Policy: Law

IGs say Grainger agrees to $70 million settlement of False Claims Act allegations

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Photo - Lake Forest, Illinois-based W.W. Grainger has agreed to pay the federal government $70 million in settlement of allegations the company violated the False Claims Act. (Company photo)
Lake Forest, Illinois-based W.W. Grainger has agreed to pay the federal government $70 million in settlement of allegations the company violated the False Claims Act. (Company photo)
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A Fortune 500 hardware distributor has agreed to pay the government $70 million to settle charges that it violated the federal False Claims Act, according to the Department of Justice.

The settlement followed allegations by the General Services Administration Inspector General (GSA IG) that the Lake Forest, Illinois-based firm failed to provide sales and pricing information required as a condition of its being accepted as a favored procurement source for government buyers, and allegations by the United States postal service Inspector General (USPS IG) that USPS was not treated as a "most-favored customer," as the company had agreed to do.

The GSA allegations emerged from a post-contract audit by that agency's IG, while the USPS allegations stemmed from the postal service IG's investigation of Grainger's pricing practices. In both cases, the results was the government had to pay higher prices than it should have, according to the Justice Department.

Grainger admitted no wrong-doing in connection with the settlement agreement.

"This case is another demonstration of the value of the work performed by Inspectors General," said GSA IG Brian D. Miller. "Our auditors and agents worked tirelessly to reach this critical settlement."

"The U.S. postal service Office of Inspector General aggressively pursues instances of contracting improprieties that negatively impact the Postal Service and cause unnecessary expenses," said Joanne Yarbrough, Special Agent-in-Charge of the OIG's Major Fraud Investigations Division.

Grainger had previously settled a 2008 case brought by a former sales manager who claimed the company was improperly billing the government. That case was settled for $6 million, a portion of which went to the whistle blower under the Qui Tam provision of the federal False Claims Act.

In that case, Grainger was accused of charging the government considerably higher prices than allowed under its contract and with supplying products from countries that do not have reciprocal trade agreements with the U.S., according to the Chicago Tribune.

Grainger reported $8.1 billion in sales in 2011 of more than one million discrete products supplied by 3,500 sources, according to the firm's 2012 Fact Book.

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