Almost five years ago, a number of large office products companies with GSA Schedule contracts settled allegations that they had submitted false claims when selling office products to the U.S. Government that were not compliant with the Trade Agreements Act (“TAA”). The allegations came not from a government audit or from employees of these companies, but from employees of a competitor who also sold office products to the Government through its own GSA Schedule contract. The Government investigated the allegations and came away with sizeable settlement amounts from each of the companies involved. Moreover, the competitor’s employees – the qui tam relators – received over a million dollars.
Now, another competitor has pursued a False Claims Act case against a fellow GSA Schedule holder. In United States ex re. Folliard v. CDW Technology Services, Inc., an employee of a competing reseller filed a qui tam False Claims Act suit against CDW Government Inc. and its parent, CDW Technology Services, Inc., for including products on both its GSA Schedule contract and NASA Solutions for Enterprise-Wide Procurement (“SEWP”) contract that are manufactured in countries other than TAA-designated countries.
The genesis of the case against CDW is interesting because both CDW and the company for which Folliard, the qui tam relator, works are resellers of Hewlett Packard equipment, and both have GSA and SEWP contracts. According to the court’s decision on CDW’s motion to dismiss, HP provides its resellers with country of origin information for its products. Therefore, Folliard was able to determine which HP products offered for sale on CDW’s GSA and SEWP contracts were not TAA compliant. While the court determined that Folliard did not plead sufficient facts to make out a False Claims Act case against CDW with respect to its GSA contract, Folliard’s allegations that CDW submitted false claims when selling HP products off its SEWP contract survived CDW’s motion to dismiss.
This case will be instructive to watch as it unfolds, and serves as a reminder for government contractors that your competitors are keeping an eye on how you conduct your government business. Given the potential monetary windfall for False Claims Act relators, your competitors and their employees will be tempted to capitalize on publicly-available information indicating possible violations and noncompliances. And given the success of past relators with TAA-related allegations, combined with GSA’s continued focus on TAA compliance for its Schedule contractors, companies should take a close look at their product offerings on the GSA Schedule and other government wide acquisition vehicles to ensure they comply with the TAA requirements.