Menu
VMware settles claim of overcharging US government

VMware settles claim of overcharging US government

VMware and Carahsoft will pay $US75.5 million, the Department of Justice said

VMware and a partner have settled a lawsuit that alleged the companies overcharged the U.S. government for its products.

VMware and a partner have settled a lawsuit that alleged the companies overcharged the U.S. government for its products.

VMware has settled a lawsuit initiated by a former executive that alleged the company and a partner overcharged the U.S. government for products over a six-year period.

VMware, of Palo Alto, California, and Carahsoft Technology Group, a Reston, Virginia-based company that sells technology products to federal, state and local agencies, will pay $75.5 million, according to the Department of Justice.

Neither company admitted to the allegations, which alleged violations of the False Claims Act from 2007 through 2013.

In a statement, VMware denied its disclosures to the government were inaccurate and violated the False Claims Act. It decided to settle "rather than engage in protracted litigation with one of its important customers the federal government."

According to the lawsuit, VMware offered a 12 percent discount on its main product to the U.S. government, a figure that was far below the average discount offered to other commercial customers.

Some commercial customers received discounts of up to 72 percent in early 2008, according to a chart in the complaint.

"There was never any legitimate justification for this discrepancy," the suit said.

Vendors are required to disclose their commercial pricing policies and sales practices to the General Services Administration (GSA), which manages the procurement of real estate and technology services.

Companies seeking contracts under the Multiple Award Schedule (MAS) program must also disclose discounts that they give to commercial customers, which allows the government to negotiate fair pricing, the DOJ said. Changes in pricing also must be related after a contract is in place.

The case came from a whistleblower, Dan Smith, a former VMware vice president of the Americas. Smith was fired by VMware in January 2010 after alerting other VMware executives to the pricing issue.

Court documents show that Smith will get a share of the settlement, which hasn't been determined yet.

Subscribe here for up-to-date channel news

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags legalCarahsoft Technology GroupVMware

Featured

Slideshows

StorageCraft celebrates high achievers at its inaugural A/NZ Partner Awards

StorageCraft celebrates high achievers at its inaugural A/NZ Partner Awards

Revealed at a glitzy bash in Sydney at the Ivy Penthouse, the first StorageCraft Partner Awards locally saw the vendor honour its top-performing partners with ASI Solutions, SMBiT Pro, Webroot, ACA Pacific and Soft Solutions New Zealand taking home the top awards. Photos by Maria Stefina.

StorageCraft celebrates high achievers at its inaugural A/NZ Partner Awards
Kiwi resellers make a splash on Synnex and Lenovo RotoVegas road trip

Kiwi resellers make a splash on Synnex and Lenovo RotoVegas road trip

​Synnex and Lenovo hosted 18 resellers for an action-packed weekend adventure in RotoVegas, taking in white water rafting on the Kaituna River, as well as quad biking and dinner at Stratosfare​, overlooking Lake Rotorua at the top of Mount Ngongotaha​. Photos by Synnex.

Kiwi resellers make a splash on Synnex and Lenovo RotoVegas road trip
Show Comments