The Min­is­ter of Ed­u­ca­tion and the Prime Min­is­ter have both at­tempt­ed to al­lay me­dia con­cerns fol­low­ing re­ports of Hewlett Packard's (HP's) US$55 mil­lion set­tle­ment with the US De­part­ment of Jus­tice. The fears seem to arise from HP be­ing ac­cused of pro­vid­ing kick­backs, which in T&T par­lance is most of­ten in­dica­tive of some min­is­ter or par­ty-in-pow­er rep­re­sen­ta­tive get­ting un­due state fund­ing.

On analysing pub­licly avail­able in­for­ma­tion, it ap­pears that the US case dif­fers from the T&T con­tract in key el­e­ments, enough to sug­gest that the risk of sim­i­lar kick­back charges in T&T is low or non-ex­is­tent. How­ev­er, there are some ques­tions rel­e­vant to T&T.?First though, a sum­ma­ry of what hap­pened in the US. What are the charges that led to the HP/Jus­tice De­part­ment set­tle­ment? HP's set­tle­ment, first an­nounced by the com­pa­ny on Au­gust 2, re­lates to a case brought by the Jus­tice De­part­ment, which joined whis­tle-blow­ers Nor­man Rille and Neal Roberts's civ­il qui tam law­suit al­leg­ing "...vi­o­la­tions of the False Claims Act (FCA) and the An­ti-Kick­back Act of 1986 (AKA) by HP and oth­er tech­nol­o­gy com­pa­nies."

The com­pa­nies are ac­cused of par­tic­i­pat­ing in an in­dus­try-wide prac­tice of us­ing part­ner­ship and al­liance pro­grammes to make im­prop­er pay­ments and cause the sub­mis­sion of false claims in con­nec­tion with gov­ern­ment IT con­tracts. The De­part­ment of Jus­tice al­leges an in­dus­try-wide scheme where com­pa­nies pro­vid­ed mil­lions of dol­lars in im­prop­er pay­ments, known as "al­liance ben­e­fits," to each oth­er, caus­ing the fed­er­al gov­ern­ment to make pay­ments to the com­pa­nies which they were not en­ti­tled to re­ceive un­der the con­tracts. The gen­er­al charge is that HP al­leged­ly paid fees to sys­tems in­te­gra­tors (SIs) and oth­er third-par­ties to gain favourable re­com- men­da­tions from them, that led to HP win­ning many high-val­ue fed­er­al con­tracts to sup­ply IT sys­tems. The sys­tems in­te­gra­tors were hired by the US Gov­ern­ment to help with IT pro­cure­ment: so ba­si­cal­ly, HP is al­leged to have paid some SIs to jump the queue.?In this case, the "kick­backs"–as de­fined in the Act–didn't go from fed­er­al funds to HP ex­ec­u­tives' pock­ets: HP was ac­cused of pay­ing a kick­back to a third par­ty SI(s) to get favourable re­fer­rals dur­ing fed­er­al IT ten­ders. Does this risk of kick­backs ap­ply in T&T with the cur­rent SEA grad­u­ate lap­top con­tract?

From what lit­tle in­fo we have on T&T's SEA grad­u­ate lap­top case, our Min­istry of Ed­u­ca­tion in­vit­ed bids from nu­mer­ous ven­dors (in­clud­ing HP) but no SIs were con­tract­ed to man­age or ad­vise on the bid eval­u­a­tions. Thus, it is dif­fer­ent from the US case, and there is no risk that HP paid any third par­ty to in­flu­ence the min­istry's ten­der de­ci­sion (since no third par­ty was in­volved in re­view­ing the bids). Some folks may ex­press con­cern whether HP is ca­pa­ble of em­ploy­ing kick­backs in the course of its busi­ness deal­ings with our gov­ern­ment. HP has de­nied the al­le­ga­tions, but the man in the street would opine that if you're not guilty, why pay a set­tle­ment??Some­times large busi­ness­es choose to set­tle out of court rather than seek to prove their in­no­cence.?HP has agreed to a set­tle­ment with­out any ad­mis­sion of wrong­do­ing, in or­der to re­solve the al­le­ga­tions in full. How­ev­er, we need to recog­nise the cir­cum­stances un­der­ly­ing that set­tle­ment and the T&T lap­top ten­der are dif­fer­ent: so don't just get dis­tract­ed by the term kick­back in the US set­tle­ment, ap­ply the T&T de­f­i­n­i­tion of it and then make wild ac­cu­sa­tions that HP paid some kick­back in T&T to win a con­tract.

