VMware Inc. and Carahsoft Technology Corporation agreed in 2015 to pay $75.5 million to resolve U.S. government allegations involving pricing disclosures and sales through a Carahsoft federal contract. The settlement did not establish that either company was liable: the Justice Department said the allegations had not been proven.
What the 2015 settlement covered
The U.S. Department of Justice announced the settlement on June 30, 2015. It concerned VMware software and related services sold to government buyers through Carahsoft’s General Services Administration (GSA) Multiple Award Schedule (MAS) contract. The DOJ placed the alleged conduct between 2007 and 2013. The DOJ announcement
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According to the DOJ, the companies’ representations allegedly concealed aspects of their commercial pricing practices and enabled overcharges to government purchasers. Those statements describe the government’s allegations, not a finding that the companies overcharged buyers.
Why commercial pricing disclosures mattered
In its 2015 release, the DOJ explained that vendors seeking a GSA MAS contract disclose their commercial pricing policies and practices so GSA can negotiate prices for federal purchasers. The department also said disclosures may remain relevant after a contract is awarded when a vendor’s commercial practices change, including when it offers improved discounts. The DOJ’s description of the MAS program
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That context explains why the DOJ considered commercial pricing representations material to the allegations. It is the department’s description of the program in the 2015 announcement, not a summary of current procurement rules.
Who was involved and how the case began
- VMware Inc. was the virtualization-software company whose products and related services were involved in the sales.
- Carahsoft Technology Corporation was a government IT distributor and held the MAS contract used for the sales described in the release.
- Dane Smith, a former VMware vice president, filed the civil suit as a relator under the False Claims Act’s whistleblower provision. The DOJ said his share of the recovery had not been determined when it announced the settlement. DOJ announcement
The case was United States ex rel. Smith v. VMware, Inc., et al., Eastern District of Virginia, Case No. 10-CV-769, as identified by the DOJ.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the settlement did—and did not—decide
The settlement agreement provides for payment of $75.5 million plus interest and specifies releases conditioned on payment. Settlement agreement A settlement resolves claims; it is not the same as a court finding that the defendants violated the law.
The DOJ expressly said the claims resolved were allegations only and that there had been no determination of liability. The available announcement also does not establish the eventual distribution of the proceeds or Smith’s ultimate share.
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