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DOJ Names Dozens of IT Vendors in Kickback Scheme
grantus writes "Today, the U.S. Department of Justice joined three whistleblower lawsuits against Hewlett-Packard, Sun Microsystems and Accenture alleging a massive kickback scheme on government contracts. Among the IT vendors listed in the lawsuit as Accenture partners are Microsoft, Cisco, IBM, Dell and Oracle."
Nothing to see here, move along...
09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C1 bottles of beer on the wall. Take one down, pass it round... Oh, umm...
The corruption in question isn't in the government, it's in the vendors that sell products and services to the government.
Mea navis aericumbens anguillis abundat
If you had RTFA, you would have seen that the corruption wasn't with the govt. but with other companies. The other companies received money from Microsoft, Cisco, IBM, Dell and Oracle, among others for preferential treatment when it came to govt contracts.
RTFA, the US government was the ones that where getting scammed.
Effectively with government contracts all the companies would agree to estimate far higher then it would ever take to fill the order. Step two, the contract winner would take the amount of money for the contract, subtract how much it really would have taken(this being raw "bonus" profit) and split that amongst the group since it involved the entire group to go along with it for it to work. Wait for the next contract and do it all over again, scamming millions if not billions from the US government who thought that it was getting a good deal off of each company fighting for the deal when really it was getting scammed by a pseudo-monopoly.
If i had one dollar for every brain you dont have, i would have $1.
I guess you see only what you want to see.
...blah, blah, blah, OUTSIDE!, blah, blah...
Reminds me of that Far Side cartoon "What a dog hears"
My eyes reflect the stars and a smile lights up my face.
why does the entire industry feel the need to play dirty?
I waver between "old habits die hard" and "never change a running system".
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
It is no surprise this happens, but how much of this is due to perverted "preferred supplier" agreements within the govt organisations, usually setup via the old hand under the table wad of cash from supplier to head bureaucrat to ensure competitors are left out. Then it is a matter for those excluded vendors to try to "piggyback" someone elses contract to get their foot in the door... None of this surprises me, it happens everywhere...
As if. IBM's head intellectual property attorney once bragged (under an NDA'd room that included Vint Cerf and Dave Farber) that they'd spent all $60M of their DC lobbying budget to make sure no new tlds were created.
Need Mercedes parts ?
Imagine this being a normal person. Like, someone cheating at taxes. What does immediately follow a revelation like this? I mean, besides the lawsuit that strips him to his bones and beyond (though I doubt the same is gonna happen to Cisco, MS and the rest of the organized cri... I mean honorable corporations).
Right. New laws that should increase "transparency". Read: Make you more transparent for the powers that be, and any complaints from the ACLU would be shot down with reference to those crooks that dared to cheat Uncle Sam and his poor children (i.e. the citizens of the USA), how dare you be against laws protecting them?
So... I'm now waiting for the corresponding laws, or at least suggestions, to make corporations more transparent and make them better manageable and taxable.
Though... I think I better not hold my breath. Suffocating is one of the worst ways to die.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Giving other vendors discounts for work performed on certain types of high volume contracts might well be standard practice. The fact that one of those type of contracts was US Federal Government contracts just means that someone with guns feels they deserve the discount. I mean what right does the government have to deserve a certain price, the government puts a job up for competitive bid and they get whatever the best price they get, if someone outside these cartels can perform the same service at the same cost then they should be able to come in at under the other bids by not having to include the cross rebates in their pricing structure. If the outsider can't give that better price then the government can STFU and take the best deal available.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
I see your point, but if you look at the two parties involved, buisness and goverment. Buisness (capitalism) is doing what "it is", makeing sure it obtains a surplus of funds and market, where as the goverment (democracy) fails to be ruled by the people and follow a few select people.
A democracy that is allowed direct contact with special interest groups and lobbyism will drift towards an oligarchy, unless both (goverment and buisness) have a strong morale and/or rules (law) that are upheld. An oligarchy can, of course, only happend if the people let it, but I will let that be up to you (plural) to judge if that will happen.
Note to self: Don't try to write political posts at 5AM when you haven't been to bed yet. XD
Carbon based humanoid in training.
And more importantly why does the entire industry feel the need to play dirty?
Because they're all greedy as fuck and "... everybody else was doing it!"
We live, as we dream -- alone....
