Fastenal Co. pays $6.25 million to settle defective pricing, related False Claims allegations with GSA

by Ben Vernia | January 15th, 2011

On January 13, the Department of Justice announced that Minnesota-based Fastenal Co. had agreed to settle allegations that the company submitted false information in a General Services Administration Multiple Award Schedule bid, and violated terms of its contract, including violations of the Trade Agreements Act. According to DOJ’s press release:

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.

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