Cisco Systems and one of its distributors, Weston Group North America, will
pay $48 million to settle a lawsuit brought by the federal authorities claiming
the two companies overcharged on government contracts.
The case against Cisco and Weston was the latest in a series of
complaints filed against IT vendors for alleged illegal actions in connection
with government contracts. The charges against Cisco, Hewlett-Packard, EMC,
IBM and others stem from allegations lodged
by the same two whistleblowers.
The Department of Justice announced the settlement with Cisco
and Westcon Sept. 7. According to the DOJ, Cisco and Weston overcharged the GSA
(General Services Administration) and other federal agencies by providing
incomplete information to GSA contracting officers during negotiations
regarding Weston's contract with the agency.
"Overcharging the government results in waste of taxpayer
dollars," Brian D. Miller, GSA inspector general, said in a statement. "Our
auditors and special agents keep vigilant watch to ensure contractors stay
honest."
The allegations by whistleblowers Neil Roberts and Norman Rille
led to lawsuits against a host of IT vendors. Many settled the claims against
them. For example, Hewlett-Packard in August announced that it had settled its
case with the government
for $55 million. In that case, HP was accused of paying kickbacks in
exchange for favorable recommendations in connection with government contracts,
and not disclosing discounts to the GSA that it was offering other customers.
HP did not have to admit wrongdoing as part of the settlement.
In May, EMC
paid $87.5 million to settle its lawsuit for overcharging government
agencies and participating in a kickback scheme to influence the IT decisions
of federal agencies.
Other IT companies that have settled similar lawsuits include IBM,
PricewaterhouseCoopers and Computer Sciences.
Two other companies, Sun Microsystems—now part of Oracle—and
Accenture have not settled their lawsuits.
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