(Bloomberg) -- SAP SE, Europe’s most valuable software company, is scrutinizing its relationship with government reseller Carahsoft Technology Corp. after the FBI raided the US company’s Virginia office in September.
“There are still business activities running, and we have to be absolutely sure that we can rely on a clean partner,” SAP’s Chief Financial Officer Dominik Asam said in an interview on Tuesday.
The remarks come after a US Department of Justice civil investigation into SAP and Carahsoft came to light last month in a Bloomberg News report. Since at least 2022, DOJ lawyers have been looking at whether SAP 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 records show that the civil probe has focused on whether SAP, Carahsoft and other firms made false statements to the Department of Defense by coordinating bids and prices for SAP products. Prosecutors broadened the probe this year to examine the companies’ work with almost 100 government agencies.
In September, FBI and Department of Defense investigators searched Carahsoft’s Virginia office. A Carahsoft spokesperson, Mary Lange, described the search as “an investigation into a company with which Carahsoft has done business in the past” and said the company was cooperating with the FBI probe. It’s unclear whether the search of Carahsoft’s office has any connection to the civil investigation.
Carahsoft didn’t immediately respond to a request for comment on Asam’s remarks.
An SAP spokesperson previously said the company wasn’t involved in any criminal investigation related to Carahsoft and had no information about “the latest events” concerning its vendor, in reference to the FBI raid.
Asam said on Tuesday that the matter has “nothing to do with SAP” and that “we need to scrutinize that partner,” referring to Carahsoft.
“We have gotten written assurance from Carahsoft that the FBI search was entirely unrelated to SAP and NS2,” the SAP unit that conducts defense business in the US, he added.
SAP received a civil investigative demand from the DOJ in August 2022, Asam confirmed, and the company conducted a “very, very heavy forensic exercise within our company” to provide all the “necessary information.”
The civil investigation is examining the more than $2 billion worth of SAP technology that the US government has purchased since 2014, although it’s unclear what portion of these sales prosecutors believe might have been shaped by bid rigging.
Still, SAP is unlikely to change vendors for its future government business. Carahsoft is an essential middleman in sales between the government and major technology firms and there is no other distributor near its size in terms of federal revenue, experts told Bloomberg previously. The federal government has awarded $9.9 billion in unclassified prime contracts to Carahsoft since 2014, according to Bloomberg market data.
As to how this probe might affect SAP financially, Asam said there was “no news at this front.”
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