EDUCATION TECHNOLOGY GETS A PRICING EDUCATION

A couple of months ago, the Department of Justice announced a settlement with VMware, Inc. and Carahsoft Technology. The two companies specialize in providing virtualization software and information technology products to federal, state and local governments. The allegation against these two entities was that they did not provide their “best price” to the United States General Services Administration (GSA).

The GSA administers contracts for the federal government. The GSA also provides prospective vendors an opportunity to submit their best commercial pricing for inclusion on the Multiple Award Schedule (MAS). The MAS program is a benefit to vendors and other governmental entities. The vendor benefits from having their product exposed to other federal entities as well as state and local governments. The governmental entities benefit because of the ability to utilize the MAS program without having to go out to bid for every contract.

To maintain the integrity of the MAS program, the GSA requires that the vendors always provide them with information regarding the “best price”. The “best price” can also change during the term of the contract and the vendor is required to advise the GSA of any improved pricing. Without accurate information, the system does not work.

In the recent $75.5 million settlement, VMware and Carahsoft resolved allegations that false statements had been made to the government regarding the “best price”. Simply put, these vendors failed to advise the GSA of more favorable contract pricing given to other customers.

Interestingly, these companies provide products to New Jersey education organizations like NJEDge and the New Jersey School Boards Association (NJSBA). It is not known as to whether or not NJEDge or the NJSBA utilize the MAS program, nor is it known whether or not these defendants provided the “best price” to the New Jersey educational institutions.

The alleged fraud was revealed by an individual familiar with the business practices of these defendants. A former employee, Dane Smith, provided the “inside information” to the United States government. Mr. Smith will share in the recovery as permitted by the provisions of the federal False Claims Act. The federal False Claims Act provides for a recovery to an individual supplying information to the United States government. The individual providing the information, referred to as a “relator”, is entitled to between 15% and 30% of the amount of money recovered by the federal government. The actual amount to be recovered by Mr. Smith has not yet been determined, however, should result in a reward to him of not less than $11 million.

Interestingly, the state of New Jersey instituted a False Claims Act regarding claims against the state of New Jersey in 2008.

If you are aware of a false claim against the state of New Jersey or the federal government, you should contact a qualified New Jersey whistleblower lawyer to discuss your case.