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Accenture contract sparks controversy

A group led by Bermuda-based Accenture Ltd. won a ten-year contract worth up to $10 billion to develop a system for tracking visitors to the US, the Department of Homeland Security said.

Accenture's group beat teams led by Computer Sciences Corp. and Lockheed Martin Corp. Shares of Accenture and SRA International Inc., part of the bidding group, rose. Computer Sciences and Lockheed Martin declined.

The contract will probably be the largest awarded for information technology this year, William Loomis, an analyst at Legg Mason Wood Walker, said in a report. The group will help implement a security program to collect and share data on foreigners entering the US as part of the US-Visit programme, the department said in a statement issued in Virginia.

"Accenture will have to share with the others in the contract, but it's still a big positive," said Cindy Shaw, an analyst at Schwab SoundView Capital in San Francisco, who rates the shares "outperform" and says she doesn't own them.

The contract has a minimum value of $10 million and maximum of $10 billion, the department said. It was awarded for five years with five one-year options to extend.

Shares of the companies involved in the bidding began moving before the department's announcement amid speculation that Accenture's group had won the bid.

Homeland Security Undersecretary of Border and Transportation Security Asa Hutchinson said he had no reason to believe the information was divulged ahead of time. The contract was awarded on May 28 and Hutchison said he personally informed the companies involved via telephone yesterday at about 10 a.m. Bermuda time.

"We will always be concerned if there is any evidence that there was an inappropriate leak," he said. "This was very closely held and handled with a great deal of integrity. The secrecy rules and the procurement rules were followed in very great detail."

Accenture spokeswoman Roxanne Taylor couldn't immediately be reached for comment. Computer Sciences spokesman Rich Venn said the company had no comment on the contract loss. Lockheed Martin spokesman Thomas Greer also declined to comment.

The contract is for the "prime integrator" role for the US Visit, or US Visitor and Immigrant Status Indicator Technology, program, department spokesman Dennis Murphy said.

The US-Visit programme will create a system for identifying visitors to the country and link as many as 20 government databases to collect information on when overseas visitors enter the US, their movements in the country and when they leave.

Accenture will manage subcontractors installing systems to monitor the entry and exit of every individual at US airports, seaports and land border crossings, Murphy said.

"People were surprised that Accenture got the bid because they are headquartered in Bermuda," Caris & Co.'s Garrity said. He said he doesn't own shares in the companies involved. "If you were going to get a large government contract like US-Visit, how could it go to a non-US domiciled company?"

The department saw no conflict in awarding the contract to a Bermuda-based company, Hutchison said. Accenture has a unit based in Virginia, he said.

"Accenture LLP is a US company based in Reston, Virginia, that employs 25,000 US citizens and pays US taxes," Hutchinson said. "Legal counsel looked at this and determined that all three bidders met all the legal requirements."