01/17/2011

News / Minnesota-based National Hardware Store Distributor Fastenal to Pay U.S. $6.25 Million to Resolve False Claims Act Allegations

WASHINGTON - Fastenal Company, a national hardware store distributor, has reached a settlement with the United States following an investigation of alleged false claims in connection with a General Services Administration (GSA) contract, the Justice Department announced today. Fastenal has agreed to pay the United States $6.25 million.

The settlement relates to a contract entered into by the Winona, Minn.-based company to sell hardware products to government customers through the GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government and other GSA-authorized purchasers with a streamlined process for procurement of commonly-used commercial goods and services. To be awarded a MAS contract, and thereby gain access to the broad government marketplace, contractors must agree to disclose commercial pricing policies and practices, and to abide by the contract terms when selling to purchasers under the MAS contract.

The settlement resolves issues discovered during a GSA post-award audit of Fastenal’s contract. The GSA Office of Inspector General learned that Fastenal knowingly failed to meet its contractual obligations to provide the GSA with current, accurate and complete information about its commercial sales practices, including discounts afforded to other customers.

In addition, the settlement resolves allegations that Fastenal failed to comply with the price reduction clause of its GSA contract, overcharged government customers, and improperly assessed delivery and sales tax charges on government sales. As a result, the United States paid more than it should have for Fastenal products. The settlement also resolves allegations that Fastenal violated the Trade Agreements Act when it knowingly sold products to the United States that were manufactured in countries that do not have trade agreements with the United States, e.g., China.

"Misrepresentations during contract negotiations undermine the integrity of the government procurement process," said Tony West, Assistant Attorney General for the Civil Division. "The Justice Department is acting to ensure that government purchasers of commercial products can be certain that they are getting the prices to which they are entitled."

"This case is another demonstration of the value of OIG audits in helping to uncover fraud on government programs," said Brian D. Miller, GSA Inspector General.

This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Western District of Missouri; and the GSA Office of Inspector General and Office of General Counsel in investigating and resolving the allegations.

http://www.justice.gov/opa/pr/2011/January/11-civ-042.html

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