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Watchdog: Follow the Money

Federal contractor caught inflating prices, settles for $6.2 million with GSA

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Maryland,Watchdog Blog,Kelly Cohen,GSA,Inspectors General,Waste and Fraud,Follow the Money,Government Contractors

Federal contractor Axway overcharged the General Services Administration and now has to pay — $6.2 million, to be exact.

Axway, a global software and services company registered in France and headquartered in the United States, gave GSA insufficient pricing information.

By doing so, the company was able to sell software licenses and other technology services to federal agencies at inflated prices while maintaining a GSA Multiple Award Schedule contract.

The settlement was announced Monday by U.S. Attorney for Maryland Rod J. Rosenstein and Brian D. Miller of the GSA Office of the Inspector General.

"Companies must provide complete and accurate pricing information during the GSA contracting process," Miller said.

"Failure to do so is cheating the government and ultimately the American taxpayers, and taxpayers deserve a better deal," Miller said.

The MAS program allows prospective vendors to reveal their pricing policies and practices to GSA in exchange for access to the federal marketplace.

Vendors must make "current, accurate and complete" disclosures of all discounts they offer to commercial customers, which the GSA relies on to then negotiate fair pricing for government buyers.

The settlement shows that on Oct. 3, 2001, GSA awarded an MAS contract to Valicert Inc. for the sale of software licenses and other services.

Valicert then merged with Tumbleweed Communications Corp. in 2003, which in turn merged with Axway in 2009.

From 2001 to December 2011, numerous federal agencies bought products and services from the three companies based on the MAS contract pricing.

It was later discovered that Valicert and Tumbleweed failed to provide GSA with the current, accurate and complete commercial pricing.

The inflated prices were exposed by Kenneth Marcus, a former employee at Tumbleweed. He filed a civil lawsuit under the whistleblower provision of the False Claims Act, which lets private parties to file suit on behalf of the U.S. for false claims and eventually get some of the government’s recovered money from the suit.

View the full settlement here.

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Kelly Cohen

Staff Writer
The Washington Examiner