From the lim­it­ed lo­cal press re­ports, HP was the pre­ferred bid­der for the min­istry's lap­top ten­der, and I did raise ques­tions on what's in it for the lo­cal HP agents. How­ev­er, that has noth­ing to do with the HP set­tle­ment, an­nounced this week; well, at least the kick­back por­tion of it. Is HP mak­ing mas in T&T? I'm more in­ter­est­ed in the sec­ond dri­ver of the set­tle­ment: a charge that HP al­leged­ly with­held ma­te­r­i­al in­for­ma­tion from the US Gen­er­al Ser­vices Ad­min­is­tra­tion (GSA) that led to an im­prop­er­ly priced mul­ti­ple award sched­ule (MAS) con­tract. This um­brel­la con­tract is cen­tral­ly ne­go­ti­at­ed by the GSA, and al­lows the var­i­ous arms of the fed­er­al gov­ern­ment to ob­tain HP prod­ucts and ser­vices at dis­count­ed prices. MAS works like this:

If you, as an in­di­vid­ual, buy an HP lap­top from their Web site, you pay their full Web site price.?If you part­ner with 100 oth­er peo­ple who want to buy a lap­top, and all of you ap­proach HP as a sin­gle group, then you can ask for and get a large group dis­count off the Web site re­tail price for each lap­top (since you're buy­ing in bulk).

Sim­i­lar­ly, with the MAS con­tract, in­stead of in­di­vid­ual fed­er­al gov­ern­ment de­part­ments buy­ing in­di­vid­u­al­ly from HP and pay­ing near-re­tail prices, the GSA ne­go­ti­ates with HP what size dis­count should be ap­plied if any fed­er­al de­part­ment buys HP prod­ucts dur­ing the term of the MAS. Ac­cord­ing to the terms of the MAS, if HP failed to pro­vide re­quired ma­te­r­i­al in­for­ma­tion to the GSA, then it would have breached the con­tract (and po­ten­tial­ly led to the dis­count be­ing too small). US reg­u­la­tions ap­par­ent­ly al­low the GSA to seek re­dress from HP (or any oth­er ven­dor that ne­go­ti­at­ed a MAS con­tract with it) in these cas­es.

Now, since the T&T Gov­ern­ment is in all like­li­hood seek­ing to pur­chase lap­tops every year go­ing for­ward, here are my con­cerns aris­ing from this sto­ry. Did the T&T Gov­ern­ment ne­go­ti­ate with HP a sim­i­lar um­brel­la MAS con­tract for the sup­ply of HP prod­ucts to oth­er min­istries be­sides Ed­u­ca­tion, as well as dis­counts for any fu­ture min­istry lap­top pur­chas­es (say, to re­place stolen or bro­ken lap­tops in the cur­rent­ly due ship­ment)?

If a MAS con­tract was ne­go­ti­at­ed be­tween the Gov­ern­ment of T&T and HP:

n For what pe­ri­od does it ap­ply? Will it, for ex­am­ple, ap­ply to any pur­chas­es to be made for the Sep­tem­ber 2011 in­take of SEA grad­u­ates, thus re­sult­ing in HP ob­tain­ing fur­ther busi­ness with­out a new ten­der be­ing opened in 2011? Is the T&T Gov­ern­ment con­fi­dent that HP didn't with­hold pric­ing pol­i­cy in­for­ma­tion that may have in­flu­enced the price? Ed­u­ca­tion Min­is­ter Tim Gopeesingh said the ten­der process was open and trans­par­ent.?What does that mean? Since we still don't have many de­tails about the ten­der, much less how it fits in with the over­all ed­u­ca­tion pol­i­cy, how is this trans­par­ent??Last­ly, does T&T have, or in­tend to have, any leg­is­la­tion sim­i­lar to the USA's False Claims Act and An­ti-Kick­back Act? Do any of T&T laws pro­tect against un­fair in­flu­ence on stake­hold­ers in­volved in state pro­cure­ment?

Ed­mund Nigel Gall

Lon­don