Justice joins lawsuits against three top tech companies

The Justice Department has joined three whistleblower suits that claim Hewlett-Packard Co., Accenture Ltd. and Sun Microsystems Inc. have been bilking the government for years in a broad-based scheme of improper payments and kickbacks involving their information technology government vendors.

The suits, originally filed by former Accenture employee Norman Rille and Neal Roberts in U.S. District Court in Little Rock, Ark., allege that the three companies and their resellers submitted false invoices for IT hardware and services on numerous government contracts beginning in the late 1990s.

Some press reports say the list of companies allegedly involved in similar activities is much longer and includes Cisco Systems Inc., Microsoft Corp., IBM Corp., Dell Inc. and Oracle Corp. and others.

In a short statement Thursday, Assistant Attorney General for the Civil Division Peter Keisler said the department "is acting in this case to protect the integrity of the [federal] procurement process."

According to a Justice announcement, the heart of the allegations is that "the defendants have systematically solicited and/or made payments of money and other things of value, known as 'alliance benefits,' to a number of companies with whom they had global 'alliance relationships' or an agreement to work together."

Justice asserts that these alliance relationships and the resulting alliance benefits amount to kickbacks and undisclosed conflict-of-interest relationships.

The suits were originally filed under the qui tam or whistleblower provisions of the 1985 False Claims Act. Under that statute, a private party, known as a "relator," can file an action if the fraud has not previously been publicly disclosed, whether or not the plaintiff has direct knowledge of it.

"Whenever Justice intervenes, it takes over the case," said Charles Miller, spokesman for Justice's Civil Division. "Whistleblowers file a suit on behalf of the United States, and it comes before us and we make a determination as to whether there are merits to the suit for the government to pursue it."

Miller said plaintiffs are free to pursue their cases on their own if the government chooses not to join in. "But in this case, what they have acquired is the full force of the United States Department of Justice Civil Division to actually litigate this, which is a much bigger animal than your local attorney."

He said when there is a successful financial recovery and the whistleblowers are not part of the alleged fraud, under the False Claims Act, they are entitled to between 15 percent and 25 percent of any recovery. In some cases, the share can amount to many millions of dollars. The government may recover three times its losses and civil penalties.

Justice filed its complaints April 12, but they were not unsealed until yesterday.

The three companies refuted the allegations.

"HP is proud to partner with the government and is confident its business practices are appropriate," said Emma D. Wischhusen, public relations manager at HP. "We plan to vigorously defend this action and look forward to demonstrating that HP has done nothing wrong."

HP also posted the Justice announcement on its Web site.

Sun Microsystems said Friday that it has fully cooperated with the audit process, as it routinely does, and welcomes the opportunity to address the claims in a fair and impartial forum.

In a statement, Sun Microsystems said, "The company continues to take pride in its relationship with GSA and the many government agencies that rely on Sun products and services. In accordance with Sun policy, the company cannot provide further comment on pending litigation."

Accenture is confident that it has "acted appropriately and in compliance with the law. We intend to defend our position and expect to prevail," said Roxanne Taylor, a company spokeswoman.

Accenture of Hamilton, Bermuda, has 140,000 employees and had revenue of $18.2 billion for fiscal 2006. Accenture ranks No. 24 on Washington Technology's 2006 Top 100 list of the largest federal IT contractors.

Hewlett-Packard of Palo Alto, Calif., has 150,000 employees and had revenue of $91.6 billion for fiscal 2006. HP ranks No. 26 on Washington Technology's 2006 Top 100 list of the largest federal IT contractors.

Sun Microsystems of Santa Clara, Calif., has 38,000 employees and reported $13 billion in revenue for fiscal 2006.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

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