Yeah, yeah. And some say "new Senate majority leader makes shady real estate deals in Las Vegas and hides the income" or "the Democrat congressman from Louisiana with $90,000 of bribes found in his freezer was just put by Pelosi on the committee overseeing Homeland Security affairs" too. Are you really prepared to assert that none of the thousands of career agency and departmental procurement people that have their hands in the administration of federal IT contracts weren't hired during the previous administration, or don't consider themselves to be Democrats? Wake me up when the party you clearly prefer doesn't, while wagging its finger at the other party and promising to cut down on pet project funding once they got control of congress, graft almost $4 billions in pork onto a defense appropriations bill (peanut storage? giving tax dollars to spinach growers that weren't insured against e coli losses?) to buy supporting votes from their otherwise skittish fellow party members. Nah, never mind. Cuz, that would require some honesty about your double standards. Want to bitch about politicians? Fine. Me too. Just don't pretend that your preferred political camp isn't also a fabulous source of shallow, grasping, corrupt twits and the inevitable resulting satire.
Don't disappoint your bird dog. Go to the range.
Usually, governments don't order a dishwasher or a fridge. They order power plants and recycling centers. And there are only so many companies who can offer those.
Also, as the government you can't only take price and quality into consideration. There is a reason why the feds drive around in US built cars and not in BMWs. Simply 'cause one of their goals is to increase the own infrastructure and business power and rely as far as possible on goods built in the country.
Military hardware is even more complicated, since you have to trust the companies far further than with some ordinary civilian stuff.
So your choices become very, very narrow. You usually only have a handful of companies to pick from, if that. So it's easy for them to form a cartel, if only a "secret" one, by fixing prices and splitting the revenue. And that, in turn, is illegal.
So you can't simply assume there is someone "outside" the cartel. The company would have to be in your country, it would have to be large enough to be able to offer the service requested. And if it isn't part of the cartel, they would quickly find a way to acquire and split that competitor.
Business is a shark's world. Don't think they would accept a competitor without fighting him with claws and teeth.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
you don't get it at all do you? let me break it down some more. company A and company B secretly agree to quote a lot more then what they would normally quote, and which ever one of them wins the contract sub contracts the REAL price out to the other, with the winner skimming the fat off the top of the "arranged" price and the loser getting the work(which would still be a very healthy profit). everyone wins - except the tax payer which gets screwed with artifical prices.
If you mod me down, I will become more powerful than you can imagine....
Show of hands if you are surprised that the voters don't give a damn* and continue to re-elect said corrupt politicians and buy from corrupt corporations.
*to the point of being just as corrupt if the politician brings home a sufficient amount of bacon. Dan Rostenkowski has always been my favorite example since he also exemplified Chicago politics as well. Monkey see, monkey do. Can't blame the politicians when they have full public approval.
What?
Everyone doing it. You don't do it? File for bankrupcy.
High profile business is a dog eat dog world. Playing fair is no option. You either participate in the corruption and bribe the right people or you go under.
Yes, that's sad. Yes, that's business.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
CNN doesn't have a prayer of the week? Both sides are equally corrupted. There is a saying the Republicans Take the money out of your right pocket, the Democrats stand to your left and take the money out of your right pocket. They are all just as corruptible. Republicans favor the rich by giving them tax breaks. Democrats say they want to help the poor by using tax money for government services that seem to help the poor but they are so complex to access that only the rich seem to get the services. The fair and competitive bidding process is just a joke, they are particularly written so only one company can win the bid. It is just we are so blind sided and think if we choose a side it will lead us to a perfect life that we miss that our side is just as corrupted as the other. So what if the link has a "prayer request of the week" just because they are openly religious and most likely right wing doesn't make the fact that corruption in the democrat party doesn't exist. Just as the more liberal sources just because they are Atheists or Support Gay rights it and most likely left wing doesn't make the fact the Republicans corruption doesn't exist.
We like the 2 Party system because it make us believe that there is a good and evil party. If one side agrees and the other disagrees then you figure that one side needs to be right and the other needs to be wrong. While the truth can be both are right or both are wrong or right about some parts and wrong about others. Stop following party lines and think for yourself.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Nowhere in the TFA does it say that these alliances were secretly agreeing on anything or even bidding on the same contracts. If that were the case, I would think that that would be very prominent in the article, but its not. I read into it the same as the previous posts. The article said quite plainly that the contract winners outsourced to their strategic partners (at a reduced rate, which is true on government and non-government contracts alike) and they weren't passing the rebate onto the government. There was no mention of bidding ethics at all.
Here's the rub. Nearly all government contracts are fixed price. They quote the job ahead of time and if they come in under budget, that's extra profit. If they come in over budget, the vendor loses money. If the vendor is taking a risk at losing money on a contract if it runs over, why should they have to compound that risk by having to return any extra profits to the government? IMHO, if a vendor says they'll do it for $X and the government agrees, then it shouldn't matter HOW much the vendor actually spends to get the job done as long as the job gets done -- as long as there was not a collusion in the bidding process.
