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Deloitte Accused of Lobbying for California Contracts

By Michael Foster, Big4.com Blogger

Deloitte is being accused of lobbying for contracts in the state of California. In the Los Angeles Times, the Big4 firm was accused of “adept lobbying of state and local officials” that helped it win government contracts despite failed projects in the past.

The newspaper cited an incident when the Department of Developmental Services hired the firm to integrate a system for tracking the cost of services for disabled Californians. After $5.7 million was spent, the Department cancelled the service after the system failed to work.

The paper also cited an incident when Deloitte finished a project at a cost of $24 million–twice the original budget–that was designed to computerize the state’s workers’ compensation claims monitoring system.

In another incident, Deloitte received $310 million before the state cancelled a project that would network every computer in California’s courts.

“It’s amazing to me, given past performance, that this company keeps getting contracts,” said Bob Stern, former head of the Center for Governmental Studies in Los Angeles, a non-profit think-tank. Deloitte spokesman Jonathan Gandal responded that, “Because of the quality of Deloitte’s work, the expertise of our people and the value of our services,” clients want the company “to provide additional features and services beyond the scope of our original contract.”

The company is still working on three projects for the state, even after allegations of improperly influencing state employees. In 2006, Deloitte executives are accused of taking a Marin County manager to an expensive dinner in San Francisco and suggesting that there might be a position in the firm for him. “After a really hard day, it was a great finish,” the manager wrote of the occasion.

That manager expanded Deloitte’s contract, signed off on 22 payments for the firm, and was then hired a year later by SAP Public Services, which was a Deloitte partner on the project in question.

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