Deloitte Consulting: Commercial Discounts Behind the GSA Price-Reductions Settlement

Deloitte Consulting agreed to pay $11.38 million in a General Services Administration price-reductions settlement over allegations that commercial discounts given to specified customers should also have lowered the government’s IT-services prices. For someone who worked with commercial sales or government billing, the useful knowledge is the connection between those prices: which customer received the discount, what the contract promised, and what the government continued to pay.

The Justice Department announced the settlement on May 31, 2016. Deloitte Consulting LLP, a nationwide consulting company headquartered in New York City, had won the General Services Administration contract to provide information technology services.

What the GSA Contract Required

The General Services Administration awarded Deloitte the IT-services contract in 2000. It required Deloitte to reduce the prices it charged the government when it offered lower prices to specific commercial customers during the contract. The Justice Department alleged that Deloitte failed to comply with that Price Reductions Clause from 2006 through 2012, leaving government customers paying more than comparable commercial customers.

We see the absurdity in that bargain: taxpayers had a contract promising lower prices when the specified commercial customers got them, yet the government alleged it kept paying more. A price protection that failed the buyer it was meant to protect.

The settlement resolved allegations under the False Claims Act that Deloitte submitted false claims under its contract. The Justice Department’s Civil Division, through its Commercial Litigation Branch, and the General Services Administration Office of Inspector General handled the case.

Why the Commercial Customer Matters

Traditional General Services Administration Schedule pricing used commercial sales information to negotiate the government’s deal, then a specified customer relationship to track later changes. That relationship gives an insider’s knowledge of a commercial discount its significance.

The traditional Commercial Sales Practices disclosure format sought actual discount and concession practices, including departures from written policies. A price list could show the starting price while the sales records showed the deal customers actually received. Those differences mattered to what the government knew when it negotiated. The disclosure requirement also covered changes before negotiations closed, so the initial submission was only part of what the contractor had to tell the government.

The General Services Administration sought most-favored-customer pricing, but its negotiating framework allowed another fair and reasonable price where warranted. The negotiated basis-of-award customer became the reference for tracking price changes. The customer with the best deal and the customer selected for that tracking role could be different.

A sales employee may know the discount. A contract administrator may know which customer relationship the government agreement used. The case takes shape when those pieces are connected to the government bill. For Deloitte, that comparison concerned the prices of information technology services and the commercial customers specified in its contract.

Rebates and concessions can matter alongside invoice prices in these pricing cases. We examine the commercial transaction as the contract defines it, including the pricing records that explain what the customer received. A customer invoice and a later rebate record describe different parts of the same deal. The published price, the negotiated discount and the government charge each tell a different part of that story.

What Proof Do You Need as a Whistleblower?

For a commercial-discount case, the useful evidence connects the contract’s customer comparison, commercial invoices and rebates, pricing disclosures, and government invoices. Our work is to establish how the commercial deal affected the price the government was owed, and what the company represented along the way.

Your knowledge of how a concession worked can help us interpret what those records mean. We work with you to connect the sales decisions you understand to the contract’s pricing promise and develop the whistleblower case.

The Price Reductions Clause Follows the Contract

Under the traditional basic Price Reductions Clause, a triggering change in the specified price or discount relationship could require a government reduction for the same effective date and period. The timing of the commercial reduction therefore belongs beside the amount.

The General Services Administration’s guidance on the transition to transactional data reporting ties the end of traditional customer tracking to the particular contract modification and its effective date. We examine that change with you when connecting past commercial discounts to government charges.

The Pattern in Other GSA Pricing Cases

CA Inc. agreed to pay $45 million in a pricing settlement that concerned both the government’s original deal and later discounts. The government alleged false commercial-discount disclosures during the original negotiation and later extensions, followed by failure to provide improved discounts required by the Price Reductions Clause.

A former employee brought that qui tam case, and the government joined part of it. The comparison with Deloitte shows the pricing relationship over the life of a contract: what the company disclosed when the government agreed to its price, and what happened when commercial discounts later improved.

Symantec’s case reached a court finding. The court found that Symantec knowingly made false commercial-sales disclosures, continued inaccurate certifications and violated the Price Reductions Clause. The negotiated comparison concerned a designated customer or category. Gen Digital, formerly Symantec, later paid $55.1 million to satisfy the judgment.

The whistleblower in that case administered the Symantec contract. That role matters to the pattern: the person familiar with the government’s pricing agreement may be able to explain what commercial sales information meant for the obligations inside it.

Whistleblower Rewards in GSA Pricing Cases

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In a commercial-discount case, our whistleblower experts work with you to connect your knowledge of the pricing practices to the government’s overcharge and bring in government procurement whistleblower lawyers who understand General Services Administration contracts.

You Know the Discount Behind the Government Price

If you know how a contractor’s commercial prices compared with its government charges, speak to one of our Whistleblower Experts about the discount the government missed. We build your strongest GSA pricing whistleblower case around the contract and the pricing decisions you can explain, find whistleblower lawyers with experience in these pricing disputes, and stay beside you through the pursuit of a recovery.