In The News

CA Inc Agrees to Pay the Government $45 Million to Resolve Alleged False Claims Act Violations

The Department of Justice’s crackdown on alleged acts of fraud and abuse has seen many different kinds of businesses accused of dealing with governmental agencies in a less than forthright manner. This was shown to be the case when last week the Department of Justice announced that CA Inc. (CA) had agreed to pay $45 million to resolve alleged violations of the False Claims Act. The government alleges that the company made false claims and statements while it was negotiating a General Services Administration (GSA) contract. CA is an IT management software services company based in New York. “Today’s settlement demonstrates our continuing vigilance to ensure that contractors deal forthrightly with federal agencies when seeking taxpayer funds,” said acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will take action against contractors who withhold information and cause the government to pay more than it should for commercially available items.”

The settlement resolves allegations that CA filed false claims under a GSA contract that was awarded to the company for software licenses and maintenance services. Under the Multiple Award Schedule (MAS) contract, GSA pre-negotiates prices and contract terms for subsequent orders from federal agencies. The government alleges that CA’s contractors misrepresented how they conducted business in the market place and that this hampered GSA’s ability to negotiate a fair price for CA’s services. The MAS contract also contained a clause stating that CA had to reduce its prices to the government if its prices to commercial customers improved.

In short, the settlement resolves allegations that CA did not disclose its discounting practices to GSA contracting officers when negotiating the MSA contract. The government alleged that CA provided false information about the discounts it gave commercial customers for its software license and maintenance services. These violations are alleged to have occurred in 2002. The contract was extended in 2007 and 2009. Finally, the settlement resolves claims that CA violated the “price reduction” clause that was a part of the MSA contract. “This case illustrates that we will vigorously pursue federal contractors who fail to negotiate and perform their obligations with transparency and fairness,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “Together with our federal partners, we will zealously press such claims in court to recover what is owed to the American taxpayer.”
The settlement comes about as the result of a lawsuit that was filed by a Dani Shemesh, a former employee of the CA Software Israel LTD. Under the False Claims Act, whistleblowers can sue on behalf of the government and share in any recovery. Shemesh’s share of the settlement comes to $10.195 million. If you know of abuse that has been committed against the government or one of its agencies, you are encouraged to report it and to contact a qui tam lawyer. Qui tam lawyers will be able to advise you in such matters and will work to protect your rights.