HP Pays $32.5M to Settle Federal Allegations

Palo Alto-based Hewlett-Packard Co. has agreed to pay $32.5 million to settle allegations that it overcharged the U.S. Postal Service during a 10-year contract for computers and services, the U.S. Justice Department announced Friday.

The settlement agreement signed by representatives of HP and the Justice Department last week resolves allegations made by the government under the U.S. False Claims Act without a lawsuit and without any finding of liability.

The settlement states the agreement is “neither an admission of liability by HP nor a concession by the United States that its claims are not well-founded.”

The contract was for a program in which the computer company provided the Postal Service with computers, printers, other hardware, software, and maintenance and repair services between 2001 and 2010, according to the settlement document.

At the time the contract was awarded in 2001, Compaq Computer Corp. valued it at up to $2 billion for the 10 years. The contract was originally granted to Compaq and was taken over by HP after HP acquired Compaq in 2002.

The Justice Department alleged HP overcharged the Postal Service by violating pricing terms of the contract, including a requirement that the company provide prices that did not exceed those offered to other HP customers with comparable contracts.

The department also alleged HP made misrepresentations during contract negotiations regarding its pricing and its plans to ensure it would provide the required most-favored-customer pricing.

Assistant U.S. Attorney General Stuart Delery said in a statement, “Protecting the federal procurement process from false claims is central to the mission of the Department of Justice.

“We will continue to ensure that when the government purchases commercial products, it receives the prices to which it is entitled,” said Delery, who heads the department’s Civil Division.

Hewlett Packard issued a statement saying, “HP is happy to find a mutually acceptable resolution to this matter. “HP values its ongoing relationship with the U.S. Postal Service, and looks forward to continuing to deliver high-quality products and solutions to its valued customer,” the company said.

HP spokeswoman Sarah Pompei said she could not give details on what contracts may be included in the company’s current relationship with the Postal Service.

The 2001-2010 contract was known as ADEPT2, short for Automated Desktop Extended Processing Technology. It followed an earlier contract, ADEPT1, that was awarded in 1994 to Digital Equipment Corp., which was acquired by Compaq in 1998.

The allegations were investigated jointly by Postal Service’s Office of the Inspector General and the Justice Department’s Civil Division.

—Bay City News.