Grainger to pay $70M over false contract claims

By Stephanie Ostrowski | Jan 9, 2013

WASHINGTON (Legal Newsline) - W.W. Grainger Inc. has agreed to pay the Department of Justice $70 million to resolve allegations of submitting false claims under the General Service Administration (GSA) contract and the U.S. Postal Service.

Through the GSA's Multiple Award Schedule program, Grainger began a contractual agreement to sell hardware products and other supplies to government customers. To obtain a contract with MAS, contractors must agree to disclose their commercial pricing policies and practices to assist the government in negotiating the terms of the MAS contract.

The MAS program provides the government and other GSA-authorized purchasers with a streamlined process for buying commonly used commercial goods and services. A company associated with this agreement will gain access to the broad government marketplace.

Grainger, a national hardware distributor headquartered in Lake Forest, Ill., will settle issues discovered during a GSA post award audit by paying $70 million.

Grainger failed to meet its contractual obligations in working with the USPS and as a result government customers purchasing items under the Grainger MAS contract paid a higher price than necessary. A GSA Office of Inspector General revealed Grainger did not provide the GSA with current, accurate and complete information about sale practices and discounts.

The USPS contracts required Grainger to provide "most favored customer" pricing. Agents and auditors investigated Grainger's prices and practices to discover Grainger did not consistently adhere to the requirements.

"Misrepresentations during contract negotiations undermine the integrity of the government procurement process," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. "The Justice Department is committed to ensuring that government purchasers of commercial products receive the prices to which they are entitled."

This settlement was a coordinated effort by the Commercial Litigation Branch of the Justice Department's Civil Division, the U.S. Attorney's Office for the Eastern District of Wisconsin, the GSA Office of Inspector General, and the USPS Office of Inspector General and Office of General Counsel.

The claims settled by this agreement are allegations only, and there has been no determination of liability.

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