VMware, Carahsoft to pay $98m in US govt pricing scandal

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VMware, Carahsoft to pay $98m in US govt pricing scandal

Settlement over alleged overcharging.

Technology giant VMware and partner Carahsoft have agreed to pay the US government US$75.5 million (A$98.1 million) to settle claims the pair overcharged agencies for software and services for six years.

The country's Justice department today said virtualisation giant VMware and government IT solutions provider Carahsoft had allegedly made false statements about VMware's products through the US government's multiple award schedules program.

Under the program, technology companies disclose their commercial pricing and policies in order to receive greater access to the federal government.

The companies are required to hand over details of discounts offered to private sector customers as part of the program, and let the government know when any changes to commercial pricing practices are made. 

The program is an effort to provide the US government value for money - in line with what is offered in the private sector - in technology procurement.

However, the US Department of Justice alleged VMware and Carahsoft hid their commercial pricing from the government between 2007 and 2013 - in violation of the False Claims Act.

"Transparency by contractors in the disclosure of their discounts and prices offered to commercial customers is critical in the award of multiple award schedule contracts and the prices charged to government agency purchasers," US Attorney Dana Boente said in a statement.

VMware had initially filed a lawsuit against the claims but the settlement announced today resolves the legal action.

It is unclear which of the two companies will foot the US$75.5 million bill.

Head of Justice's civil division Benjamin Mizer said the settlement demonstrated the department's "continuing vigilance" to give taxpayers a fair deal.

"Government contractors who seek to profit improperly at the expense of taxpayers face serious consequences," he said in a statement.

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