commentary Eyebrows were no doubt raised in Canberra last week after the US Department of Justice (DoJ) threw its weight behind a case that takes Accenture, Hewlett-Packard and Sun Microsystems to task over alleged kickbacks when working together on big US government procurement deals.
The case -- first filed by a whistle-blowing former Accenture staffer in 2004 -- accuses the consulting firm of allegedly accepting millions of dollars in rebates and other cash incentives from Sun and HP, in return for recommending their products and services to government clients.
If the DoJ succeeds in its case, the US government can claim three times the amount of its losses, plus civil penalties, from the defendants.
Here in Australia, Accenture manages hundreds of millions of dollars worth of contracts for several of our biggest federal government agencies, including the Australian Taxation Office (ATO) and Department of Defence.
And kickbacks -- although you rarely hear them described as such -- tend to be a regular part of the middleman's diet no matter which part of the world you're in. Whether you are a big consultant or a local computer store, you tend to be given financial incentives (ie rebates) to recommend one vendor's products over another.
Sun, HP and Accenture -- targeted by the DoJ case -- have released statements claiming that they have done nothing wrong.
"Accenture has a global policy with regard to compensation from third-party vendors," said Roxanne Taylor, Accenture US spokesperson.
"The purpose of the policy is to require disclosure to clients that the company has commercial arrangements with vendors that may result in the payment of compensation to the company in connection with a client contract."
The DoJ has said it is "acting to protect the integrity of the procurement process" -- and claimed that the defendants "have exploited the trust the government has reposed in them to act with honesty and candour; to provide accurate, complete and current cost and/or pricing data; to act without conflicts of interest; and to serve as independent third party objective advisors."
But its real beef with Accenture seems to be as much about the government missing out on the action as being about whether advice was swayed by pay-offs.
Under US law, any marketing assistance or rebate you score from negotiating a government contract is required to be passed on to the client.
Accenture, in this case, is accused of keeping the spoils for itself instead of sharing the love.
It's unlikely that the case will spur the Australian government on to similar investigations.
But if the case sets a precedent or perhaps spurs new legislation -- there is still a flow-on affect for government procurement in Australia.
Future suppliers will be required to be more transparent in their dealings with government -- especially if they are firms with global presence, such as Accenture, CSC, EDS, IBM Global Services etc.
The complex Sarbanes-Oxley compliance regulation is a good parallel. While US legislation, it demands from firms a new level of transparency on an international level.
The big accounting firms, for example, were forced to separate their accounting and consulting businesses on a global level. One obvious impact was PriceWaterhouseCooper's decision to sell off its consulting arm to IBM.
So even if our own Department of Finance and Administration shy away from making their own investigation into kickbacks, they might at least expect suppliers to disclose their alliances with greater detail in the future in line with new standards set in the US.
Either way, as a ZDNet Australia source has said, the likes of the Special Minister of State and the Minister for Finance and Administration would be "very interested in the outcome."
In light of these developments, Defence and the ATO should be seeking formal assurances from Accenture that it doesn't engage in these practices in Australia. They also need to conduct independent reviews on Accenture's performance under its contracts.