Cisco Systems and its distributor, Westcon Group, have agreed to pay the US government $48 million to resolve False Claims Act allegations that they defrauded various federal agencies, attorneys for the relators announced. The agreement resolves a False Claims Act suit filed in 2005 by two whistleblowers who worked for “systems integrators” Accenture and PricewaterhouseCoopers. According to Packard, Packard & Johnson, the law firm representing relators Norman Rille and Neal Roberts, the two whistleblowers first approached the attorneys in 2002; they jointly worked on the case for two years before filing suit under seal in federal court in Little Rock, Arkansas. After the suit was filed, the two relators and their attorneys assisted the government over a period of years in the investigation of the allegations and the damages. Cisco and Westcon have consistently denied any wrongdoing.

Rille had worked for Accenture, a systems integrator for the federal government, which did many large projects for various federal agencies. During his employment at Accenture, he became aware of alliance activity between Cisco and Accenture. The terms and practices of the alliances called for referral fees and special discounts by Cisco to Accenture, the amounts of which were often kept confidential. When Rille left Accenture, he took with him over 700,000 pages of documents, many of which involved Cisco. Accenture vigorously insisted that the documents had to be returned, but a federal court ruled that protecting taxpayers trumped any nondisclosure agreements or state laws. Roberts worked with PricewaterhouseCoopers for years and also knew about alliance practices and the requirements of disclosure to the government regarding discounts.

The Federal Anti-Kickback Act prohibits a systems integrator, who is supposed to provide objective advice to the government, from receiving anything of value for recommending the purchase by the government of a vendor’s products. At the same time, Federal Acquisition Regulations require that a vendor provide the government its current, accurate, and best pricing data when negotiating a multiple award schedule with the government. Failure to do so results is a violation of the False Claims Act.