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U.S. investigating SAP, Carahsoft for possible price-fixing

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German software developer SAP SE, product reseller Carahsoft Technology Corp. and other companies are being probed by U.S. officials for potentially conspiring to overcharge government agencies over the course of a decade. 

Since at least 2022, Justice Department lawyers have been looking at whether SAP — which makes accounting, human resources, supply chain and other business software used across the globe — illegally conspired with Carahsoft to fix prices on sales to the U.S. military and other parts of the government, according to federal court records filed in Baltimore.

The civil investigation, which hasn’t previously been reported, poses a legal risk to a top technology vendor to the U.S. government and to Germany’s most valuable company as its shares are soaring.

The review also shines an even greater light on Carahsoft, a large software vendor whose offices in Virginia were raided on Tuesday by FBI agents and military investigators. 

Carahsoft spokesperson Mary Lange described the search as “an investigation into a company with which Carahsoft has done business in the past.” It’s not clear if the search is related to the investigation of SAP. Lange and other Carahsoft representatives declined to answer detailed questions. 

SAP's corporate campus in Walldorf, Germany
A logo on an office at the SAP SE campus in Walldorf, Germany.

Alex Kraus/Bloomberg

SAP has been cooperating with the DOJ’s civil investigation “since the beginning,” spokesman Daniel Reinhardt said in an emailed statement. The German company is not involved in any criminal investigation related to Carahsoft and has no information about “the latest events” concerning its vendor, he said.

SAP shares dropped 2.4% to close at €201.80 in Frankfurt on Wednesday. The shares have risen about 44% this year. 

News of the probe also had knock-on effects for shares of ServiceNow Inc. and Okta Inc., which both “saw over 40% of disclosed federal contract dollars come through Carahsoft,” according to a note from Piper Sandler. Shares of ServiceNow fell as much as 4% on Wednesday. Okta shares declined as much as 1.7%.

Civil probe

The long-running civil probe is focused on the companies possibly rigging the market for the more than $2 billion worth of SAP technology that the U.S. government has purchased since 2014, according to the court records. They show prosecutors are also examining the role of other software resellers and a unit of Accenture, a giant management and technology consulting firm.

Many investigations end without any formal accusations of wrongdoing. 

Accenture spokesperson Peter Soh said the subsidiary, Accenture Federal Services LLC, “is responding to an administrative subpoena and is cooperating with the DOJ.” The Justice Department didn’t respond to requests for comment. 

The Justice Department classifies bid rigging as a form of fraud that involves an agreement among competitors as to who will be the winning bidder.

The investigation came to public light in an ongoing court fight between the prosecutors and Carahsoft over the closely held firm’s handling of a legal demand for documents. While many records in that separate proceeding are sealed or heavily redacted, unredacted versions of documents describing the underlying investigation were also publicly available.

False Claims Act

It’s unclear exactly when prosecutors began examining the relationship between SAP, which has its headquarters in Walldorf, Germany, and Carahsoft, based in Reston, Virginia. But by June 2022 prosecutors had sent Carahsoft a demand to turn over documents and provide information related to potential violations of the False Claims Act.

The civil investigative demand — which was among the unredacted documents obtained by Bloomberg News — states that prosecutors are examining whether SAP, Carahsoft and other firms made false statements to the Department of Defense by coordinating bids and prices for “SAP software, cloud storage, and related hardware and services.” The document directs Carahsoft to produce a wide array of emails, text messages, contracts, staff lists and other information related to its sale of SAP software. 

More than a year later, federal prosecutors sued Carahsoft, seeking to have a federal judge in Baltimore enforce the demand and alleging that the company has “obstinately refused to provide this basic information.” Back-and-forth litigation in the case — much of it sealed from public view — continued up to last Friday, when it was assigned to a new magistrate judge for pretrial fact-finding known as discovery. 

One of Carahsoft’s lawyers, Richard Conway, declined to answer questions about the case, the civil investigation or the FBI search of his client’s office.

“I don’t discuss such matters in the press,” he said when reached by phone Tuesday. 

In response to questions about the FBI search, Lange said Carahsoft is “fully cooperating on this matter” and “operating business as usual.”

Carahsoft dominant

Since its founding in 2004, Carahsoft has grown into a dominant player in the government technology procurement market. Last year, it ranked 45th on Forbes’ list of the largest private companies in the U.S., with $11 billion in estimated revenue and more than 2,400 employees.

