A computer consulting company has agreed to pay a record $128 million to settle claims that it gouged the government on an electronic archiving contract.
Network Appliance Inc., based in Sunnyvale, Calif., but operating out of McLean, agreed to pay the General Services Administration to settle claims that it illegally offered steeper discounts to private clients than it was offering to taxpayers. The company, known as “NetApp,” continued to deny wrongdoing in the settlement, which was obtained by The Examiner.
The settlement makes a rich man of former NetApp engineer Igor Kapuscinski, who under federal law is entitled to more than $19 million for exposing the fraud. Kapuscinski couldn’t be reached for comment.
Most federal contracts require vendors to tell the government when it is offering cheaper prices to other clients and to offer the feds a similar discount.
NetApp had been hired to archive the government’s electronic records. In 2006, Kapuscinski filed a lawsuit under Civil War-era whistle-blower laws, alleging the company was concealing records of cheaper deals given to more favored clients.
The so-called qui tam statutes entitle whistle-blowers to up to 25 percent of funds recovered under the False Claims Act.
Kapuscinski said that he began to grow suspicious in 2003, when he was temporarily assigned to manage the government’s contracts. In trying to pull together information for a routine government inspection, Kapuscinski alleged he “encountered significant resistance” from company executives. Through the spring and summer of 2003, Kapuscinski said in his lawsuit, he urged the company to take another look at the price requirements of its contracts.
Company officials reaped millions on the deals, Kapuscinski alleged.
NetApp officials didn’t respond to requests for comment. The company said in Tuesday’s court papers that it was settling the case “to avoid continued litigation and associated risks.”
Kapuscinski’s suit remained under seal for years as the government investigated his claims. The lawsuit was brought by the law firm of Ashcraft & Gerel, a small personal-injury boutique that has made a cottage industry out of qui tam lawsuits stemming from GSA contracts.
