Justice Dept. Sues CA for False Claims on Government Contract -- 4th Update

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 [e-mail]

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