In its May 29th press release, the Department of Justice announced its intention to pursue claims against technology giant CA Technologies for alleged misrepresentations during negotiations for the purchase of software licenses. CA Technologies provides software and technology to several government agencies, including the Department of Labor, Department of Defense, Department of Energy and the Department of Health and Human Services. The lawsuit, originally filed in 2009, was commenced by a former employee of CA Technologies in Israel under the qui tam provisions of the False Claims Act. The lawsuit was first made public late last month.
Details of Case Against CA Technologies
CA Technologies holds a large Multiple Award Schedule (MAS) contract with the federal government for the provision of vital software, licenses, maintenance, training, and consulting services. Under the terms of the contract, CA Technologies was required to fully disclose its general business practices, as well as provide complete and accurate information as to how it sets its prices and does business in the commercial marketplace. The purpose of the full disclosure requirement was to make sure the government was receiving a fair deal for the products and not overpaying.
Nonetheless, the details of the case against CA Technologies reveal allegations of overcharges and a failure to fully disclose available discounts or other price reductions generally available to commercial marketplace customers. More specifically, the complaint alleges that CA Technologies repeatedly assured the government that its discounting procedures had not changed from year to year when in reality, discounting policies and procedures as applicable to private customers had increased.
In addition to its failure to reveal changes in pricing, CA Technologies is alleged to have improperly applied the “price reduction clause” contained within the contract. This clause required CA Technologies to keep an eye on discounts offered to private customers and offer the same discount to the government if doing so would result in a lower price. The complaint alleges CA failed to monitor these discounts and, when it did, did not apply the correct discount amount to the government contract, resulting in an overpayment for services by the agencies receiving its products and services.
Government’s Decision to Intervene
The federal government may intervene in a whistleblower case at its own discretion, and many times opts to allow the plaintiff to continue individually. However, in today’s case, the government took a hardline approach against dishonest and unscrupulous federal contractors.
In a statement by the U.S. Attorney for the District of Columbia, “Too many federal contractors think they can get away with overcharging the government….Our complaint alleges that CA broke its promise to give the government the same prices it was giving commercial customers. We look forward to vigorously pressing these claims in court and recovering every dollar that is owed to the American taxpayer.”
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