Accenture Contract Threatened by Congressional Action

Congress is taking aim at the practice of companies incorporating offshore to avoid paying U.S. taxes, with a multi-billion dollar Homeland Security contract threatened by a provision attached to the department’s budget.

The House Appropriations Committee approved a $32 billion budget for the Homeland Security Department but attached a provision that bars the multi-billion dollar contract awarded last week to a coalition of companies led by the U.S. unit of Bermuda-based Accenture Ltd., the Wall Street Journal reported.

The 35-17 vote reflects the growing resentment members of Congress have toward companies who use offshore locations to limit their U.S. tax liability. Accenture has powerful allies among the House Republican leadership, so the company hopes to salvage the contract.

The Accenture-led Smart Border Alliance was selected last week by Homeland Security to design and implement the United States Visitor and Immigrant Status Indicator Technology (US-VISIT) program. Under the contract, which includes five base years plus five option years, and is worth an estimated $10 billion, the companies will help develop and implement a new entry/exit system to be deployed at the nation's more than 400 air, land and sea points of entry.

"It's very hard to go home and explain to hard-working Americans why we would issue one of the biggest contracts ever to a company or partnership that has chosen to have their headquarters in Bermuda," Rep. Don Sherwood (R., Pa.) told the Journal. "There's no reason they would have been headquartered in Bermuda except to avoid American taxes."

Rep. Rosa DeLauro (D., Conn.), who sponsored the amendment, called Accenture's complicated corporate structure an "outrage."

For its part the company says that as a genuine multi-national company that it never incorporated in the U.S. A spin off of the former Andersen Consulting, the company insists that all the work performed by Accenture for Homeland Security will fall under the U.S. unit, which will pay U.S. taxes on its earnings under the contract.

The award was based on "cost, capability and management criteria," according to Accenture spokesperson, Roxanne Taylor. "Preventing successful companies from bidding on government contracts just because they are not incorporated in the U.S. rejects the free-market principles of the federal procurement system."

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