Workrite: Office-Furniture Discounts and the GSA Settlement

Workrite agreed to pay $7.1 million in its office-furniture discounts case to resolve allegations that it gave the General Services Administration inaccurate commercial-sales information and failed to extend lower prices required by its government contract. A former sales manager brought the case. The alleged overcharges left taxpayers paying more for office furniture than the contract required.

The Department of Justice announced the settlement on December 3, 2020. Workrite Ergonomics LLC, an ergonomic office-furniture maker, and its parent, Knape & Vogt Manufacturing Co., both agreed to settle.

What Workrite Sold Through GSA

Workrite supplied office furniture to government entities from 2009 through 2017 through the General Services Administration’s Multiple Award Schedule program. The program gives government buyers a simpler way to purchase commonly used commercial goods and services. The commercial side of the seller’s business mattered because it helped establish the government’s bargain.

Traditional Schedule pricing used information about the supplier’s actual commercial discounts and concessions in negotiations. The government sought favorable pricing, then agreed on a customer or customer category against which later pricing changes would be tracked. That comparison customer was known as the basis-of-award customer.

For a furniture sales team, the important information was therefore more specific than a published catalog price. It included the discounts customers actually received and the concessions made in particular transactions. Those commercial dealings could affect both the price negotiated with the government and the reductions owed afterward.

Commercial-Sales Disclosures Before the Award

The Justice Department alleged that Workrite failed to give the government accurate information about its commercial sales practices during contract negotiations.

The General Services Administration’s traditional commercial-sales disclosure format asked about actual discount and concession practices, including departures from written policies. It called for current, accurate and complete information, with later changes disclosed before negotiations closed. A price list could show the formal policy while leaving out the better deal a customer actually received.

The government’s negotiating position depended on that information. A disclosure that left out relevant concessions could make a government discount look more favorable than it was.

Price Reductions After the Award

The government also alleged that Workrite failed to extend lower prices to government customers as its contract’s Price Reductions Clause required.

Under GSA’s traditional Schedule pricing approach, the customer used to track later discounts could differ from the supplier’s most favored customer. The parties agreed on the relationship the contract would preserve. The useful question for a pricing insider is which customer’s terms the government price was supposed to follow.

The traditional Price Reductions Clause tied covered changes in that relationship to a government reduction for the same effective date and period. The date of a better discount helps identify the government purchases affected by it.

Negotiating the contract and setting later prices are different decisions inside a supplier’s business, and they leave different records.

What Proof Do You Need as a Whistleblower?

For an office-furniture pricing case, the useful evidence connects actual commercial transactions to the contract’s pricing promises and the government’s bill. Our whistleblower experts examine that connection with you, including what the company told GSA and what its sales records showed at the time.

The negotiation records explain the initial account of the business: the commercial-sales submission, discount policies and information about actual concessions. The contract and its modifications identify the comparison customer and the pricing relationship agreed with the government. We read those promises alongside the actual transactions.

Later sales records show which customer received a discount, what it applied to and when it took effect. Government prices and invoices connect that change to what public buyers were charged. We compare those transactions with what the supplier told the government.

Someone in sales may recognize a customer concession that a person reading only the government contract would miss. Someone responsible for government pricing may know whether that concession reached the Schedule price. We work with the part of the transaction you understand and connect it to the rest of the case.

Workrite’s whistleblower was a former sales manager. That role makes the case especially relevant to people who know how a supplier’s commercial prices are actually negotiated. The negotiated deal is where that knowledge begins.

Another Furniture Supplier, Another Discount Promise

VARI agreed to pay $1.1 million in a separate office-furniture settlement. The government alleged that, from December 8, 2016 through June 30, 2019, VARI failed to give the General Services Administration discounts equivalent to those offered to the customers designated in its contract and made false statements about compliance. A former sales executive brought that case.

The shared point is the link between the commercial discount and the government price. Workrite’s allegations included the information given during negotiations. VARI’s account focused on discounts tied to its own agreed comparison customers.

Which Pricing Promise Applied?

The pricing promise in force when the furniture was sold governs the comparison. The General Services Administration’s later shift to transactional data reporting removes the traditional basis-of-award tracking promise. Its guidance on the transition ties that change to when the individual contractor’s revised terms take effect.

When we examine a discount discrepancy, we connect it to the version of the contract governing that transaction. A change in today’s Schedule rules does not erase the pricing promises made to Workrite’s government buyers.

The Workrite Whistleblower Reward

The Justice Department said the former sales manager would receive approximately $1.27 million from the settlement proceeds. The whistleblower brought the allegations as a qui tam case under the False Claims Act.

The department credited a coordinated effort that included the General Services Administration’s Office of Inspector General and the U.S. Attorney’s Office for the Northern District of California. Commercial pricing knowledge inside the business had become a federal overcharge case.

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

You Know the Discount Behind the Price

If you know the commercial discounts and the prices charged to government furniture buyers, speak with our whistleblower experts about where they diverged. We build your case around the transactions and pricing promises, bring in GSA procurement fraud whistleblower lawyers who understand commercial-sales disclosures, and stay alongside you throughout the case.