The company now running the healthcare.gov website has a long history with President Barack Obama, leasing space for his 2008 campaign headquarters and company associates making generous political contributions.
Accenture, an Ireland-based technology and consulting firm, now has until Thursday to answer questions from the House Energy and Commerce Committee about its communications with the Obama administration leading up to the $91 million non-competitive contract it was awarded to fix the website to sign people up for Obamacare insurance plans.
The firm was brought in to replace the Canadian-based CGI, which presided over the disastrous launch of healthcare.gov last October. Though CGI was scrutinized for one of its executive’s relationship with the first family, the political ties between the White House and Accenture are also significant.
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Accenture, which has one of its largest offices in Chicago, sublet 33,514 square feet of office space to Obama's 2008 campaign headquarters for $30,000 per month beginning in February 2007. On average, a tenant leasing office space in Chicago in 2008 would pay about $20 per square feet, according to LoopNet.com, a commercial real estate website, but the Obama campaign paid about half that.
Accenture spokesman James McAvoy insisted the deal was nothing out of the ordinary.
“We listed the space with a broker and it went unrented for six months – not a single offer,” Accenture spokesman James McAvoy told TheBlaze. “We were approached by a broker representing an unnamed lessee that wanted immediate occupancy. ... The $10.75 rate was at market; it was not only competitive for that building, it is more than other space [that] was being offered in that same building at the same time. Even now, when rental rates in Chicago are considerably higher than they were in 2008, you can still rent space at [that address] for $10 per square feet.”
Accenture did well with government contracts during the Bush administration, but its fortunes have improved under Obama, going from $664 million in federal contracts to $904 million, according to the Washington Examiner.
Ken Boehm, chairman of the conservative government watchdog National Legal and Policy Center, told TheBlaze the leasing agreement with Obama's 2008 campaign "might be questionable."
“The [Federal Election Commission] rules are that if somebody is financially involved with a campaign, it has to be at market rate. If not, the FEC would see it as a sweetheart deal," Boehm said.
Boehm, a former Pennsylvania state prosecutor, said it’s not entirely clear if there is a problem, but said leasing space to any political campaign might have been questionable considering the volume of federal contracts the company now has.
McAvoy said the company did not know who its tenant was until after the $10.75 per square foot offer was made.
“We immediately took all the appropriate legal steps necessary to determine that the sublease would not be a violation of campaign finance law and that the rent was at fair market value,” McAvoy said.
Money and Political Ties
During the 2008 election cycle, Accenture employees, their family members and the firm's political action committee donated $157,445 to the Obama campaign, according to the Sunlight Foundation, a nonpartisan watchdog group that tracks money in politics. During the 2012 campaign, that amount dropped to $121,973.
Accenture's PAC has given to both Republicans and Democrats, and for the 2014 election cycle has actually donated more to Republican candidates so far, according to the Center for Responsive Politics, another campaign finance tracker. But in 2008, 2010 and 2012, the Accenture PAC gave more to Democratic candidates.
A senior manager for Accenture in Chicago is Tracey Patterson, the wife of Obama bundler and Chicago attorney Chaka Patterson, who raised $500,000 for Obama's 2012 campaign. The couple even held a campaign fundraising event for the president at their home.
“I'm so grateful to Chaka and Tracey and their beautiful daughters for opening up this great home,” Obama said during the June 1, 2012 event. “It is true Chaka and I have known each other for a long time. The first time we met he was still a young up-and-comer. Now he's a big ship. Now he's a big ship in the deep ocean."
McAvoy said Accenture bans corporate contributions to political parties or candidates.
“The Accenture employees’ political action committee contributes to federal candidates who represent areas where our people live and work, and to candidates who share our interest in issues that affect our company, our industry and our people,” McAvoy said. “Individuals at Accenture do make contributions to political candidates, as part of their right to participate in the political process. We do not attempt to discourage and encourage political giving to any specific candidate, party or organization.”
Still, Tom Fitton, president of the conservative watchdog Judicial Watch, believes the political connections tie in with a familiar pattern.
“This fuels the fire around the decisions to award a no-bid contract to Accenture,” Fitton told TheBlaze. “It was no surprise healthcare.gov needed fixing. But it took months and months to, and they give it to an Obama donor? Even if that didn’t come into consideration, no competitive bidding shows a contempt for the process.”
Perhaps just as important as money was the contribution of tech skills that led to Obama’s re-election. His campaign famously utilized precision data in getting voters to the polls in 2012.
Rayid Ghani began working at Accenture in 2001, but in July 2011, he left his role there as senior research scientist and director of the Accenture labs to be the chief scientist of the Obama 2012 campaign. His curriculum vitae says that his job for Obama was “focusing on analytics, technology and data for improving different functions of the campaign including fundraising, volunteer, and voter targeting and mobilization.”
Troubled Past
In a letter last month to Accenture Federal Services chief executive David Moskovitz, Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, asked the company to provide a briefing to the committee about the process by which it obtained the Obamacare contract to fix healthcare.gov.
But as rocky as the website's early months have been, Accenture has had its own troubled past. The Washington Post reported that nearly 30 Accenture projects in the U.S. and abroad have faced problems such as technical malfunctions and cost overruns. Meanwhile, the Justice Department and other federal agencies have called the company out.
While admitting to no wrongdoing, Accenture reached a settlement in 2011 with the Justice Department to pay $63.68 million to resolve a federal probe of alleged irregularities and kickbacks in federal contracting.
McAvoy said the matter began as a private legal complaint against 20 information technology companies that included Accenture. The Justice Department joined as a plaintiff in 2007.
“The lawsuit claimed that, in work for the U.S. federal government, Accenture received payments, resale revenue or other benefits through alliance agreements with technology vendors that were not sufficiently disclosed and that were not allowed on federal contracts,” McAvoy said.
“Accenture continues to vigorously deny that there was any wrongdoing,” he added. “We remain confident that our agreements and dealings with our alliance partners, vendors and the government were appropriate, lawful and properly disclosed to the U.S. government. However, to avoid the additional time, inconvenience and expense that would come with protracted litigation, Accenture agreed to settle.”
He pointed out that the settlement has not restricted the company from getting other government contracts, and has even been awarded contracts by the Justice Department. Further, he said the majority of the company’s competitors also made similar settlement agreements.
The Interior Department’s inspector general said in a 2007 report that Accenture’s work on a new computer systems for the Mineral Management Service – which regulates the oil industry – took 15 times as long to establish as the one it replaced, the Post reported.
In June 2013, the U.S. Postal Service's inspector general found that Accenture "demonstrated an absence of business ethics," and recommended the USPS terminate the $200 million contract.
But problems for Accenture haven’t just been at the federal contracting level. In North Carolina, an Accenture computer system contributed to a large backlog for the state’s food stamp recipients, the Post reported. Texas state officials had problems with Accenture operating call centers to process social service benefit applications that led to delays in their disbursement. Accenture developed a city tax office computer system for Washington, D.C., that frequently incorrectly calculated some penalties and interests for tax bills.
Still, Accenture has a comparatively strong reputation in the IT industry, said Joseph Walent, a health IT analyst with Technology Business Research.
“If an IT service provider hasn’t had issues with clients, it’s very rare, or a young company that hasn’t had many clients,” Walent told TheBlaze.
He said both Accenture and CGI have solid reputations within the information technology industry.
“Accenture was brought in to clean up the mess,” Walent said. “As healthcare.gov was being rolled out, it was a crunch for time for any company. Accenture is in a better position.”
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