787 Hiring Outsourced

A foreign-owned firm gets a state contract.

As if the $3.2 billion, 20-year tax exemption given Boeing to assemble its new- generation Dreamliner in Everett wasn't controversial enough, the state has awarded its first major contract from that deal to a tax-dodging company incorporated in Bermuda. For $4.4 million, Accenture LLP, the American subsidiary of Bermuda- headquartered Accenture Ltd., will operate the Employment Resource Center for Boeing's new 787 production line, hiring and training 800 to 1,200 Boeing workers at taxpayer expense. The center is part of the sweetheart deal between the state and Boeing in 2003, when then-Gov. Gary Locke and the Legislature engineered the contract to Boeing's specifications. The governor's office quietly employed Boeing's own consulting company to fashion the incentives package, which included at least $10 million to build and operate the employment center.

The newly signed Accenture contract describes the agreement as a "partnership" with Boeing and Accenture "to create a new model for workforce selection, education and training." Jason Mercier of the tax watchdog Evergreen Freedom Foundation in Olympia questions the hiring and also points out the state is financing creation of a worker pool for a private corporation.

A global management and technology firm with corporate offices in New York, Accenture formerly operated as the consulting arm of Arthur Andersen, Enron's accounting firm. Specializing also in helping companies globally outsource their operations, Accenture skates past many major U.S. taxes because of its location in Bermuda, a British territory with no corporate income tax. For an annual licensing fee of $27,825, according to federal Securities and Exchange Commission filings, Accenture, with net revenue of $13.6 billion in fiscal 2004, saves hundreds of millions on taxes with its storefront Bermuda headquarters. The practice is thought to cost the U.S. $20 billion a year in tax revenue thanks to offshore companies in Bermuda and elsewhere.

In Olympia, the company's selection resulted from a competitive bid, says Kathy DiJulio, spokesperson for the state Employment Security Department. It "was really based on qualifications and the proposals they submitted," she says. Accenture's offshore status did not come up "to my knowledge," she says. Robin Pollard, project coordinator for the state 787 office, in a written statement calls the deal a "milestone" and predicts "long-term benefits" from the new center.

The Freedom Foundation's Mercier says it's all about special-interest welfare. "Washington needs to eliminate barriers standing in the way of a profitable business climate for all employers," he says, "not use tax dollars to take over the personnel responsibility of private employers."


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