Cisco, Weston Pay $48 Million to Settle Federal Lawsuit

Cisco and Weston Group were the latest IT vendors to settle a federal lawsuit claiming they overcharged government agencies. The two will pay $48 million.

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.