Carahsoft: The VMware Pricing Case Through a Schedule Reseller’s Records

Carahsoft and VMware agreed to pay $75.5 million to resolve allegations that they concealed commercial pricing practices and overcharged the government for VMware software and related services sold through Carahsoft’s Schedule contract with the General Services Administration. The contract belonged to the reseller. The software came from the manufacturer. For someone who worked on those sales, the connection between commercial discounts and the information submitted to the government is the heart of the case.

The Department of Justice announced the joint settlement on June 30, 2015. The alleged overcharges ran from 2007 through 2013.

Carahsoft’s Place in the GSA Schedule

Carahsoft Technology Corporation was the Schedule reseller, and VMware Inc. was the software vendor. VMware specialized in computer virtualization software. Carahsoft distributed information technology products to federal, state and local governments from its principal place of business in Reston, Virginia.

The General Services Administration’s Multiple Award Schedule program gave vendors access to government purchasers through one central contract. The attraction was both the federal marketplace and the administrative ease of selling through that contract. In the pricing system described in the settlement announcement, vendors supplied commercial pricing information so GSA could negotiate fair prices for government buyers.

That arrangement makes the reseller’s contract file important. The government buys a manufacturer’s product through a contract held by another company, and the commercial information used to negotiate the price may have to cross the same company boundary. A government quote shows the price offered to the agency. The commercial sales information behind that price explains how the government was persuaded to accept it.

The government alleged that Carahsoft and VMware made false statements associated with sales under Carahsoft’s Schedule contract. Those statements allegedly enabled the companies to overcharge government purchasers. The taxpayers’ bargain depended on information the sellers themselves supplied.

Commercial Discounts Behind the Government Price

Commercial pricing disclosures were supposed to show the discounts customers actually received, including deals outside the standard discount policy. The government’s negotiating position depended on the accuracy of that information.

The traditional Commercial Sales Practices format sought actual discounts and concessions, including departures from written policies. A reseller without significant commercial sales could need information from the manufacturer. A published price list alone did not describe every relevant concession.

This is where a sales employee’s knowledge can be more revealing than a catalog. The written policy describes the ordinary offer. An approved exception, a rebate or a customer invoice can show the transaction the company actually made.

Under the older Schedule model, GSA and the seller agreed on a commercial customer or customer category whose prices would be the reference for later price changes. That was the basis of award.

Under the traditional Price Reductions Clause, a covered change in that pricing relationship could require a corresponding government price reduction. The commercial transaction, the agreed comparison and the timing belonged together. A contract administrator could therefore see a pricing problem in a later discount decision, well after the original Schedule negotiations had ended.

The VMware and Carahsoft announcement describes both stages: commercial discount disclosures during negotiations and disclosure of improved discounts after award. The contract’s pricing terms and effective dates matter: later Schedule models changed that discount-tracking promise.

A VMware Executive Brought the Pricing Case

A former VMware vice president of the Americas brought the whistleblower case under the False Claims Act. The person behind the case worked at the software vendor, while the government contract belonged to Carahsoft. Access to the commercial side of a sale can matter even when another company handles the government contract.

What the Reseller’s Records Can Show

A reseller’s records can connect the manufacturer’s commercial pricing to the government’s purchase. The comparison runs from the commercial deal, through the information supplied for the Schedule contract, to the government quote and bill.

On the manufacturer side, customer transactions and discount approvals show the terms actually offered. On the reseller side, the commercial sales submission and pricing correspondence show what information reached the government. A concession visible in the sales records may be precisely what is missing from the account used to negotiate the Schedule price.

For someone who knows the reseller’s submissions, the question is concrete: did the commercial information sent to GSA match the business being done? For someone who knows the manufacturer’s discounts, it is whether those terms reached the people negotiating and administering the government price. Our work connects those accounts to the purchases and the decisions behind them.

The Pricing Pattern Beyond VMware

Informatica’s 2019 settlement announcement describes a particularly close parallel. The government alleged that the manufacturer gave resellers false discount information for GSA Schedule negotiations, causing inflated maximum prices and government purchases at inflated prices. In that allegation, the misleading information originated with the manufacturer and reached the government through resellers.

Oracle’s 2011 software pricing settlement and NetApp’s 2009 settlement involved allegations of incomplete commercial sales disclosures and later discounts that should have produced government price reductions. Both show why the original negotiation and later contract administration matter. The alleged overcharge can begin with an incomplete account of commercial sales and continue when improved discounts do not reach the government.

Symantec went to trial and lost. The Justice Department’s 2024 announcement concerning Gen Digital, formerly Symantec describes a court finding that Symantec knowingly misrepresented commercial sales practices during contract negotiation and performance. The court found that the company continued to give inaccurate assurances about its commercial sales practices and failed to pass on required price reductions.

Across these cases, the evidence is close to the daily work of sales and contract administration: customer discounts, the disclosures about them, the pricing relationship the government agreed to, and the charges that followed. In the Carahsoft matter, the reseller’s position makes the passage of that information between companies central to the story.

What a GSA Schedule Pricing Whistleblower Case Can Pay

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Sales employees, reseller contract administrators and government buyers see different parts of the same pricing chain.

Knowing why a customer received a concession, what the reseller disclosed, or what an agency was charged can help connect the commercial transaction to the alleged overpayment. We work with people who know these transactions to connect their commercial knowledge to the representations and government purchases a pricing case turns on.

You Know the Discounts Behind the Quote

If you know how a manufacturer’s commercial terms reach a reseller’s Schedule submissions, or saw a gap between discounts and government charges, talk with our whistleblower experts about what you saw. We build the pricing case with you and bring in GSA Schedule pricing whistleblower lawyers who understand the manufacturer-reseller relationship. We stay beside you through the investigation and the pursuit of the government’s recovery.