Among all federal vendors of IT products, Carahsoft holds the second-highest value of contracts directly with the government, totaling $3.5 billion since the beginning of fiscal 2020, according to Bloomberg Government data. Only Dell Technologies Inc. has more revenue.

SAP technology is a big chunk of this business. Carahsoft received more than 600 federal contracts for SAP tech worth more than $990 million and “facilitated” as much as $1 billion more in additional sales, prosecutors said in court filings. 

It’s unclear what portion of these sales prosecutors believe might have been shaped by bid rigging. The False Claims Act allows the government to recover up to three times its damages plus a penalty. 

Both SAP and Carahsoft have had other run-ins with the Justice Department.

In 2015, Carahsoft and VMware LLC agreed to pay $75.5 million to resolve allegations in a False Claims Act lawsuit accusing them of overcharging the government for VMware’s software and services from 2007 to 2013, according to a statement from the department.

Deferred prosecution

In January, SAP agreed to pay more than $220 million to resolve a foreign bribery investigation by U.S. authorities. The company entered into a three-year, deferred-prosecution agreement with the Justice Department after it was charged in a pair of schemes to bribe government officials in South Africa and Indonesia.

Earlier this month, German prosecutors opened a criminal probe into the company’s chief technology officer, who is stepping down due to “inappropriate” behavior. 

The new investigation comes to light as SAP’s share price has been hitting record highs amid a corporate restructuring. This year, chief executive officer Christian Klein has cut jobs and spending at the company, even as other executives have left or announced their departures in recent months. 

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Trump berates Republicans to ‘Stop talking,’ pass tax cuts

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Donald Trump listens to a question while speaking to members of the media before boarding Marine One on the South Lawn of the White House in Washington, D.C.
Donald Trump

Al Drago/Bloomberg

President Donald Trump called on members of his party to unite behind his economic agenda in Congress, putting pressure on factions of lawmakers who are calling for last-minute changes to the legislation to drop their demands.

“We don’t need ‘GRANDSTANDERS’ in the Republican Party,” Trump said in a social media post on Friday. “STOP TALKING, AND GET IT DONE! It is time to fix the MESS that Biden and the Democrats gave us. Thank you for your attention to this matter!”

Trump sent the post from Air Force One after departing the Middle East as the House Budget Committee was meeting to approve the legislation, one of the final steps before the bill can move to the House floor for a vote.

House Speaker Mike Johnson has set a goal to pass the bill next week before the House recesses for its Memorial Day break.

However, the the bill failed the initial committee vote — typically a routine, procedural step — with members of the party still sparring over the scope of the cuts to Medicaid benefits and how much to raise the limit on the state and local tax deduction.

Narrow majorities in the House mean that a small group of Republicans can block the bill. Factions pushing for steeper Medicaid cuts and for an increase to the SALT write-off have both threatened to defeat the bill unless their demands are met.

“No one group gets to decide all this stuff in either direction,” Representative Chip Roy, an ultraconservative Texas Republican advocating for bigger spending cuts, said in a brief interview on Friday. “There are key issues that we think have this budget falling short.”

Trump’s social media muscle and calls to lawmakers have previously been crucial to advancing his priorities and come as competing constituencies have threatened to tank the measure.

But shortly after Trump’s Friday post, Roy and fellow hardliner Ralph Norman of South Carolina appeared unmoved — at least for the moment. Both men urged continued negotiations and significant changes to the bill that could in turn jeopardize support among moderates.

“I’m a hard no until we get this ironed out,” Norman said. “I think we can. We’ve made progress but it just takes time”

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97% say CPA firms not using tech efficiently says survey

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While CPA firms far and wide have made major technology investments over the years, the vast majority of accountants say they’re not being used to their full potential. 

This finding comes from a recent survey undertaken by CPA.com and payment solutions provider Bill. The 400-person poll found that nearly all respondents, 97%, say they use technology inefficiently and that additional training is needed to maximize return on investment. Further illustrating the point, 43% of respondents said that technology is making them do more manual work, not less, something. Becky Munson, an Eisner Amper partner specializing in outsourced accounting services, believes this reflects a failure of training and change management, as she has seen many who disliked a technology change develop manual workarounds specifically to avoid using the new solutions. 

