Government Contract Fraud

CA Inc. (CA), an information technology management software and services company, agreed to pay $45 million to resolve allegations brought under the False Claims Act. The federal government alleges that CA made false statements and claims in the negotiation and administration of a General Services Administration (GSA) contract.

“Today’s settlement demonstrates our continuing vigilance to ensure that contractors deal forthrightly with federal agencies when seeking taxpayer funds,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “We will take action against contractors who withhold information and cause the government to pay more than it should for commercially available items.”

The settlement resolves allegations related to a GSA contract awarded to CA for software licenses and maintenance services.  At the time of CA’s contract, contractors were required to fully and accurately disclose to GSA how they conducted business in the commercial marketplace so that GSA could use that information to negotiate a fair price for government agencies using the GSA contract to purchase CA products and services.  The contract also contained a price reduction clause that set forth when the contractor had to reduce the prices it charged to the government if its prices to commercial customers were discounted.

The federal government contends that CA did not fully and accurately disclose its discounting practices to GSA contracting officers.  Specifically, the agreement resolves claims that CA provided false information about the discounts it gave commercial customers for its software licenses and maintenance services at the time the contract was negotiated in 2002 and was extended in 2007 and 2009.

This case arose from a qui tam lawsuit filed by Dani Shemesh, a former employee of CA Software Israel LTD. The False Claims Act’s qui tam provisions allows private individuals to sue on behalf of the government and share in any recovery. Shemesh will receive a whistleblower reward of $10.195 million for reporting this fraud on the government.

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