$75.5 Million Settlement Reached in Case involving the Fraudulent Sale of Software to the Federal Government

VMware Inc., a manufacturer of computer visualization software, and Carahsoft Technology Corporation, a distributor of information technology, will be paying $75.5 million to settle claims that they made misrepresentations that allowed them to overcharge the government for VMware’s products and services.  Under the United States General Services Administration’s (“GSA”) Multiple Award Schedule Program, vendors who wish to do business with multiple branches of the government are required, during the contract negotiation process, to provide the GSA with “current, accurate and complete” information regarding the standard and non-standard discounts they offer to commercial customers.  This data is used by the GSA to arrive at a fair pricing level for the goods and services to be purchased by the government. Moreover, once a contract is awarded, the seller must inform the GSA if its commercial pricing practices change, including increases to the discounts provided to commercial customers.

A complaint was filed against VMware and Carahsoft under the False Claims Act with the Unites States District Court for the Eastern District of Virginia accusing them of making false statements relating to the sale of VMware products and services under a Multiple Award Schedule Program contract that Carahsoft had with the GSA.  These misrepresentations supposedly concealed the companies’ commercial pricing practices and allowed them to overcharge the government from 2007 through 2013.  This settlement brings an end to this lawsuit which was brought by Dane Smith, VMware’s former vice president of the Americas.

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