Action Alert: ACCENTURE is awarded U.S. CONTRACT FOR BORDERS (Foreign Corporation!)

June 2, 2004 Accenture Is Awarded U.S. Contract for Borders By ERIC LICHTBLAU and JOHN MARKOFF

WASHINGTON, June 1 - The Department of Homeland Security on Tuesday named Accenture as the prime contractor for a multibillion-dollar project aimed at creating a "virtual border" around the country to head off would-be terrorists entering the United States.

Asa Hutchinson, the under secretary in charge of border security, said the project, called U.S.-Visit was "a significant milestone in the history of the department" and in the bolstering of border security since the Sept. 11 attacks. "I really don't think you could overstate the importance of this responsibility in terms of securing our nation," he said.

The project will use the latest technology, including biometrics, to identify people coming into the United States. The contract was awarded to Accenture, formerly Andersen Consulting, over two competing contractors, Lockheed Martin and Computer Sciences. Several industry executives and analysts said that the award surprised them and that Accenture had widely been considered the outside candidate.

The award also brought controversy. Accenture is incorporated in Bermuda, and some critics attacked the idea of awarding a contract so valuable and important to national security to a company with its headquarters outside the United States.

After Accenture was named, Representative Lloyd Doggett, a Texas Democrat, suggested the company took advantage of an uneven playing field to win the contract over Lockheed Martin and Computer Sciences.

"If companies truly want to contribute to our nation's security, they can pay their fair share of taxes. If they want a slice of the American pie, they had better help bake it," he said in a statement.

Representative Richard E. Neal, a Massachusetts Democrat and a senior member of the House Ways and Means Committee, also questioned the award.

"This decision is outrageous," he said, in a statement. "The Bush administration has awarded the largest homeland security contract in history to a company that has given up its U.S. citizenship and moved to Bermuda. The inconsistency is breathtaking."

But homeland security officials said they were satisfied that Accenture, which has an operation in Reston, Va., with 25,000 employees, meets the legal requirements for an American-based company. The three bidders "were all U.S. companies," Mr. Hutchinson said.

The bid proposal set a range of $10 million to $10 billion over the 10-year life of the project. Mr. Hutchinson said the project was "certainly going to be a billion-dollar project when all is said and done."

Investigators at the General Accounting Office, however, have called the program "a very risky endeavor" because of management and financial concerns. They have estimated that the total cost, including financing needed from other agencies, could reach $15 billion.

"I would've been frustrated if they'd said it was not a risky endeavor," he said. "I could've told you that from Day 1."

Homeland security officials said that Accenture, in its bid proposal, provided an estimated cost of $72 million for two initial phases of the project, including the securing of the nation's 50 busiest land ports by the end of the year. Citing legal restrictions, officials would not disclose whether that represented the lowest bid. Other factors, including the companies' business and technical strategies and their experience were also considered, officials said.

Part of the challenge of the U.S.-Visit project will be integrating at least 19 large government databases, and that was a factor in the choice of Accenture, said T. Jeff Vining, an intelligence and law enforcement analyst at Gartner, the research firm.

"The government is basically soliciting on-the-fly R.& D.," he said, referring to research and development. Accenture also had the strongest team of subcontractors with international reach, he added.

Cindy Shaw, a financial analyst at Schwab SoundView Capital Markets, said the company had a successful track record with the Transportation Security Agency.

"One of the things that got lost in this whole competition is that Accenture helped T.S.A. put together its airport screening process," Ms. Shaw said. "They showed well under pressure there."

The project manager for the Accenture team said the company would take a similar approach to a contract it holds with the Pentagon's Defense Logistics Agency in deploying the U.S.-Visit system.

"We view this as a business transformation and we're talking about changing business processes," said Eric Stange, Accenture's program manager for the project. "We're looking at the human dimension as well as the technology dimension."

Mr. Stange said that in its work with the Defense Logistics Agency, Accenture had altered job descriptions and employee deployment. He said the border security project was similar in size and scale to the Pentagon contract. He refused, however, to make specific estimates either about the number of federal employees who would be involved or the number of Accenture employees who would take part.

The Department of Homeland Security has talked about using digital fingerprint and photographic information to help ensure identity. Mr. Stange, however, said that Accenture was continuing to evaluate other potential biometric techniques for accurate identity checks.

"Part of our approach is to continually assess technology innovations," Mr. Stange said. "For a 10-year contract that's a generation or two of technology, and biometrics is a very hot area."

The contract is for five years, with one-year options for five years after that.

Accenture's stock rose 75 cents on the news, to close at $25.36. Asked about what appeared to be a rise in the company's stock before the markets opened Tuesday, Mr. Hutchinson said he was unaware of any leak that might have driven up the stock but that the department would investigate. Wall Street analysts said, however, that there had been "chatter" about the award to Accenture before the market opened.

I am ripping mad about this! They bypassed two US corporations to give the massive contract to a FOREIGN CORPORATION. Do you want foreigners monitoring who gets into our country and who doesn't???

LOU DOBBS TONIGHT

Bermuda Based Accenture Wins Department of Homeland Security Contract

Aired June 1, 2004 - 18:00 ET

DOBBS: A foreign company wins a huge border security contract. It could be worth $10 billion. My guest tonight is the chairman of the House Committee on Homeland Security, Congressman Christopher Cox.

DOBBS: As we reported, the department of homeland security today awarded a border security contract worth as much as $10 billion over a ten-year period to Bermuda-based Accenture. Announcing that decision, Homeland Security Undersecretary for Border Security, Asa Hutchinson said, quote, "I really don't think you could overstate the importance of this responsibilty in terms of the security of this nation." And yet, the department of homeland security chose to award this critically important contract to a foreign company. Congressman Christopher Cox is the chairman of the select committee on homeland security and joining us tonight from Capitol Hill. Mr. Chairman, good to have you here.

