The allegation is that Accenture received benefits through agreements with technology suppliers, which were not properly disclosed or for that matter allowed on contracts with the US federal government.
Accenture denies any wrongdoing but settled the case to "avoid additional time, inconvenience and expense that would come with protracted litigation." The settlement will not affect Accenture's work with the US federal government.
Read the full Accenture announcement here.
Looks like suppliers will have to be careful. Mark Lewis, lawyer at Berwin Leighton Paisner, says: "There has been a trend over the past few years for clauses to be included in IT and outsourcing contracts prohibiting suppliers acting where there is a conflict of interest - in some cases, doing so will be a material breach, which would entitle the customer to end the contract. I am aware that many UK government contracts have these clauses. It is never entirely clear what a conflict of interest is in the context of IT and outsourcing.
This case reminds us, as well as the consequences of suppliers following practices that may be standard in the IT industry, but will be treated as conflicts of interest by their customers - with the results shown in the Accenture case," added Lewis.
The fact that the case won't affect Accenture's current work with the US federal government as well as future potential work reminded me of a conversation I recently had with a contact.
We were talking about UK public sector project failures (those that have cost and time over-runs) and the fact that failures are often the fault of the customer. Things like changing scope midway through a project.
I asked why suppliers always seem prepared to take the blame? You would think it could damage their reputation and lose then a lot of business.
He said the suppliers are more than happy to take the blame because these government contracts are worth so much to them. More often than not a project that over-runs in cost and time means more money for the supplier.