The U.S. Department of Justice (DOJ) is conducting a civil investigation into German software giant SAP SE and its U.S. reseller, Carahsoft Technology. The focus of the investigation is on allegations of a conspiracy to overcharge U.S. government agencies for SAP technology.
The probe, which has been ongoing since at least 2022, centers around potential price-fixing schemes involving approximately $2 billion worth of SAP technology sold to the U.S. military and government agencies since 2014. The DOJ is also looking into other software resellers, including a unit of Accenture plc, for potential involvement in manipulating the market.
The investigation came to light after federal agents conducted a raid on Carahsoft’s Virginia offices, seizing documents and computers. Prosecutors have subsequently filed a suit against Carahsoft to enforce their demands for internal communications related to these SAP sales.
Carahsoft holds a significant position within federal technology procurement. Since 2020, the company has secured over $3.5 billion in contracts, with a substantial portion of this business stemming from SAP technology sales. Carahsoft has facilitated over 600 contracts involving SAP, totaling nearly $1 billion. If the bid-rigging allegations are proven true, it suggests that government agencies may have been significantly overcharged for SAP technology over the past decade.
This is not the first time either company has faced legal scrutiny. In 2015, Carahsoft and VMware reached a $75.5 million settlement to resolve claims of overcharging the government. Recently, SAP settled a $222 million bribery case involving seven countries, including South Africa and Indonesia. This series of legal issues has intensified scrutiny on the company’s business practices.
Bloomberg reported that SAP has confirmed its full cooperation with the DOJ and emphasized that no criminal charges have been filed. Despite the news, SAP and Carahsoft are continuing with their planned two-day Executive Summit in San Francisco, focusing on future IT trends and innovations. Notable attendees include Data Scientific CEO Cassie Kozyrkov, bestselling author Sol Rashidi, and former OpenAI’s Head of Go-To-Market Zack Kass.
Carahsoft has not yet responded to Benzinga’s request for comment.
Following the news of the investigation, SAP’s stock price dropped by 2.91% to $224.21 on Wednesday. Despite this dip, SAP remains one of the top-performing European large-cap stocks, with a year-to-date gain of around 47%.
