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August 15, 2014 Contractor Fraud

Hewlett-Packard Settles Allegations of Overbilling the U.S. Postal Service

In a recent announcement by the Department of Justice, Hewlett-Packard has settled allegations it bilked the federal government out of millions of dollars during a ten-year contract for the provision of computer software and maintenance services. The computer giant agreed to remit a staggering $32.5 million to settle claims advanced under the False Claims Act; however, it has not admitted liability in the matter. The details of the case reveal an alleged systematic practice of overbilling the government agency for computer services pursuant to a contract executed in 2001 and spanning until 2010.

Details of the Case Against Hewlett-Packard

In 2001, the federal government joined with Compaq, Inc. in a contract for the delivery of software services, maintenance, and repair for the U.S. Postal Service. The contract was assigned to Hewlett-Packard after it acquired the struggling Compaq in 2002. Specifically, Hewlett-Packard was under an agreement to offer the best prices for its ADEPT product, which is also known as the Automated-Desktop Extended Performance Technology. HP provided services to the agency for over eight years.

Much like any other government contract, HP was required to offer the Postal Service rates that were less than or comparable to rates offered in other contracts with private companies. According to the allegations, HP not only failed to offer the government the same or better rates than it offered under comparable contracts, according to the complaint, it engaged in misrepresentations and fraud during the contract negotiation process. All in all, the government alleged overbilling across the eight-year period topping $32 million and, notwithstanding HP’s silence on liability, has reiterated its position that the settlement does not imply its claims were not well-founded.

Responses to the Settlement

In an effort to curtail further discussion on the matter, a spokesperson for HP stated, “HP values its ongoing relationship with the U.S. Postal Service, and looks forward to continuing to deliver high-quality products and solutions to its valued customer.”

Assistant U.S. Attorney Stuart Delery stated that “[p]rotecting the federal procurement process from false claims is central to the mission of the Department of Justice….We will continue to ensure that when the government purchases commercial products, it receives the prices to which it is entitled.”

The claims were investigated in a joint effort between the U.S. Postal Service’s Inspector General and the Department of Justice’s Civil Division.

Unlike many other False Claims Act cases, this cause of action did not involve initial allegations by a private whistleblower. However, the False Claims Act allows for private individuals with original information about fraud under a government contract to come forward with their information and, if successful, receive up to 30 percent of the ultimate judgment or settlement.

Aware of Contractor Fraud? Contact Berger Montague Today

Contractor fraud is one of the most common forms of fraud litigated under the False Claims Act. If you are aware of suspicious activity pursuant to a contract with the federal or state government, we encourage you to contact us right away. An experienced whistleblower attorney can help you properly and confidentially advance your claims.