The
For many products the "developer studio" software is quite expensive, indeed these days with "zero foot print" web clients no user software is needed. Now then there is an attempt to monetize based on number of users of system, server flops, i/o etc but sometimes this can be blurry/hard to determine. Overall for a large installation it ends up being blended pricing in a bespoke negotiated contract.
:-(
The installation & software writing is often do by consultants/systems integrators - I work for one of the largets of these - we won't benefit from the product & also it suits the software companies to have us guys out there pushing their products. Thus software companies will give us free server & developer licenses. We'll use these for internal proof of concepts, training, evaluation before we even get near actual project work. So as a marketing effort it is quite valid to give us these licenses for free. But:
What if we use the software/package for our own internal business processes ?
or
Sometimes a very, very large software vendor (guess who) gets pretty pissed if we are recommending a competitor... even if the competitor's offering is more limited, specialized & regarded as the best available. So the very large software vendor instead of throwing chairs at us threatens to revoke all our developer licenses wordwide unless we ditch the competitor.
Like any area of business software is quite murky.
A bit of history, first. The government was being ripped off in the 70's through 80's by contractors who were overpricing goods and services. You've probably heard stories (most of which are terribly exaggerated) about the military buying $600 toilet seats and $400 hammers. The backlash led to many new laws and regulations clamping down on government fraud, waste, and abuse, as well as on contractor kickbacks and fair pricing.
In those days, it was quite common for contractors to give lots of free perks to government employees, in return for sending contracts their way. Similarly, government employees were sending contracts to favored contractors, in order to eventually retire from the government to a nice high-paying job with that contractor. Notice the common theme here is the sending of contracts based on personal gains of those involved, rather than the best value for the government.
The bottom line is that now contractors can neither give nor receive any non-trivial benefit to/from any government employee. Note that the rules go so far as to limit what was a common practice of holding a very nice business dinner, with a government employee and a contractor; now neither can offer to pay for the other, and they must--by law--split the check. There are even mandatory training classes, where contractors and government employees alike study scenarios where, for example, a government employee is stuck with a flat tire by the side of the road, and you are quizzed whether you as a contractor can stop and render free assistance (you can, by the way, within reason). There are detailed FAQs regarding cases where you can and can't buy doughnuts for meetings regarding established contracts. Further, unless you're a relatively small business or otherwise exempt, you can't even contract with the government unless and until you can prove you've provided this kind of training to all your employees. Yes, this may all seem a bit surreal, but that's where we are.
Now the issue noted in TFA should be fairly obvious in this context. As others have mentioned, most contracts are bid as "cost plus" (and those that aren't have to extensively justify the "cost realism" of their fixed-price or other styles of contract). The point is that you simply can't do what is so common in normal wholesale/retail practices. You must, when contracting with the government, pass the savings on to the government.
Let's say part of your contract is to purchase and install a piece of hardware, where the hardware costs $10,000. You markup the cost by 15% to cover your administrative expenses and a small bit of profit (the joint rate which must be disclosed) and charge the government $11,500. Later, let's say you receive some sort of $2,000 rebate on the hardware. At that point, you're obligated to refund that rebate (and its associated markup) to the government, otherwise you'd have overcharged the government. That's not just bad for taxpayers, but it also is seen as the government employees providing you $2,300 in benefits (indirectly though it may be) as a way to bribe you to hire them later.
Keep in mind the typical volumes we mean. You may be bidding to provide upwards of 10,000 laptops to the government at a time. You can be sure that various providers (HP and Lenovo, for example) will want you to choose them; that's a huge sale to close. They may offer to provide all kinds of benefits to your company, such as free support work for all your staff, if you choose to bid their products rather than the competition. That incentive is not directly attributable to the sale of the 10,000 laptops, which hides this "rebate" quite nicely. You're now suddenly not required to surrender the rebate, because there really was no rebate. Meanwhile the government still overpaid (if you can manage to think within the rules of this bizarre process) for these laptops, because all the benefit of the sale incentive should have been recovered by the government. Obviously things can be hidden even more indirectly, w
Government contracts aren't a free market. Since there is ONE consumer and a very small pool of vendors.
In this case, a company can pay to be a preferred supplier even though they are more expensive and perhaps of less quality or equal quality to other suppliers.
The big factor is the lack of competition that these paid and potentially secret "strategic alliances" create in this environment.