“We see employees make workarounds with tech stacks, which makes headaches that I think align with this 43%. We train people on new things, we ask them to use them, and they keep doing what they were doing before and only use the technology as much as they have to [in order to] move things along while you have people well trained on the software keeping up,” she said in a webcast on Thursday about the survey. 

Inefficient

Ariege Misherghi—senior vice president and general manager of accounts payable, accounts receivable and the accountant channel—said the issue isn’t just because of firms but also vendors that don’t provide enough support, and may not necessarily understand the profession in the first place. 

“Too often I think tools aren’t fully aligned with the workflows they’re meant to support. In SaaS they talk about product-market fit, but in this profession it’s not just that but also product-firm fit, and maybe product-profession fit. Not every tool marketed to accountants was built by people who truly understand how this profession works: the rhythms, the regulations, the stakes, the relationships, all of that. And even the greatest tools can fall short if they’re not implemented with a deep understanding of how firms really operate,” she said. 

And sometimes the inefficiencies come from both sides at once: the survey found that only 37% of firms require clients to use their tech stack, something that Munson said “breaks my heart” as “it is so low.” A streamlined, established tech stack is needed to achieve true economies of scale, but to get there firms need to standardize their data, and to do that firms need to make sure their clients’ data is also standardized, which usually means integrated tech stacks. 

“If you have all these different clients with all these different technologies, even if your own tech stack is standardized the systems they use is different, so the kind of data you will get will be different, and the work you need to do to make it work with your data is different, and your team spends a lot of time spinning their wheels,” she said. “Once you get standardized, where everything back and forth from clients is the same, you get to see how well the teams can do their work.” 

One source of inefficiencies is a rushed implementation. Munson said that, too many times, firms are so eager to get a solution working that they don’t pay attention to all its capacities, just the ones they need right now, but once the basics are down firms still don’t circle back on the rest of the features and how they can be used to drive efficiency. 

“Most of us have been through an implementation, either in the practice or with a client, where you’re just like ‘anything to get it working. Forget about all the fancy things it does. We just needed to do the basics right,’ and then we never circle back on those better, more efficient processes. We get to sort of minimal viable, and then we forget to come back and give it an extra polish. And so what we see there is the processes get written for that basic piece, and we never update,” she said. 

But this is part of what both speakers believed was the larger problem of firms getting lost in the details of their tech stacks and not taking a broader, more holistic approach, which would enable more efficiencies. The key component to managing technology effectively, Munson said, is looking not at individual solutions here and there but thinking of the system as a whole. 

“Often, what happens is something’s wrong or something is troublesome in some way. And so [we say] what can we do to fix that one thing? And we don’t think about it holistically and get all the right folks in there so that we’re solving for the right pain points,” she said. 

Misherghi agreed, and added that this holistic extends not only to the technology a firm already has but the solutions they plan to purchase in the future. When evaluating what technology they need, she said leaders need to think not in terms of specific point solutions to particular problems but things that can support the entire workflow—plus, the onboarding, training and ongoing support from the vendor. 

“Don’t just look for features, right? Look for solutions that support your workflows from providers that understand you. For firms, onboarding and training and optimization can’t be an afterthought. They’re essential to realizing value. I think this is where vendor partnerships matter. Firms seeking the strongest results aren’t just using software, they’re collaborating with their providers, they’re staying educated, they’re making sure their tools evolve alongside their needs. The best outcomes happen when your technology partner acts like part of your team, not just part of your toolkit,” she said. 

Misherghi said that the more successful firms she’s seen think less in terms of performing particular tasks but designing an entire system that, through automation, can do those tasks for them. It is less about plugging holes and more about developing a full infrastructure. The survey found that 74% of participants have a detailed plan to add new services in the next 12 month; Misherghi noted that, among these firms, 86% have a detailed technology roadmap, which is “a wonderful mark on the evolution of the profession we’re seeing.” 

She said a good tech roadmap is more like a service design blueprint versus a shopping list. Successful firms, she said, are not just chasing features but designing intentional workflows and systems capable of scalable service delivery. Similarly, she stressed that the provider should be more than just a vendor but a strategic co-architect that can help with growing pains. 

