September Surprise!

As everyone in government contracting knows, the end of the fiscal year is a particularly busy time. Because budgets are often “use it or lose it” before September 30, the government works extra hard to make sure that any end-of-year funds are spent[1]. And because end-of-year spending is, by its very nature, not quite as well planned out, the government tends to buy one-time things. Things like furniture or training … or computer stuff.

If you pay attention to the space, it’s hard to think of a company that is more optimized around September sales than Carahsoft Technology Group. According to the data, Carahsoft earned roughly 40% of its $1.4 billion in FY2023 in the fourth quarter, and almost 68% of that number came in September.

But, uh…. maybe this isn’t their year?[2] Yes, sure. Within the beltway, folks are paying attention to the Continuing Resolution. But just outside the beltway on Sunset Hills Road in Reston, VA, things were buzzing: ?

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 US military and other parts of the government, according to federal court records filed in Baltimore. … 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.

Yikes.

We’ve talked about Carahsoft once before, in the context of C3.ai’s protest against Palantir. And we’ve written about Carahsoft’s business model as an ITVAR. But it’s hard to overstate how much Carahsoft is the platonic ideal of an ITVAR, and it’s massive… with $11 billion in estimated revenue and more than 2,400 employees.[3] As a friend joked to me yesterday, there are several federal agencies that literally won't be able to operate if they can't buy from Carahsoft.

So, thoughts and prayers to any contracting officer that is trying to figure out whether to make an award to Carahsoft now that it’s been raided by the feds with less than a week to go before the end of the fiscal year. Do you try and get new quotes? Do you just keep going? There are only wrong answers here, folks!

Meanwhile, the subreddits have been blowing up and I’m here for it. The top comment here is particularly delicious: “Take advantage of the FBI being there, prospect them for leads people.” “Threat intelligence webinar !!!!” Always be closing, amirite??

Anyway, there’s a lot of speculation about what’s going on, and the leading article suggests that it’s related to this case, involving potential bid-rigging allegations involving SAP and Carahsoft and some unidentified channel partners, including — probably — Accenture.[3]

Time will tell, I suppose. But for everyone trying to hit their quotas and for everyone trying to get those contracts out the door before midnight next Monday, just remember that, in #govcon, it could always be worse! Happy hunting!

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[1] Technically, the funds are obligated, not spent. But stay with me.

[2] I apologize for the paywall link. Here’s a different one.

[3] As long as we’re all out here shitposting and speculating, this is my moment to go extremely niche on a specific SAP-branded product: ConcurGov. For those who have ever traveled on behalf of a civilian agency, you’ve probably used ConcurGov, the government’s travel reimbursement tool. Unlike its commercial Concur counterpart, ConcurGov is a monstrosity of bad user experience.?

Within my former agency, ConcurGov was the subject of much gallows humor because, to actually submit travel reimbursement required the user to “stamp” the request about a dozen times. “Keep on stamping”, we’d darkly joke, as we internally cried about how the digital metaphor of a stamp represented the dumbest parts of federal bureaucracies.

In this telling of events, I’m imagining some prosecutor going Office-Space-burn-it-all-down on SAP and Carahsoft after they finally decided to, once and for all, stop stamping.