House Moves to Block $10B Accenture Deal

A U.S. House of Representatives committee overwhelmingly voted Wednesday afternoon to strip Accenture from a potential $10 billion federal contract based on the IT consulting firm’s corporate parent location.

The decision comes barely a week after the Department of Homeland Security (DHS) awarded the Bermuda-based Accenture Ltd. one of the largest federal contracts in history.

On a 35-17 vote, the House Appropriations Committee attached a provision to the DHS budget that would prohibit it from granting contracts to corporations using offshore headquarters to avoid certain U.S. taxes.

The measure still faces a full House vote and must also be approved by the Senate before being sent to the White House for President Bush’s approval.

“It is outrageous and wrong to reward these companies for abandoning our country — particularly from the very department charged with safeguarding our homeland security as we work to pay for the ongoing war on terrorism,” Rep. Rosa L. DeLauro, who co-sponsored the amendment, said in a statement.

The Connecticut Democrat added, “The United States government should not be doing business with those who want all the benefits of citizenship without any of the responsibilities that come along with it.”

Neither Accenture nor officials from the DHS were immediately available for comment.

Under the DHS contract, Accenture will serve as the prime contractor on a complex and ambitious “virtual border” project to be deployed at more than 400 U.S. air, land and sea ports of entry. The contract calls for a biometrics systems design to verify the identity of incoming visitors and to confirm compliance with visa and immigration policies.

When DHS announced the contract on June 1, DHS officials dismissed questions about the location of Accenture’s corporate headquarters. Asa Hutchinson, under secretary for Border and Transportation Security at the DHS, told reporters that Accenture, the former Arthur Anderson Consulting, met all the bid

The company’s U.S. division, Accenture LLP, is charged with carrying out the contract and is based in the Washington suburbs of Reston, Va. According to public documents, Accenture Ltd. has more than 80,000 employees with 28 percent of them based in the United States.

According to DeLauro’s office, the amendment approved Wednesday would close the current loopholes that allow contract winners to use what she calls “shell corporations.” It also removes a provision in the law that allows companies which have already incorporated overseas to continue to receive government contracts, to ensure that the ban applies to all corporate expatriates.

“Allowing contracts with domestic subsidiaries [of foreign corporations] essentially guts the existing Homeland Security Department corporate expatriates contracting ban, since the shell corporation provides no services,” the DeLauro statement says.

Lesley Sillaman, a spokesperson for DeLauro, told, “It is not a mater of how many employees a company has in the United States, it’s a matter of paying taxes.”

Two years ago, DeLauro sponsored an amendment to prevent companies that use foreign tax shelters to avoid paying taxes to receive government contracts from the DHS. Like Wednesday’s amendment, it handily passed the House Appropriations Committee but was ultimately watered down in a full House vote.

“I am deeply disappointed that the Department of Homeland Security has awarded $10 billion of the taxpayers’ money to a company that refuses to pay its own federal taxes,” DeLauro said in a statement released last week. “These companies enjoy all the benefits of corporate citizenship in America — they look like U.S. companies, the principle market their stock is traded in is the United States, and their physical assets are protected
by our armed forces. They just refuse to pay for the benefits as every other U.S. citizen and company does.”

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