Is EMC gaming the government?

by Robin Harris on Thursday, 5 March, 2009

According to PC World, the US Justice Department joined a suit brought against EMC, Booz Allen Hamilton, Acxiom, and Titan Corporation by 2 individuals in Little Rock. The original suit was filed 2 years ago – the new news is Justice’s involvement.

Justice says EMC

. . . gave false statements to the GSA about its commercial pricing so it could get a higher price on its contracts, thereby overcharging the government for products and services, the Justice Department said Monday.

The government stands to recover 3x any losses – plus civil penalties.

It’s only waste, fraud and abuse when the other guy does it.
By law vendors must offer the Feds the same pricing they offer their very best customers. But do they?

AFAIK, “best” pricing is based on contract prices – usually discounts off list – that don’t reflect special terms, such as competitive allowances, that aren’t considerd part of the price. Any major commercial deal will be competitive and allowances are commonplace.

Government spending has risen 155% since 2000, while the purchasing work force has risen 10%. Many deals haven’t had the oversight to ensure the best possible deal.

Maybe that’s why EMC was a big tech supporter of John McCain in the recent election. These figures are for donors giving over $200 and come from a post (Techies choose Obama – by a landslide) I wrote for ZDnet.


There’s a new sheriff in town.

Read all about it
I got a copy of the suit and its exhibits online with the intention of writing about it. But it is even duller than the usual legal brief.

But if you want to give it a go, be my guest. Download the zipped 3.4 MB file here.

Let us know if you find anything juicy.

The StorageMojo take
Breaking up cozy arrangements between consulting firms, vendors and service providers is a Good Thing. Given the commercial revenue crunch right now companies won’t welcome a similar crunch from lucrative government contracts. But it needs to be done.

Courteous comments welcome, of course.

{ 3 comments… read them below or add one }

Mauricio Daher March 10, 2009 at 6:38 am

I would like to know if the solutions put in place had favorable technical outcomes. If not, what fair market action was attempted by the Feds BEFORE resorting to legal action. I only read the brief, and those details were not there.

Interesting case, since it hits home for a lot of companies trying to remain profitable in trying times.

Robin Harris March 10, 2009 at 8:10 am

Mauricio, the government did not instigate the case – private citizens did 2 years ago – but the DoJ only joined case under the new administration.

In any case the law is clear: the government gets best customer pricing. This is a law passed by Congress and is in addition to the standard contract law that governs commercial transactions. If the private suit can prove that vendors have been flouting the law then the 3x penalties kick in – and vendors can be barred from bidding on GSA contracts.

Whether the systems worked as promised is beside the point.


EW March 13, 2009 at 9:32 am

I find it pretty sad that you are intentionally partisan politicizing this. Trying to make tenuous ties that borderline tin-foil conspiracy theories. Especially when your “evidence” shows that there were *more* EMC’s giving money to Obama than McCain.

It a sad state when a blog that I normally think highly off starts pulling crap like this to… only thing I can think of is to pull in eyeballs using some good-old yellow journalism methods (or you are so blindly partisan that you are bleed it). Seriously… look at what you typed and tell me that because there were 6% less EMC’ers giving to McCain than to Obama that EMC has been trying to buy influence in the justice dept, etc… How can I show this blog to any colleague for technical information and expect that information to be taken seriously.

This is coming from a lifelong registered independant who voted for Obama.

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