Justice Dept. Intervenes in EMC Pricing Suit

EMC gave improper kickbacks to partners and overcharged the U.S. General Services Administration, the Department of Justice has alleged, intervening in a suit brought by whistleblowers.

The storage vendor gave false statements to the GSA about its commercial pricing so it could get a higher price on its contracts, thereby overcharging the government for products and services, the Justice Department said Monday. The GSA procures products and services for other federal agencies.

In addition, EMC gave money and other things of value, namely alliance benefits, to systems integrators and other alliance partners, the suit alleges. Those payments amounted to kickbacks and undisclosed relationships that created conflicts of interest, the Justice Department said. The allegations concern numerous government contracts that EMC negotiated from the late 1990s to the present. The government could recover three times its losses, plus civil penalties, the Justice Department said.

The suit originally was filed in the U.S. District Court for the Eastern District of Arkansas, in Little Rock, by two private individuals. Norman Rille and Neal Roberts sued under a part of the False Claims Act called the qui tam, or whistleblower, statute. It allows individuals to sue on behalf of the government as a "relator" and collect a portion of what is recovered in the suit.

Rille and Roberts have filed similar suits against other IT vendors. A 2007 suit against Hewlett-Packard, Sun Microsystems and Accenture alleged a widespread, multimillion-dollar kickback scheme involving dozens of vendors. Partners of the companies, including IBM, Oracle and SAP, received payments from Accenture, according to court documents in that case. The two men have also sued Computer Sciences and IBM and PriceWaterhouseCoopers. The Computer Sciences case was settled for US$1.37 million and the IBM-PWC case for $5.3 million.

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