Carahsoft FBI Raid – An Increase in False Claims Act DOJ Investigations

Those of you who follow me on LinkedIn know my last post was about the FBI raid on Carahsoft Technology Corp. The investigation stems from allegations that Carahsoft and SAP may have colluded to fix prices for technology sold to federal agencies. This follows an earlier investigation on Carahsoft’s pricing practices, which the company previously settling for $75 million in 2015. SAP has also faced legal consequences, having paid over $220 million in fines earlier this year related to bribery allegations. During the raid, Carahsoft employees were instructed to leave the premises, and the FBI served multiple subpoenas.

In recent years, the Department of Justice (DOJ) has significantly ramped up its enforcement efforts under the False Claims Act (FCA), particularly targeting federal government contractors. As part of its 2023 FCA statistics, the DOJ announced a marked increase in investigations and settlements involving federal contracts, driven by procurement fraud, cybersecurity violations, and pandemic-related relief fraud.

DOJ initiated 500 new FCA cases in FY 2023, the highest since 1987, signaling a growing focus on contractor fraud. In total, the government and whistleblowers secured over $2.68 billion in settlements and judgments—a 54% increase from the previous year. This surge includes a significant number of cases involving defense contractors and procurement fraud.

The DOJ’s Civil Cyber-Fraud Initiative is very active with several cases being pursued for contractors ’failing to meet cybersecurity requirements on government contracts. $4 million settlement with Verizon comply with federal cybersecurity standards. This emphasis on cyber-related enforcement is expected to grow in the coming years.

Whistleblowers continue to play a key role in FCA enforcement, filing 712 new cases in FY 2023. whistleblowers brought 40 cases related to DoD contracts. These qui tam lawsuits resulted in significant payouts for the whistleblowers, further incentivizing whistleblowers to come forward.

What Contractors Can Expect

1. Increased cyber security compliance investigations by DOJ
2. Increased scrutiny of GSA Schedule pricing and discounting practices on commercial sales

What to do if DOJ Subpoenas your Records

1. Cooperation is key for reduced penalties and liability
2.Supply documents in a timely manner after retaining legal counsel. If DOJ feels the company is delaying the inevitable production, then it will show up at your corporate offices to seize laptops and documents.

Hear me discuss this and more on our free monthly webinar GovConversations TODAY, Thursday October 3rd from 4 to 5 ET.

Have questions related to this topic or need assistance? Email Barbara directly to discuss further.