Cisco, Westcon Pay $48 Million To Settle Federal Overbilling Investigation

Specifically, the Department of Justice said in a Tuesday statement, Cisco and Westcon "knowingly provided incomplete information to GSA contracting officers during negotiations in regard to Westcon's contract with the GSA, which resulted in defective pricing of Cisco products and submission of false claims to the United States."

The investigation stems from a lawsuit filed by a pair of whistleblowers, Norman Rille and Neal Roberts, in 2004. That lawsuit, United States ex rel. Rille v. Cisco Systems, Inc., filed in the United States District Court for the Eastern District of Arkansas, will be dismissed as part of the settlement, according to the Department of Justice.

Rille and Roberts originally filed suit under the False Claims Act, which allows private citizens to sue on behalf of the government.

"Contractors that do business with the United States must deal fairly with federal agencies," said Tony West, assistant attorney general for the Civil Division of the Department of Justice, 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."

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"Overcharging the government results in waste of taxpaper dollars," added Brian D. Miller, GSA inspector general, in a statement. "Our auditors and special agents keep vigilant watch to ensure contractors stay honest."

In a statement e-mailed to CRN, a Cisco spokesperson said "Cisco and Westcon have been working with the DOJ on this issue for years, and we are very pleased to resolve this matter.

"The settlement covers a small fraction of sales to the General Services Administration from 1997 through 2009 and does not impact any current government business," the Cisco statement reads. "Westcon continues to have an active contract with the GSA, and Westcon and many other distributors continue to sell a broad range of Cisco equipment to the federal government."

Westcon Group could not be reached for additional comment Wednesday.