Accenture, as you know, is a partnership incorporated in Bermuda through its level of organization. Operates in 40 countries. Are you concerned about the U.S. government awarding something so critical to national security to a foreign-based company?

REP. CHRISTOPHER COX (R-CA), SELECT CMTE. ON HOMELAND SECURITY: Well, it's a fair question. As you might imagine with a contract so significant and a competition for this contract so fierce, that question has been turned over and analyzed very, very carefully. The award of the contract makes it very clear that all this work is going to be done in the United States. It is true that Accenture's parent company is incorporated in Bermuda but Accenture in the United States with its 25,000 employees here in the U.S. is going to do this work along with a broader alliance, the smart border alliance, which, in total, has 330,000 employees in the United States. There is an assurance that all this work will be done here and, of course, all the taxes will be paid here as well. In its second quarter filing, Accenture, I should note, paid 35 percent of its earnings in taxes to the United States from its United States operations.

DOBBS: Mr. Chairman, 35 percent. Our research reveals that they don't say what percentage of that 35 percent tax level went to the U.S. in the form of taxes.

COX: No, no. What I said is that 35 percent of their earnings went to the United States in taxes.

DOBBS: Of Accenture in Bermuda?

COX: From Accenture, right. No, no. Accenture is incorporated in Bermuda. This is Accenture in the United States paying taxes here in the United States of America with 25,000 employees. But I think it is a fair question. We want to make sure on something that is of vital importance to our country who comes in and out of the borders, that we have technology that works, that we have system that works. And we want to make sure the U.S. contractor is in charge of that. DOBBS: A U.S. contractor in charge of it. I guess by some stretch of imagination one could consider a subsidiary a U.S. contractor, but they're also a subsidiary of a foreign-based company set up precisely to avoid taxes to the U.S. government and to the states in which they operate.

Is that really the message that you want to send to corporate America and to the rest of the country?

COX: Lou, as I just said, all the work is going to be done here in the United States with 330,000 employees, not just from Accenture, but several companies. All of the Accenture companies will be U.S. employees. It is going to be a U.S.- based operation, paying taxes here in the United States. So the U.S. Economy benefits directly this, the U.S. national security benefits directly from this. I think it is a fair point to raise it, that's why it was important we got the assurances.

DOBBS: Let's turn to the issue of the assurances and the visit program itself. Critics are saying, point blank, that they think this is going to be a very difficult contract to execute under any circumstance.

How confident are you that it can be the -- that deadlines can be met and this consortium executed?

COX: Count me in the camp that will cast a weary eye on all of this. This is enormously difficult what we're trying to do, with or without technology. The sheer numbers of people we have to look at, number one. And number two, the importance of accuracy, both in capturing the biometric information and matching it against other data bases. I want to make sure it works. This contract, I should note, which lasts for a decade, potentially, is worth up to $10 billion. It's also worth as little as $10 million. There are milestones along the way to make sure it works on issues of which technology to use, facial recognition, finger prints, retina scan, photography, even voice. All of these things are open questions that are subject to proof and experimentation as we go down the road. And we know that technology will change and move on us during this period. We want to use the very best technology available to us.

DOBBS: Congressman Cox, how satisfied are you with the progress being made by Homeland Security and the other agencies responsible for port security, for border security, along with the visit program and a host of other screening operations that were to have been in place that are not?

COX: As you know, first starting with U.S. Visit, it's operating on time. This contract, incidentally, was awarded on time. The program began in January of this year. We've just taken this container security initiative to further countries now as a result of our agreement with Europe, but we are seeing a great deal of progress there. The container security initiative for those who aren't fully aware of what that's about is screening cargo before it gets on the ship in foreign ports, before they come here. We're screening 100 percent of the high-risk cargo that enters the United States of America. There is no question that we have a lot more to do, but when you take a look at how much we've done in barely over a year it's absolutely extraordinary to move from a standing start to what is now being accomplished. Both my Democratic colleagues and Republican colleagues on the Homeland Security Committee, dedicated as we are to the oversight of the Homeland Security Department, a, want to see it succeed and, b, want to make sure we have constructive oversight to achieve these fundamentally difficult but important tasks.

DOBBS: Oversight is one of the roles of Congress which we're hearing increasingly from both Republicans and Democrats, some lament that Congress has not more rigorous in other areas, in terms of your committee's charter.

How concerned are you about not having sufficient oversight and engagement on these issues, particularly in the case of border security watching as many as a million illegal aliens cross our border every year?

COX: U.S. Visit, of course, is designed to deal with this problem. It is an entry/exit program. For the first time to begin keeping track of who's coming across the border, what their stay is, and when they leave. That's not been done before. And it's fund mentally necessary if you're going to claim to have control of your borders. I think the merger of this function into the Department of Homeland Security gives us an opportunity to get serious about border control in a way we never have before. I think the oversight and attention we can give to this is enhanced in the house of representatives because we, just like the executive branch which reorganized itself, have created the Homeland Security Committee expressly for this purpose.

DOBBS: Congressman Christopher Cox, chairman of the Select Committee on Homeland Security, we thank you for being with us.

COX: Happy to join you.

DOBBS: A reminder to vote in our poll tonight.

Do you believe the federal government should be outsourcing its border security?

Cast your vote at cnn.com/lou. We'll have the results coming up for you later in the broadcast.

I have a friend who says that Accenture plays in hisindustry: IT Consulting. They are known as scumbags. They play sloppy with the rules, pay low, and are bottom of the barrel players anymore. They get large contracts, but many of those fail.

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