VMware: Commercial Pricing Through Carahsoft’s GSA Schedule

VMware and Carahsoft agreed to a $75.5 million civil settlement over allegations that they misrepresented VMware commercial pricing through Carahsoft’s GSA Schedule and overcharged government buyers. A former VMware vice president of the Americas brought the whistleblower case. The contract carried the reseller’s name, but the person who brought the case came from the software vendor. For someone who knows the commercial discounts behind a government price, that is the part worth noticing.

VMware specialized in computer virtualization software. Carahsoft distributed information technology products to federal, state and local governments. The government alleged that false statements connected to VMware products and services sold under Carahsoft’s Multiple Award Schedule contract concealed the companies’ commercial pricing practices from 2007 through 2013.

The Commercial Prices Behind the GSA Schedule

The General Services Administration used commercial pricing disclosures to negotiate prices for government purchasers. Under the Multiple Award Schedule program described in the Justice Department’s announcement, vendors disclosed their commercial pricing policies and practices in exchange for access to government buyers through a central contract.

The disclosure covered standard discounts and the nonstandard discounts offered to commercial customers. A written discount policy describes the rules on paper. The concessions actually offered to customers show how the business priced its deals.

The traditional Commercial Sales Practices format sought those actual practices, including departures from written policies. It could also require manufacturer information from resellers without significant commercial sales of their own. A manufacturer’s commercial business could therefore supply the comparison used to price a reseller’s government business.

The government’s account of the VMware allegations explains why the information mattered after the contract award, too. Vendors were required to disclose changes in commercial pricing practices, including improved discounts.

Traditional Schedule pricing also used a negotiated customer or customer category as the reference for tracking discounts. The General Services Administration sought most-favored-customer pricing but could negotiate another fair and reasonable price. The contract identified the customer comparison that mattered.

That is why the original pricing agreement and its modifications matter together. They show which promise applied when the sale occurred.

What the Former VMware Executive Could See

A former vice president of the Americas at VMware filed the False Claims Act case. The role gives this matter its particular value to a manufacturer employee: the whistleblower came from the company whose products and commercial pricing were at issue, while Carahsoft held the Schedule contract.

That division puts different parts of the pricing story in different places. The vendor side can explain its commercial sales practices. The reseller side can explain the information used for Schedule pricing. The government order and invoice show where the representation reached a purchase.

A sales employee may know the concessions granted in practice. A person working with the reseller may know which of those concessions appeared in the information sent onward. It puts a commercial decision next to the representation made about it.

The VMware False Claims Act Settlement

The Justice Department announced the joint settlement on June 30, 2015. VMware and Carahsoft agreed to resolve allegations that their false statements concealed commercial pricing practices and enabled government overcharges.

The former VMware executive brought the qui tam case in the Eastern District of Virginia. The General Services Administration’s Office of Inspector General was part of the coordinated effort that produced the settlement.

The alleged deception was in the price negotiation: government buyers were bargaining without an honest account of the companies’ commercial discounts. Taxpayers paid the inflated bills, according to the government’s allegations.

The Same Pricing Problem Can Start With the Manufacturer

Informatica provides a close parallel. In a separate Justice Department settlement announcement, the government alleged that the software company gave resellers false information about commercial discounts. The resellers used that information in negotiations with the General Services Administration, allegedly producing inflated maximum prices and government purchases at inflated prices.

The Informatica allegation makes the reseller connection explicit: the manufacturer supplied the discount information, and the resellers used it to negotiate government prices. It gives a software vendor employee a concrete reason to look at where the company’s pricing account went next.

The CA pricing settlement illustrates another part of the pattern. The government alleged false commercial-discount disclosures during the original negotiation and contract extensions, followed by failures to provide required improved discounts. Pricing information mattered both when the bargain was struck and as commercial practices changed.

What Proof Do You Need as a Whistleblower?

For a commercial-pricing case, the useful proof connects the actual commercial transaction to the pricing representation, the applicable contract terms and the government bill. We examine that connection with you, including the customer comparison the contract used and the version in effect for the sale.

An insider may understand why records that look consistent on their face tell an incomplete story. A published policy and the concessions granted in practice can differ. Manufacturer information and reseller submissions can describe different parts of the same sale. The useful contribution is knowing how those pieces fit and where the commercial practice disappeared from the account given to the government.

Transparency International’s 2024 paper, Transparency, Accountability, and Integrity of Public Procurement Systems, explains that useful procurement transparency depends on the quality of the information and on people able to interpret it. In a pricing case, that is the value of the person who understands the sales practices behind the documents.

How Much Money Can a Whistleblower Get From a Qui Tam Lawsuit?

A whistleblower case under the False Claims Act can pay the whistleblower 15% to 30% of what the government recovers.

For an insider in software sales, the starting point is the commercial practice you can explain and the government purchase it affected. Our whistleblower experts assess that connection with you and build the case around the evidence.

You Know the Discounts Behind the Government Price

If you know the commercial sales practices behind VMware or another vendor’s government prices, talk with our whistleblower experts about what the Schedule disclosures left out. We build the case with you and bring in government procurement fraud whistleblower lawyers who understand software sales, reseller relationships and GSA pricing. We stay beside you from the first assessment through the pursuit of a recovery.