Cisco, Westcon to pay $48 million to settle US overbilling case

Cisco Systems, the biggest networking-equipment maker, and distributor Westcon Group North America have agreed to pay the U.S. government US$48 million to settle charges that they misrepresented prices in contracts with the U.S. General Service Administration and other agencies. The settlement resolves assertions by the U.S. Department of Justice that Cisco and Westcon knowingly provided incomplete information to GSA contracting officers during negotiations over Westcon's contract with GSA, the DOJ said. The omission caused U.S. agencies to pay more for Cisco products than allowed in contracting law, the DOJ said. Contracting law requires companies doing business with the U.S. government to disclose any discounts they give commercial customers and then offer the government the same discounts.

"Contractors that do business with the United States must deal fairly with federal agencies," Tony West, assistant attorney general for the DOJ's Civil Division, said in a statement. "When contractors provide incomplete and untruthful information to the government, we will take action to restore the integrity of the procurement process and protect taxpayer dollars." Whistleblowers Norman Rille and Neal Roberts accused several IT companies of paying kickbacks to systems integrators in exchange for preferential treatment on government contracts the systems integrators were working on, or in exchange for strong recommendations to potential government customers.

On Aug. 30, the DOJ announced a settlement in the Arkansas case with Hewlett-Packard. HP agreed to pay $55 million to settle the kickbacks charges and allegations that HP had not disclosed discounts it offered to other customers in a 2002 contract with GSA.

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