NetApp to pay £86m US government contracting fraud fine

Network Appliance has agreed to pay the US government a $128 million (£86 million) fine to settle contract fraud charges brought by the General Services Administration.

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Network Appliance has agreed to pay the US government a $128 million (£86 million) fine to settle contract fraud charges brought by the General Services Administration.

GSA accused NetApp of overcharging US government customers by failing to give agencies the same discounts it gave to commercial customers. The US government paid "far more" than it should have for NetApp products, the US Department of Justice said.

GSA alleged that NetApp "knowingly failed to meet its contractual obligations" to provide the agency with accurate and complete information about its sales practices, including discounts offered to other customers, the DOJ said. NetApp also made false statements to GSA about its sales practices and discounts, the DOJ said.

A NetApp representative was not immediately available for comment.

The settlement relates to contracts by NetApp to sell hardware, software and storage management services to government agencies through the GSA's Multiple Award Schedule (MAS) programme. The MAS program provides GSA-authorized purchasers with a streamlined process for procurement of commonly used commercial goods and services.

MAS gives vendors access to hundreds of government customers, but the programme requires that contractors disclose commercial pricing policies and practices.

The settlement resolves a whistleblower lawsuit filed on behalf of the US government by former NetApp employee Igor Kapuscinski, who will receive a $19.2 million share of the recovery in the case. Under the US False Claims Act, private citizens can bring suit on behalf of the US government and share in any recovery obtained by the government.

"Especially in these difficult economic times of stretched government budgets, we will ensure that government contractors provide the government with the price it has been promised and all of the discounts to which it is entitled," Jeffrey Taylor, US Attorney for the District of Columbia, said in a statement.

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