Government contractors are once again reminded of the consequences of circumventing procurement rules under the False Claims Act. Dell Technologies Inc. and Dell Federal Systems L.P. (collectively Dell), alongside Iron Bow Technologies LLC (Iron Bow), recently reached settlements totaling $4.35 million to resolve allegations of government contracting fraud. A competitor filed a qui tam lawsuit and will receive approximately 15% of the settlement with Dell.

The Allegations Against Dell and Iron Bow

According to the allegations, between May 2020 and April 2024, Dell operated a “deal registration program” that allegedly facilitated non-competitive bidding under the Army Desktop and Mobile Computing 3 (ADMC-3) contract. According to the United States Department of Justice, Dell provided Iron Bow with advantageous pricing to secure contracts for specific Dell computer hardware products purchased by the Army.

While Iron Bow submitted bids with lower prices, Dell also entered higher direct bids to create an illusion of competition. This practice, the government claimed, misled Army decision-makers during the source selection process. The result? The Army was allegedly overcharged for certain Dell products under the ADMC-3 contract, in violation of the False Claims Act. Dell has agreed to pay $2,300,000 to resolve these allegations and Iron Bow has agreed to pay $2,051,000 for its involvement in the scheme. Both companies were accused of violating the False Claims Act, which prohibits submitting or causing the submission of false claims for payment or approval to the government.

Non-Competitive Bidding Harms Taxpayers

Non-competitive government contracting poses a significant problem for taxpayers because it often leads to higher costs, reduced transparency, and limited accountability. Without competitive bidding, government agencies can award contracts to companies without comparing prices or evaluating alternative solutions, resulting in inflated prices for services and goods. This lack of competition reduces the incentive for contractors to provide high-quality services or innovate, as they may face no pressure to improve efficiency. Non-competitive bidding may ultimately divert taxpayer money away from its intended purposes. As the Principal Deputy Assistant Attorney General said about the case, “The United States relies on competition to get the best value and price for the American taxpayers.”

The Whistleblower’s Role and Reward

The case against Dell also resolves a qui tam lawsuit filed by whistleblower Brent Lillard, an executive at another IT reseller. The whistleblower provisions of the False Claims Act empower private individuals to file lawsuits on behalf of the government when they suspect fraud. Mr. Lillard will receive $345,000. To secure a level playing field for all companies in an industry, competitors are empowered to blow the whistle on government contracts fraud under the False Claims Act.