HP to pay $55M to settle kickback claims

The Department of Justice (DoJ) announced Hewlett-Packard will pay
$55 million to settle claims that it paid kickbacks in order to secure
government contracts.

Whistleblowers Normal Rille, a former
partner at PricewaterhouseCoopers, and Neal Roberts, a former
senior manager at Accenture, first sued HP and other technology
companies in 2004 under the False Claims Act, alleging HP had paid
systems integrators including IBM and Accenture to recommend its
products to federal agencies. Justice announced the final settlement on
Tuesday after HP agreed to resolve the case earlier this month.

“Contractors must deal fairly with the government
when doing business with federal agencies,” said Tony West, assistant
attorney general for the Civil Division at DoJ. “As this case
demonstrates, we will take action against those who seek to taint the
government procurement process with illegal kickbacks.”

HP is the latest in a string of technology firms to settle with the government over alleged violations of the False Claims Act. EMC settled a kickback lawsuit in May for $87.5 million, and other firms, including Network Appliances, IBM and PricewaterhouseCoopers, have settled similar cases. HP has denied any wrongdoing in connection with the case.

“HP denies engaging in any illegal conduct in connection with these
matters. We believe it is in the best interest of our stakeholders to
resolve the matter and move beyond this issue,” HP said in a statement.

Under the False Claims Act, Rille and Roberts are entitled to a portion of the money recovered by the government. The DoJ joined their lawsuit in 2007, indicating the case had merit. Out of the firms the pair have pursued in court, only Accenture has failed to settle their case.

The statement also resolves charges that HP failed to provide complete information on its commercial pricing practices during 2002 contract negotiations with the General Services Administration. Under a rule known as the Price Reduction Clause, all vendors on GSA’s Federal Supply Schedules vehicle must offer the government the same price as their best commercial customers. HP revealed in 2007 that it hadn’t complied with that rule, leading to a GSA audit.