For the prospective IT buyer, the act of purchasing technology can be a fraught one. Whether buying hardware, software or middleware, the process is complex. However there are two rules that seem to hold. Firstly, the list price is not the best price that can be negotiated; secondly, if vendors appear to have routinely overcharged, they can expect some seriously aggrieved customers.
These two rules seem to be borne out by the experience of US government officials and they are undoubtedly aggrieved. Fallout from the spat may have serious repercussions across the industry.
At issue is the US Department of Justice’s decision to intervene in three suits being brought against Hewlett-Packard, Sun Microsystems and Accenture. The cases had initially been raised by two apparent whistleblowers, who alleged serial and protracted improprieties in the negotiations of technology contracts signed by government agencies.
The DoJ has now joined the whistleblowers – both former Accenture employees – and is supporting their case, which alleges that millions of dollars of kickbacks were sought, received, offered and paid in relation to government contracts involving the three vendors. The DoJ believes this resulted in government departments overpaying for certain contracts.
Sun, HP and Accenture all contest the charges, arguing that Accenture’s choice of technology partner for the contracts in question followed well-established industry practices.
The case will inevitably be complex – Accenture had relationships with many other technology vendors that have not been charged, and until the matters are dissected in court, it is difficult to form any opinion on the validity of the accusations.
Nevertheless, the court case will bring the opaque world of vendor-service provider relationship into the spotlight. It is common for technology manufacturers to offer incentives for partners to recommend their technology, but the case should help clarify what is a legitimate incentive and what is a pernicious kickback.