NetApp Settles Government Lawsuit For $128 Million

The settlement resolves allegations by the General Services Administration that NetApp made false statements to the GSA about discounts it offered other customers but failed to offer the government agency.

The original lawsuit was filed on behalf of the U.S. government by Igor Kapuscinski, NetApp's former federal systems manager, under the "whistleblower" False Claims Act, the law that allows private citizens to bring such lawsuits. Kapuscinski will receive a $19.2 million share of the settlement, according to the DOJ statement.

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

"The settlement further resolves allegations that NetApp knowingly failed to comply with the price reduction clauses of their GSA contracts by failing to disclose to GSA discounts NetApp gave to its commercial customers when they were higher than the discounts that NetApp had disclosed to GSA, and by failing to pass those discounts on to government purchasers. Because of these allegedly fraudulent dealings, it is alleged that the United States accepted lower discounts and paid far more than it should have for NetApp products," the DOJ said.

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NetApp admits to no wrongdoing as part of the settlement, according to a NetApp filing with the Securities and Exchange Commission earlier this week. "The agreement reflects neither an admission nor denial by NetApp of any of the claims alleged by the DOJ, and represents a compromise to avoid continued litigation and associated risks," the filing said.

The DOJ statement said the settlement is the largest contract fraud settlement the GSA has ever obtained.