Autonomy: Accusations Fly from the US Air Force

January 7, 2014

The Washington Post story “Government Questioned MicroTech about Its Role in HP Fraud Allegations” puts search and content processing in the spotlight. The newspaper is digging into the interesting underbelly of US government contracting. (The full series is at

I am certain that there are many fascinating tales about the interactions of contractors, contract officers, politicians, and lobbyists. The Washington Post is hopping into the fray and not a minute too soon to probe activities somewhat less fresh than the project or a number of higher profile projects, including tanks that are orphans and fighters that are too slow, underarmed, and unable to outperform fighters from certain other countries.

In fact, I think the HP-Autonomy deal closed a couple of years ago and US government contracting has been chugging along in its present form for 40, 50 years. Perhaps the procurement processes will change so that contractors’ business practices can change accordingly.

I found this passage from the Post story  interesting:

MicroTechnologies LLC is among two companies and six executives who are said to have taken part in the efforts to boost the revenues of software maker Autonomy before its sale to HP, according to documents prepared by the Air Force deputy general counsel’s office that raised the possibility of barring all the parties from receiving federal contracts.

The Post story was picked up by other “real” journalists, including the estimable Telegraph in the UK (See the British take in “Autonomy Founder Mike Lynch under Fire from US Air Force over HP Claims.”)

After working through the stories, I formed several hypotheses:

  1. Resellers bundled software, storage, and hardware for clients. The reason may be due to a desire to get an “appliance”, not a box of Lego blocks or to procure a system without having to go through the uncertain process of getting approval for a capital expenditure.
  2. The indirect sales model used by Autonomy with considerable success required Autonomy to pay money when the reseller picked up the phone and said, “We sold a big deal, and we need cash to move forward” or some variation on this theme that is well known to integrators and resellers.
  3. The business process in place provided payments to resellers because of the terms of a particular agreement with a reseller or class or partners. Autonomy purchased some resellers and integrators to respond to the challenges the indirect sales model posed to Autonomy since 1998.
  4. Some combination of factors was arbitrated by Autonomy’s financial team.

Autonomy purchased the Fast Search & Transfer government sales unit and that group may have imported some of Fast Search’s procedures.

With Dr. Michael Lynch inventing video technology like US8392450 and US 8488011 filed coincident with the HP closing, was he able to dive into reseller deals?

The fact is that Autonomy is now a unit of Hewlett Packard. What few pay attention to is another fact. HP was an Autonomy partner for a number of years prior to its purchase of Autonomy. HP was part of Autonomy’s indirect sales channel and presumably knows how procurements, sequesters, allocated funds, and the other arcana of US government procurement “works.”

Dr. Lynch did something no other search or content processing vendor serving the enterprise market was able to do. From the inception of Autonomy in 1996, he exhibited an uncanny knack for recognizing trends and incorporating solutions to information access problems on top of those trends. In the course of Autonomy’s trajectory from 1996 to 2011, Autonomy grew as a modern day roll up that generating almost $850 million in 2011.

I am supportive of a historical understanding of search and content processing. On one hand, Autonomy is now HP’s information processing prodigy. On the other hand, HP may not have the management or technical skills to build on Dr. Lynch’s work.

Oracle paid about $1 billion for Endeca, a system that dates from roughly the same era as Autonomy’s system. But HP paid $11 billion for Autonomy and discovered quickly that surviving and thriving in the odd universe of enterprise search and content processing is tough when the steering wheel is in its hands. Is Dr. Lynch on track when he suggests that his management team was more skilled than some realized?

Investigations into government contracting procedures are quite fascinating. I know from some of my past work that bureaucracies work in mysterious ways.

Perhaps some of these mysteries will be revealed? On the other hand, some of the mysteries may never be known. Where are the Golden Fleece awards today? Do bureaucracies have teeth? Do bureaucracies protect their own? Do special interests exert influence? These are difficult questions.

Maybe there will be answers in 2014? On the other hand, there may be more public relations, content marketing, and spin. I hope those involved with the matter dig into Bayes-Laplace methods, Shannon information theory,  and Linear Weight Networks. The methods can help separate noise from high value information.

Stephen E Arnold, January 7, 2014


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