VMWare and Carahsoft to Pay $75.5 Million to Settle Whistleblower Allegations

VMware Inc. and Carahsoft Technology Corporation will pay $75.5 million to resolve whistleblower allegations that both companies violated the False Claims Act by misrepresenting commercial pricing practices and overcharging the government for goods and services purchased under contract. Delaware-based VMware is a company that specializes in computer virtualization software and Carahsoft, a Maryland corporation, is a distributor of information technology products.

Under the U.S. General Services Administration’s Multiple Award Schedule (MAS) Program, vendors seeking to earn government contracts are required to disclose their commercial pricing policies and practices to the GSA. During MAS contract negotiations, prospective vendors must disclose the “current, accurate and complete” discounts they offer to commercial customers so the GSA can negotiate fair pricing for government purchasers. After any MAS contract is awarded, regulations require that participating vendors continue to disclose any changes in their commercial pricing practices to the GSA. This includes any additional discounts vendors offer their commercial customers after any MAS contract is agreed to.

According to a Justice Department press release, VMware and Carahsoft submitted false statements to the government between 2007 and 2013 in connection with Carahsoft’s MAS contract for the sale of VMware products and services. The false statements allegedly hid both companies’ commercial pricing practices, which resulted in the government being overcharged for VMware’s products and services.

The agreement settles claims initially filed in a qui tam lawsuit by whistleblower Dane Smith, who was a former VMware vice president for the Americas. Smith’s share of the recovery has not been determined.

Today’s settlement shows how valuable whistleblowers are in the fight to stop fraud on the part of government contractors seeking to steal government funds at the expense of taxpayers. Our firm applauds Mr. Smith for coming forward with these allegations and bringing accountability justice to his former employer.

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