Two cloud service providers settled a claim with the federal government Tuesday, agreeing to pay $75.5 million for overcharging government customers for almost six years.
VMware and Carahsoft, two major players in the federal IT and as-a-service marketplace, agreed to the settlement to resolve allegations that they withheld pricing information from the General Services Administration.
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The issue was brought to the government's attention by a former VMware vice president, Dane Smith, who filed suit on behalf of the government as a whistleblower under the False Claims Act.
According to the suit, the companies failed to update their pricing over time and disclose discounts offered to commercial customers, as required to be on GSA's Multiple Awards Schedule.
By concealing pricing levels, companies reselling VMware products and Carahsoft services overcharged the government from 2007 through 2013, according to the Justice Department.
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"Today's settlement demonstrates our continuing vigilance to ensure that those doing business with the government give the taxpayers a fair deal," DOJ Principal Deputy Assistant Attorney General Benjamin Mizer said Tuesday. "Government contractors who seek to profit improperly at the expense of taxpayers face serious consequences."
Under the settlement, the companies agreed to pay the $75.5 million fine without admitting guilt or liability.
"We will continue to look into all allegations of false claims in GSA contracts," said Robert Erickson, GSA acting inspector general. "I appreciate the hard work of our auditors, our agents and the attorneys on this complex case that has resulted in a large amount of money being returned to the United States."
Aaron Boyd is an awarding-winning journalist currently serving as editor of Federal Times — a Washington, D.C. institution covering federal workforce and contracting for more than 50 years — and Fifth Domain — a news and information hub focused on cybersecurity and cyberwar from a civilian, military and international perspective.
