NetApp agrees to $128 million gov't contracting fine

Former NetApp employee will receive a $19.2 million share of the recovery in a whistleblower lawsuit that charged NetApp with failing to give U.S. agencies the same discounts as other customers

Network Appliance, a California computer storage and data management vendor, has agreed to pay the U.S. government $128 million to settle contract fraud charges brought by the U.S. General Services Administration (GSA).

GSA accused NetApp of overcharging U.S. government customers by failing to give agencies the same discounts it gave to commercial customers. The U.S. government paid "far more" than it should have for NetApp products, the U.S. Department of Justice said in a news release.

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GSA alleged that NetApp "knowingly failed to meet its contractual obligations" to provide the agency with accurate and complete information about its sales practices, including discounts offered to other customers, the DOJ said. NetApp also made false statements to GSA about its sales practices and discounts, the DOJ said.

A NetApp representative wasn't immediately available for comment.

The settlement relates to contracts by NetApp to sell hardware, software and storage management services to government agencies through the GSA's Multiple Award Schedule (MAS) program. The MAS program provides GSA-authorized purchasers with a streamlined process for procurement of commonly used commercial goods and services.

MAS gives vendors access to hundreds of government customers, but the program requires that contractors disclose commercial pricing policies and practices.

The settlement resolves a whistleblower lawsuit filed on behalf of the U.S. government by former NetApp employee Igor Kapuscinski, who will receive a $19.2 million share of the recovery in the case. Under the U.S. False Claims Act, private citizens can bring suit on behalf of the U.S. government and share in any recovery obtained by the government.

"Especially in these difficult economic times of stretched government budgets, we will ensure that government contractors provide the government with the price it has been promised and all of the discounts to which it is entitled," Jeffrey Taylor, U.S. Attorney for the District of Columbia, said in a statement.

Copyright © 2009 IDG Communications, Inc.

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