The U.S. Department of Justice (DOJ) announced in a statement released on March 13, 2017, that CA Inc., an information technology, software, and software services company headquartered in New York, NY, has agreed to pay $45 million in order to settle False Claims Act (FCA) allegations. It is asserted that false claims and statements were made during the negotiation process and the administration of a General Services Administration (GSA) contract. The allegations were first brought by a whistleblower in a qui tam FCA case. The case was subsequently joined by the federal government.
The GSA contract in question was a Multiple Award Schedule (MAS) contract involving software licensing and maintenance agreements with CA. In a MAS contract, the prices and contract terms are pre-negotiated by the GSA. At the time CA entered into an agreement with the GSA, contractors were supposed to disclose all details of how they conducted business in the private, non-governmental marketplace. The information supplied to the GSA by contractors would then be used to negotiate fair prices for products and services. A price reduction clause was also included in the contract which would alter the prices that CA would charge the government if the company’s discounts for non-governmental customers changed.
It is alleged that CA did not fully and precisely reveal its discounting methods to the GSA’s contracting officers. In addition, it is claimed that CA broke the contract’s price-reduction clause because it did not provide government customers with further discounts when the non-governmental discounts changed. According to a statement by the Justice Department, the settlement “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.”
It is not the first time that FCA allegations have been brought against the company. In November 2013, CA Inc. (then called CA Technologies Inc.) settled whistleblower allegations by agreeing to pay a total of $11 million in an FCA whistleblower case brought by a former employee. It was claimed that the federal government, seven states, the District of Columbia, and the City of New York were overbilled by CA for software and related maintenance plans.
In the March 2017 announcement by the DOJ, GSA Inspector General Carol Fortine Ochoa made firm statements regarding contracts and fraud. “GSA contractors must be honest and forthcoming when doing business with the federal government. American taxpayers deserve a fair deal.”
The whistleblower, who was formerly employed by CA Software Israel, will receive $10.2 million as their share of the financial recovery.
Although CA resolved the allegations with their $45 million settlement, there was no determination of liability.
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