Accenture pays $US63.7 million to resolve gov't kickbacks case

A 2004 lawsuit alleged that IT vendors gave kickbacks to systems integrators working on U.S. government contracts

Technology services and consulting company Accenture has agreed to pay $US63.7 million to resolve whistleblower allegations that it participated in a large-scale kickbacks scheme involving U.S. government contracts, the U.S. Department of Justice announced.

A 2004 lawsuit accused Accenture of receiving kickbacks from IT vendors, inflating prices and rigging bids on federal IT contracts.

The lawsuit, brought by whistleblowers Norman Rille and Neal Roberts, accused several IT companies of paying kickbacks in the form of rebates to systems integrators in exchange for preferential treatment on government contracts the systems integrators were working on. The DOJ joined the lawsuit in 2007.

"Kickbacks and bid rigging undermine the integrity of the federal procurement process," Tony West, assistant attorney general for the DOJ's Civil Division, said in a statement. "At a time when we're looking for ways to reduce our public spending, it is especially important to ensure that government contractors play by the rules and don't waste precious taxpayer dollars."

The lawsuit, filed in U.S. District Court for the Eastern District of Arkansas, centered on alleged improper payments and illegal rebates made by Hewlett-Packard, Sun Microsystems and Accenture, but the lawsuit named dozens of IT companies allegedly involved in giving or receiving kickbacks. Rille is a former manager at Accenture.

Accenture, the latest in a long line of companies that have settled the case, said it agreed to settle the lawsuit to "avoid additional time, inconvenience and expense that would come with protracted litigation."

Accenture denies any wrongdoing, the company said in a statement. "The U.S. federal government was aware of alliance relationships in the IT industry and how they would benefit customers, vendors and the IT industry," the company said. "The details of how alliances worked in the IT industry were widely reported in the industry press."

Hewlett-Packard agreed to pay $55 million to settle the lawsuit in August 2010.

EMC agreed, in May 2010, to pay the U.S. government $87.5 million to settle similar charges.

Computer Sciences agreed to pay $1.4 million to settle the case in May 2008. In August 2007, IBM agreed to pay just under $3 million and PricewaterhouseCoopers agreed to pay $2.3 million to settle similar complaints.

In September 2010, Cisco Systems and distributor Westcon Group North America agreed to pay $48 million to settle charges that they misrepresented prices in contracts with the U.S. General Service Administration and other agencies. The DOJ dismissed the Arkansas case against Cisco as part of the settlement.

Under the U.S. False Claims Act, whistleblowers can collect a percentage -- usually between 15 percent and 30 percent -- of the proceeds the U.S. government recovers in lawsuits alleging fraudulent payments of government funds. The amount of payment to Rille and Roberts has not yet been determined, the DOJ said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Tags governmentlegalIBMemcHewlett-PackardaccentureSun MicrosystemsCisco SystemsCivil lawsuitsComputer SciencesPricewaterhouseCoopers InternationalWestcon Group North America

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Grant Gross

IDG News Service
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