Misherghi said this approach will become especially relevant as AI becomes more common, as integrations will be key to their effective use, which means thinking in terms of the whole system to understand where those integrations should take place. Right now, she said, people think of AI in terms of analyzing data or extracting fields, but with the rise of AI agents will require firms to focus more on coordinating between them. 

“I think the next big leap is when those systems don’t just talk to each other, they act on each other’s behalf. I think the next big inflection point will be moving from automated steps to autonomous workflows, where AI agents aren’t just analyzing data or extracting fields but actually orchestrating tasks across tools based on firm policies and context and that will change the role of the accounting profession: its less time doing the work and more time designing the system for how everything works together. So the firms that will be thriving are those who are building strong infrastructure now because that is what AI needs to deliver on its core value,” she said.

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Trump tax bill fails in House panel

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A key House committee on Friday failed to advance House Republicans’ massive tax-and-spending bill after hard-line conservatives bucked President Donald Trump and blocked the bill over cost concerns.

The House Budget Committee rejected the bill 21-16, with Republican Reps. Chip Roy, Ralph Norman, Josh Brecheen, and Andrew Clyde joining Democrats to vote against it. The four hardliners demanded deeper cuts to Medicaid and other government programs.

It’s incredibly rare for bills to fail at this step in the process, with the committee vote typically serving as a rubber-stamp to the bill before it moves to the House floor. 

Representative Chip Roy
Rep. Chip Roy

Stefani Reynolds/Photographer: Stefani Reynolds/B

The setback could be temporary and the panel can still approve the bill once the GOP differences are resolved. 

Republican Lloyd Smucker, who switched his vote to “no” to allow the committee to bring it up again, told reporters the committee will hold another vote on Monday. 

Trump, whose social media muscle and calls to lawmakers have previously been crucial to advancing his priorities, inserted himself in the debate less than two hours before the vote, berating dissidents and urging them to fall into line. 

“We don’t need ‘GRANDSTANDERS’ in the Republican Party,” Trump said in a social media post on Friday. “STOP TALKING, AND GET IT DONE! It is time to fix the MESS that Biden and the Democrats gave us. Thank you for your attention to this matter!”

The bill’s failure exposes the power a small group of lawmakers can wield as Republicans seek to push Trump’s “one big, beautiful bill” through the House with very narrow margins. GOP infighting threatens to kill the bill, or at least significantly delay Republicans’ plans to pass the bill next week.

(Read more:‘One big beautiful bill’ full of tax surprises.”)

Republican holdouts spelled out their demands during Friday’s committee meeting, including accelerating new work requirements for able-bodied adults on Medicaid to take effect immediately rather the 2029 deadline set in the legislation. The ultraconservatives also want a faster phase-out of clean energy tax credits.

It wasn’t immediately clear how House Republicans will re-group to address the divisions and advance the bill.

“I’ll let you know this weekend if we’re going to return first thing Monday. That’s the goal at this point,” Budget Chairman Jodey Arrington said after the vote. 

House Majority Leader Steve Scalise, who is helping to broker a deal among Republicans, said party leaders are in touch with the Trump administration to address some of the changes demanded by hardliners.

“We are all in agreement on the reforms we want to make,” Scalise said. “We want to have work requirements. We want to phase out a lot of these green subsidies. How quickly can you get it done?”

House Speaker Mike Johnson on Thursday pledged he would work through the weekend to broker a compromise between moderates, who are seeking an increase in state and local tax deductions, and ultra-conservatives, who say they won’t support it without more spending cuts.

(Read more:Here are the winners and losers in the Republican tax bill.“)

Members from both factions — the SALT Republicans representing high-tax districts and the fiscal hawks who want steeper budget reductions — have threatened to block the bill if House leaders don’t acquiesce to their demands. 

“No one group gets to decide all this stuff in either direction,” Roy, an ultraconservative Texas Republican advocating for bigger spending cuts, said in a brief interview on Friday. “There are key issues that we think have this budget falling short.”

Both Roy and Norman urged continued negotiations and significant changes to the bill that could in turn jeopardize support among moderates.

“I’m a hard no until we get this ironed out,” Norman said. “I think we can. We’ve made progress but it just takes time.”

If the legislation passes the House, it would then head to the Senate where it would likely undergo significant changes. Several members, including Senator Josh Hawley of Missouri, have stated opposition to the Medicaid cuts in the House bill.

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