By Maria Armental
New York software vendor CA Inc. is being sued by the Justice
Department for allegedly overcharging the government for software
licenses and maintenance.
The Justice Department alleges CA, formerly known as Computer
Associates International Inc., gave government contracting officers
incomplete and inaccurate information during contract extension
negotiations, including failing to disclose and pass on to the
government higher discounts it was offering to commercial customers
and miscalculating price comparisons, resulting in the government's
overpaying.
Under the terms of the contract, the Justice Department said, CA
was required to monitor such discounts and apply them to the
government. The contract, initially signed in September 2002 and
extended at least twice, covers service to several federal
agencies, including the Department of Defense, the Department of
Energy, the Department of Health and Human Services and the
Department of Labor.
The Islandia, N.Y., company Thursday challenged the allegations
in a statement saying, "We believe that the material aspects of the
government's liability theories are unfounded and will vigorously
contest them."
Negotiations are ongoing, a company spokeswoman said.
The civil complaint, made public Thursday, was first filed on
Aug. 24, 2009, in the District of Columbia by Dani Shemesh under
the whistleblower provisions of the False Claims Act, which allow
private parties to sue on behalf of the government and to share in
any recovery.
Mr. Shemesh headed CA subsidiary CA Israel Ltd.'s sales division
through December 2008, when he left the company amid a dispute,
according to his lawyer, Rob Vogel.
The government, which had previously notified the court it
intended to join in the lawsuit, will litigate the case.
"Too many federal contractors think they can get away with
overcharging the government," Ronald C. Machen Jr., U.S. attorney
for the District of Columbia, said Thursday in a statement.
"The government has the right to get the same kind of pricing
concessions that other large customers get, and not to be treated
like a gravy train," said Mr. Vogel.
Last year, CA agreed to pay $11 million to settle unrelated
claims it had overcharged customers, including school districts and
law enforcement agencies in New York and seven other states as well
as the District of Columbia and the federal government, for
software maintenance and servicing plans between 2001 and 2009.
Tess Stynes contributed to this article.
Write to Maria Armental at maria.armental@wsj.com
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