Appropriations Committee approves move to cancel US-VISIT award

The House Appropriations Committee passed an amendment to the Homeland Security Department appropriations bill that, if it were to become law, would cancel the $10 billion U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) contract.

Lawmakers have raised questions about the award to Accenture because its parent company is based in Bermuda.

The amendment, sponsored by Reps. Rosa DeLauro (D-Conn.) and Marion Berry (D-Ark.), seeks to close loopholes that allow corporations, such as Accenture, the prime contractor for US-VISIT, to avoid paying U. S. taxes. The committee passed the amendment by a 35-17 vote.

The provision, however, is already receiving opposition. Rep. Jim Moran (D-Va.) said that he or Rep. Tom Davis (R-Va.) will seek to strike the provision when the bill reaches the House floor.

DHS officials defended their decision to award the contract to Accenture.

"DHS awarded a contract to Accenture LLP of Reston, Va., consistent with all federal procurement laws and regulations," said Kimberly Weissman, a department spokesperson. "Prohibiting Accenture from competing would have violated these laws. Accenture won this contract based on the merits of their proposal."

"Based on a review of the bids by DHS legal counsel, all bidders were U.S. companies under the law and qualified to bid on the contract," she said.

DeLauro and Berry's amendment would prohibit the government from contracting with a Bermuda-based shell corporation or its subsidiary. Accenture LLP is based in Reston, Va., but its parent company is in Bermuda.

The amendment would also remove a provision in the law that allows companies that have already incorporated overseas to continue receiving government contracts. In addition, it would make it more difficult to issue a waiver to the law, except in the interest of national security.

"Accenture, and other companies like it, have used loopholes in the tax system to shirk their duties to the United States, by incorporating, on paper, in other countries like Bermuda," DeLauro said in a statement earlier this week. "It is outrageous and it is 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."

Accenture did not abandon its country because its corporate parent has never been based in the United States, the company said. Accenture, which since its inception has been incorporated in Bermuda, pays U.S. taxes on income generated by U.S. operations, and expects to pay an effective tax rate of 34.8 percent in fiscal 2004.

"Preventing successful companies from bidding on government contracts just because they are not incorporated in the United States rejects the free market principles of the Federal procurement system," spokesman Jim McAvoy said, reading from a statement.

DHS officials announced the award June 1. The five-year contract includes five one-year options and carries a ceiling of $10 billion, although DHS officials have said the contract likely won't reach that amount. Accenture estimated the first two task orders would cost $72 million.

Accenture beat out competing teams led by Lockheed Martin Corp. and Computer Sciences Corp.

In the days before the award announcement, several lawmakers were already questioning whether the department could consider Accenture for the award. Rep. Lloyd Doggett (D-Texas) expressed his concern in a statement: "If companies truly want to contribute to our nation's security, they can pay their fair share of taxes."

DHS officials said all three teams met the legal requirements to bid for the contract, which were substantial for this national security program, and that all three lead companies are U.S.-based.