Ivalua Announced Alliance with Big 4 Firm Same Month Contract Was Announced
Back-office E-procurement software is a multi-billion-dollar business that enables government agencies to buy and businesses to sell goods and services online. But are lobbyists and former elected officials persuading state government purchasing officers to buy expensive software through questionable contracts?
In New York City, an alliance between KPMG and Ivalua, a French E-procurement company, may have transformed Ivalua from a relatively minor aspirant that held a $30.5 million contract with New York City’s (NYC) Dept of Information Technology and Telecommunications into major player in this lucrative municipal market.
KPMG-Ivalua Alliance Announced in 2016
In December 2016, KPMG and Ivalua announced an alliance. That same month, they were selected by the City of New York to use Ivalua’s e-procurement software and transform how some 40 agencies spend approximately $15 billion annually. The deal was subject to oversight by the Mayor’s Office of Contract Services.
Did Ivalua’s superior technology win the day? Perhaps. Or was it KPMG’s persistent lobbying on procurement that stretched back to at least 2014?
KPMG Indicted in 2018
In January 2018, the U.S. Attorney for the Southern District of New York indicted five former KPMG executives on “conspiracy and other criminal and civil charges” for “stealing secret government lists that detailed which of its major clients, including banks, were going to get scrutinized by regulators.”
Meaning, KMPG, a “Big 4” accounting and professional services company, was concerned where the government would be looking.
The indictment named David Middendorf, a former lead director of KPMG’s board and the company’s global managing director for audit quality and professional practice, who was credited with transforming the national office. KPMG’s businesses are world-wide and provide valuable services to a variety of sectors.
Although the KPMG-Ivalua alliance began two years before the indictment, we know of no direct connection based on our research to date.
Timeline of events:
- From 2014 to 2015, KPMG LLP was registered as a lobbyist in New York City. All of this lobbying was related to seeking new procurement business.
- In March 2017, Angel Barbosa, chief procurement officer for New York City’s Metropolitan Transportation Authority (MTA) “was fired and escorted from his desk by security” for his suspected role in a bribery scandal involving KPMG. KPMG said it was “cooperating with authorities” in the investigation.
- During 2017 to 2018, KPMG employed the RG Group as registered lobbyists in New York City, with RG employees who included Catherine Giuliani (cousin of former NYC Mayor Rudy Giuliani). All of the lobbying was related to procurement.
- In January 2018, KPMG’s former Managing Director Middendorf and four others were indicted.
- Four months later, Ryan Murray — the First Deputy Director in the Mayor’s Office of Contract Services for the City of New York — spoke at the Ivalua Now 2018 conference. Ivalua shared a tweet that read, “Ryan Murray, a ‘CPO on the Rise’ on stage discussing how New York City transformed its procurement operation and the city’s $21B in spend #IvaluaNow2018.”
To learn more about the KPMG-Ivalua partnership with the City of New York, we have filed three Freedom of Information Law (FOIL) requests.
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Scott Peterson is executive director of Checks and Balances Project, an investigative watchdog that seeks to hold government officials, lobbyists and corporate management accountable to the public. Funding for C&BP is provided by Renew American Prosperity and individual donors.
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