurement Anti-Kickback Act covers paying or taking a kickback for favorable treatment on a federal contract or subcontract, and passing that kickback into the contract price.

For this kind of allegation, we examine what the payment rewarded alongside what the adviser told the government. A vendor agreement, recommendation communications and the payment record can answer different parts of that question. The sales relationship may describe an incentive that never appears in the recommendation the buyer receives.

When a vendor buys influence over the recommendation, an honest competitor has to compete against that influence as well as on its product. Taxpayers fund the purchase made on the strength of the advice.

Federal IT Pricing Runs Through Several Records

Federal IT pricing depends on the purchase terms, the order and the charges submitted for payment. To understand an inflated-price allegation, we connect those records to the recommendation that helped put the product or service in the purchase.

The recommendation can shape the purchase before an invoice exists. We connect what the adviser recommended with what the contractor represented about the price and what the government was charged.

This is where knowledge from different jobs can fit together. A person involved in recommendations may know why a product was selected. Someone involved in pricing or billing may know which rate or charge reached the government. Our work is to connect those accounts to the same purchase and the people making the decisions.

What Is the Meaning of Bid Rigging?

Bid rigging means arranging the competition so that supposedly competing firms help produce an agreed result. It can involve firms standing aside or appearing to compete while leaving a chosen bidder to win. Accenture’s settlement included the government’s allegation that it rigged bids on federal IT contracts.

The bid history matters because the price and the competition can tell the same story from different directions. An expensive winning offer shows what the buyer was asked to pay. The other participants’ behavior can help explain how that offer won. A procurement file can contain several bidders while the competition between them is largely an appearance.

What Are the Red Flags of Bid Rigging?

Repeatedly passive bidders and firms whose bids stop responding to competitive pressure can indicate coordination. A 2013 Higher School of Economics working paper, Collusion Detection in Procurement Auctions, examined highway construction auctions in a Russian region. It identified five suppliers whose passive bidding behavior was consistent with a rotating-bidding scheme.

The study compared higher-price and lower-price auctions. In the lower-price group, bidding reflected competitive factors such as the number of participants, capacity and experience. In the higher-price group, those relationships broke down. The paper describes the striking part:

For a federal IT insider, the study suggests a useful comparison: how the same firms behave across purchases, including the ones they lose. Recommendation communications and bid records can add the explanation behind a pattern in the prices. We look at both the commercial relationship and what the bidders actually did.

EMC, Sun and HP Show the Seller’s Side

The EMC, Sun Microsystems and Hewlett-Packard settlements covered allegations of payments for product recommendations and separate seller pricing practices. The person who knows the recommendation arrangements may explain why the government chose a product. The person who knows the seller’s pricing records may explain what the government should have paid for it. Accenture’s case puts the alleged recipient of recommendation kickbacks at the center of the story.

How Much Money Can a Whistleblower Get From a Qui Tam Lawsuit?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Why the Vendor Was Recommended

If you saw vendor payments shape technology recommendations or bids on federal IT work, speak with our whistleblower experts about what happened inside the purchase. We work with you to build your strongest federal IT whistleblower case around the advice, the money and the government’s bill, and bring in federal procurement whistleblower lawyers who understand technology-vendor kickbacks and pricing. You have a partner from the first account of that recommendation through the pursuit of a recovery.