As an attorney who represents whistleblowers, I have been posting about
cases where whistleblowers have helped the Government recover hundreds
of millions of dollars lost to MAS fraud.
The government negotiates Multiple Award Schedule (“MAS”) contracts
before it actually purchases items. The General Services Administration
works out a deal with a private company, setting the price and terms that
will apply when a government employee orders products or services for
his agency or department. As part of the deal, the contractor has to agree
that it will provide goods and services that meet certain standards, and
that it will give the Government at least as good a price as it gives
to other customers.
But not every contractor keeps its word. Thanks to whistleblowers and the
False Claims Act, the Government has recovered $602 million from companies
that were accused of fraud in MAS contracts.
* RPM International, Inc. and Tremco Inc. – Roofing Supplies and
Services – $61 million (2013)
The former vice president of Tremco Inc. filed a False Claims Act case
accusing Tremco and its parent company, RPM International, Inc., of several
types of fraud under its MAS contracts. Whistleblower Gregory Rudolph
said that the roofing company gave the Government inaccurate and incomplete
information about the prices it was charging commercial customers, failed
to report new discounts that it offered to commercial customers, and failed
to give the Government the same favorable pricing that commercial customers
got. Thanks to Rudolph, the Government collected $61 million, and Rudolph
received a $10.9 million payment for his work in filing an FCA lawsuit
to bring the problems to the attention of the Government.
* Oracle Corp. and Oracle America Inc. – Database and Middleware
Software, Applications Software and Hardware Systems – $199.5 million (2011)
In 2011, software giants Oracle Corporation and Oracle America Inc. paid
the government $199.5 million for similar allegations. The Government
and whistleblower Paul Frascella said that Oracle did not give the Government
“current, accurate and complete information” about the discounts
it was offering to other customers. According to the Government’s
press release, it concluded that Oracle had “knowingly made false
statements to GSA about its sales practices and discounts.” Oracle
also was accused of violating the “price reduction clause”
in its MAS contract by failing to tell GSA about discounts that it gave
to commercial customers. The upshot, said the Government and the whistleblower,
was that the Government paid more than other customers did.
Whistleblower Paul Frascella, a former Oracle employee, earned $40 million
for his work in exposing the fraud by filing a False Claims Act lawsuit.
* W.W. Grainger – Hardware Products and Cleaning Supplies – $ 70
W.W. Grainger Inc. had an MAS contract to supply Government agencies with
hardware products. The Government accused the company of failing to tell
the Government about discounts Grainger was providing to commercial customers.
Grainger also had an MAS contract to supply sanitation and maintenance
products to the United States Postal Service. According to the FCA suit,
the hardware distributor did not give the USPS “most-favored customer”
status – meaning that it did not give USPS the best discount that
it gave to other customers. The Government apparently found the MAS fraud
on its own, without a whistleblower – the only MAS fraud case listed
on DOJ’s website where that was true.
* Oracle Corp. and PeopleSoft Inc. – Software Licenses and Maintenance
Services – $ 98.5 Million (2006)
In 2006, Oracle paid $98.5 million to address accusations that a company
it had purchased, PeopleSoft Inc., had failed to disclose its real prices
when it negotiated an MAS contract with GSA. PeopleSoft had an MAS contract
to sell software and services to federal purchasers. The Government said
it had overpaid PeopleSoft for products sold between 1997 and 2005. The
accusations were similar to ones that were to be made against Oracle in
a case that Oracle settled in 2011.
The whistleblower was James A. Hicks, a former employee of PeopleSoft.
Hicks was paid $17,730,000 because he filed suit under the False Claims
Act and helped the Government recover the money it had been overcharged.