Dell, Iron Bow Settle False Claims Act Case, DOJ Investigation Ongoing

‘This settlement demonstrates the department’s commitment to hold accountable those who overcharge the government through collusion or other unlawful conduct,’ said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, in a statement.

Over a period of four years Dell Technologies knowingly submitted high bids on US Army hardware contracts to ensure that its reseller Iron Bow Technologies would win the deal with a lower bid, conduct that violated the False Claims Act and remains under investigation by the Department of Justice, according to court filings.

“Dell submitted bids to the Army that Dell and Iron Bow knew would be higher than the Iron Bow's bid, thereby creating the false appearance of competition,” the civil settlement with the US. Department Of Justice states. “The United States contends that this influenced the Army's source selection process and caused Iron Bow to overcharge the Army.”

Dell Technologies and Iron Bow, No. 41 on the 2024 CRN Solution Provider 500, agreed to settle civil claims that it violated the False Claims Act for $4.3 million, without admitting to wrongdoing. Dell told CRN Wednesday morning the settlement is “not an admission of guilt.”

Iron Bow, which is majority-owned by private equity investment firm H.I.G. Capital, did not immediately respond to a request for comment. The company, which is also listed on CRN’s 2024 Tech Elite and 2024 MSP 500 lists, has won numerous awards from vendor partners including Dell Marketing Partner of the Year in 2023, Cisco Federal Breakaway Partner of the Year in 2023 and Palo Alto Networks Nextwave Diamond Innovator award.

“This settlement demonstrates the department’s commitment to hold accountable those who overcharge the government through collusion or other unlawful conduct,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, in a statement.

On its website, Iron Bow boasts that it is the “only IT vendor” to hold all four CHESS [Computer Hardware, Enterprise Software and Solutions] contracts”- the primary source for the U.S. Army to procure commercial IT. The CHESS contracts are mandatory for most U.S. Army IT purchases.

Iron Bow also on its website says it has “proudly served the U.S. Army and the DoD [Department of Defense] for over 30 years.”

Iron Bow provided a statement to CRN, saying it has not admitted any liability in the investigation.

"Iron Bow settled this matter without any admission of liability to avoid further delays, uncertainty, inconvenience, and the expense of potential litigation. Iron Bow cooperated with the Department of Justice throughout its investigation of Dell pursuant to a Qui Tam Complaint against Dell and has maintained its position throughout that investigation," the statement reads.

As a part of its settlement the government requires Dell to “cooperate fully” with its investigators as they look at a four-year pattern of conduct involving technology bids to win billions in sales contracts.

“Fraud in the government contracting process costs taxpayers untold dollars each year,” said U.S. Attorney Prim F. Escalona for the Northern District of Alabama. “We will continue to work with our federal law enforcement partners to investigate and pursue those who commit government contracting fraud.”

In the settlement, the government describes the coming investigation and documents they are seeking as it proceeds. Dell is required not to impair the cooperation of its “directors, officers and employee” and “encourage the cooperating of former directors” for “interviews and testimony.”

“Dell further agrees to furnish to the United States, upon request, complete and unredacted copies of all non-privileged documents, reports, memoranda of interviews, and records in its possession, custody, or control concerning any investigation of the Covered Conduct that it has undertaken, or that has been performed by another on its behalf.”

The “covered conduct” is the four-year period that Dell and Iron Bow worked together on the Army accounts.

When asked by CRN, Dell did not answer questions delivered via email about the investigation or the allegations. It sent CRN this statement:

“Dell has entered into a settlement agreement because we believe it is in the best interest of Dell, our customers and partners. The settlement is not an admission of guilt or liability,” Dell’s statement read.

Government investigators began looking at Dell following a 2020 civil case filed by a solution provider in Alabama. Federal investigators took interest in the case and brought their own action as a result of it.

In the initial case, Brent Lillard, the CEO and co-founder of Charlottesville, Va.-based solution provider GovSmart, alleged Dell was violating the False Claims Act and had an unfair pricing advantage when making bids on federal government contracts.

Lillard told CRN Wednesday that while his initial lawsuit didn’t go anywhere, it was during the auditing of the facts he presented that investigators uncovered the material laid out in the settlement reached with Dell and Iron Bow.

“I hope that if anything comes out of this, it is a more fair and even system for all of us who are competing in the federal market,” Lillard told CRN.

Lillard said he doesn’t blame Dell. He said the government’s incredibly complex bidding process has made it difficult for businesses to operate fairly when competing for federal bids.

“It’s almost like they put a bunch of honey on the ground for the ants, and they are just waiting there with a boot,” he said.

The settlement in this case provides for Lillard to receive as a whistle blower a $345,000 share of the recovery from Dell, court documents state.