Hewlett-Packard Co. has agreed to pay the United States $55 million to settle claims that the company defrauded the General Services Administration (GSA) and other federal agencies, the Justice Department announced. This settlement resolves allegations under the False Claims Act that HP knowingly paid kickbacks, or "influencer fees," to systems integrator companies in return for recommendations that federal agencies purchase HP's products. The settlement also resolves claims that HP's 2002 contract with the GSA was defectively priced because HP provided incomplete information to GSA contracting officers during contract negotiations.
"Contractors must deal fairly with the government when doing business with federal agencies," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "As this case demonstrates, we will take action against those who seek to taint the government procurement process with illegal kickbacks."
The allegations that HP improperly paid kickbacks were first made in a lawsuit that whistleblowers Norman Rille and Neal Roberts filed in the U.S. District Court for the Eastern District of Arkansas in 2004. Under the qui tam provisions of the False Claims Act, private citizens may file actions for fraud on behalf of the United States and share in any recovery.
In 2002, HP entered into a contract with GSA to sell computer equipment and software to federal agencies. Under applicable regulations and contract provisions, HP was required to tell GSA how it conducted business in the commercial marketplace so that GSA could use that information to negotiate a fair price for government customers using the GSA contract to purchase HP products. HP informed GSA contracting officials in 2007 that it might not have complied with all applicable provisions of the GSA contract. This disclosure led to an audit by the GSA Office of Inspector General (GSA-OIG), which concluded that the contract had been defectively priced.