Question about SEO and SEO companies?

[the_sio_monster]

I am doing some SEO work for a company and I have a few questions. First, there is a company trying to get my boss to pay $11,000 for SEO work. This company says they are doing the SEO by adding links and descriptions to web pages. On one page alone, there are a bunch of links towards the end of the page and this company is telling my boss that this is the "secret" to SEO. Now, the only way I can think how this would be effective, is by actually having the key term and description linked to the page and inserted into the met tag keywords. Whatever this company is doing it works, because one of our competitors is #1 in rankings on Google, Yahoo and others for basically all of the keywords we can think of that have to do with our industry. So, my question is, do these large SEO companies have some sort of agreement with the search engines where they get precedence in the search listings? Or is it more likely to get listed higher in the listings by having the keyword on your website multiple times (what they have is multiple keywords and when you click on one, there is a web page describing the term). I am being pressured to improve our ratings without the use of an SEO company, and I am really unsure of what I can do. Would an SEO program work well for me?

I am not looking for a company to pay thousands of dollars to. I have been hired to do this and am looking for people who are not part of SEO companies to give me tips and advice.