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Former VMware staffer blows whistle on government pricing plan

Virtzilla and partner Carahsoft to pay US$75 MEELLION in overcharging settlement

VMware and Carahsoft, a company that bills itself as “Your Trusted Government IT Solutions Provider”, will repay US$75.5 million to the US government for what the Department of Justice (DoJ) characterises as “misrepresenting their commercial pricing practices and overcharging the government on VMware software products and related services.

The matter has its roots in the USA's Multiple Award Schedule (MAS) Program, under which vendors reveal their pricing policies in order to have a chance of selling to the colossal US government market. The MAS also offers the chance to strike one contract but sell to any US government agency. The expectation of vendors bidding for government work is that they won't so much open the Kimono as take it off, shred it, and stand naked and passive while government procurement folk jab at them and ask just how they got that small scar on the left buttock.

VMware and Carahsoft appear not to have gone quite that far, as they stand accused of making “false statements” that “allegedly concealed the companies’ commercial pricing practices and enabled the companies to overcharge the government for VMware’s products and services from 2007 through 2013.”

How did the DoJ learn of this skulduggery? The action seems to have been brought by a former VMware staffer: the DoJ says Dane Smith, “a former vice president of the Americas at VMware Inc,” filed the lawsuit.

Most of the documents in the case have been sealed by the court, so there's not much more to go on that canned statement we've linked to above, which also mentions that Smith may be in line for some of the settlement. The statement also says the decision settles the allegations but not the liability: Carahsoft's and VMware's lawyers are presumably penning terse letters to sort that out as you read.

The Reg's virtualisation desk imagines AWS, Citrix and Nutanix may also be rather happy about this settlement, as the three opposed a mooted US$1.6bn deal between VMware and the feds. That deal subsequently fell over. VMware does have plenty of US government customers and often points out that Uncle Sam is an important and growing market. As of today, it's probably also a market VMware needs to treat very, very, carefully indeed. ®

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