Accenture Discloses DoJ Investigating Its Federal Services Unit

The investigation, which came as a result from the company voluntarily disclosing inaccurate submissions to an assessor investigating the security of an Accenture Federal Services offering, exposes the company to additional risks that come with working in the government contracting environment.

Accenture Federal Services, a subsidiary of global IT solution provider Accenture and a leading provider of IT services to the U.S. federal government, Friday disclosed that it is the subject of a U.S. Department of Justice investigation.

Accenture in a Friday regulatory filing with the U.S. Securities and Exchange Commission wrote that it had made a voluntary disclosure to the DoJ, which resulted in the initiation of a civil and criminal investigation.

The DoJ is investigating “whether one or more employees provided inaccurate submissions to an assessor who was evaluating on behalf of the U.S. government an AFS (Accenture Federal Services) service offering and whether the service offering fully implemented required federal security controls,” Accenture wrote in the filing.

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AFS is responding to an administrative subpoena and is cooperating with the investigation, Accenture wrote.

“This matter could subject us to adverse consequences as described in Part I, Item 1A, Risk Factors – ‘Our work with government clients exposes us to additional risks inherent in the government contracting environment”. We cannot at this time determine when or how this matter will be resolved or estimate the cost or range of costs that are reasonably likely to be incurred in connection with this matter,’” the company wrote.

Accenture, in response to a CRN request for more information, referred all questions to what was contained in the 10-K filing. However, in the email reply to CRN, an Accenture spokesperson emphasized that the company voluntarily informed the government about the matter and is cooperating with investigators during the process.

The spokesperson also also told CRN that the investigation is related to a new disclosure.

Accenture Federal Services has lately been very busy with new wins with the federal government, although there is no word from the company which project may have been affected by the federal security control issue cited in the SEC filing.

AFS in September won a $25-million contract to help the U.S. Air Force build a digital depot. The organization in July won a $94-million contract with the U.S. Army for an ICAM (identity, credential, and access management) contract. In early July, AFS won a $98-million health agency award from the Department of Defense.

Other recent projects include a $329-million USAID (United States Agency for International Development) enterprise information assurance contract in June, and an IRS blanket purchase agreement with a $2.6-billion ceiling in May.

Being investigated by the DoJ is a big deal for a company like Accenture and Accenture Federal Services, said Dave Donald, president and founder of Keeper Technology, a Leesburg, Va.-based solution provider with a focus on U.S. federal business.

It’s very possible that Accenture Federal Services had a contract to do a managed services offering, Donald told CRN.

“Accenture is big in Azure and AWS,” he said. “As part of such a service, most federal contracts require FedRAMP or FISMA (Federal Information Security Modernization Act) for work in the cloud. The government is getting more and more concerned about and focused on ensuring the security boundaries are managed. It sounds like AFS didn’t do that, which resulted in an audit. And then in the audit, it sounds like someone lied. And that’s a bigger issue than the original problem.”

Punishment for such issues ranges from firing an individual to disbarring an entire company from bidding on federal contracts for some time, but the latter doesn’t happen often, Donald said.

“We’ve partnered with Accenture off and on over they years, and found that Accenture is as good as any federal partner,” he said.