Blue chips pay $12.7m in US contract cases

5 September 2007
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06 September 2007 | Paul Snell and Gareth Mytton

The US government has settled two procurement-related investigations after the firms involved agreed to pay a total of more than $12.7 million (£6.4 million).

IBM will pay the government $2.9 million (£1.5 million) and PricewaterhouseCoopers (PwC) will remit $2.3 million (£1.2 million) to settle allegations over improper payments.

The Department of Justice (DoJ) said the payments, relating to government technology contracts, amount to kickbacks, and that the relationships represent a conflict of interest. It did not reveal the names of the other companies involved.

Both firms deny any wrongdoing. PwC said: "PwC has agreed to settle a case with the DoJ concerning work performed by its former consulting business, since sold in October 2002. PwC believes the allegations of the complaint characterising conduct as 'kickbacks' are completely without merit."

IBM said: "IBM did not engage in kickbacks, false claims, or any other illegal conduct alleged."

In the second case, Crane Company has agreed to pay $7.5 million (£3.8 million) under the False Claims Act.

The government alleged the manufacturer, a supplier to the US Navy, breached the Defense Department's qualified product list regulations, which require suppliers to submit to inspection before they qualify to bid for government contracts.

Crane Company said it "unintentionally failed to provide prior notice to the navy and update the navy's qualified product listing to reflect a 2003 change in manufacturing location from California to Texas".


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