Dell & Iron Bow to Pay $4.3 Million to Settle False Claims Allegations Over Army Contracts

Dell Technologies and Iron Bow Technologies have agreed to pay a combined total of $4.3 million to resolve allegations of submitting non-competitive bids under a U.S. Army contract. The settlement addresses claims that the two companies overcharged the Army through a scheme that undermined the integrity of the Army’s procurement process.

The companies’ actions stem from the Army Desktop and Mobile Computing 3 (ADMC-3) contract, a key initiative that supplies the U.S. Army with critical computer hardware. Dell Technologies and its subsidiary, Dell Federal Systems L.P., both based in Austin, Texas, will pay $2.3 million. Iron Bow Technologies, a reseller based in Herndon, Virginia, will pay $2.051 million.

The allegations against Dell and Iron Bow date back to 2020, when Dell is said to have operated a "deal registration program." Under this program, Dell offered preferential pricing to Iron Bow, allowing the reseller to sell Dell products to the Army at a discount. The problem arose when Dell itself also submitted bids to the Army for the same products, but at higher prices, knowing that Iron Bow’s bids were more competitive.

This created a false appearance of competition, with the Army believing it was receiving multiple offers for the same products. In reality, Dell’s higher bids helped ensure Iron Bow would be the chosen contractor, ultimately leading to inflated prices for the Army.

According to the U.S. government, this practice misled the Army during its source selection process and resulted in taxpayers paying more for certain Dell products than they should have.

Justice Department Takes Action to Protect Taxpayer Dollars

The settlement marks a significant step in the Justice Department’s efforts to protect taxpayer money from fraud and misconduct. Principal Deputy Assistant Attorney General Brian M. Boynton, who oversees the DOJ’s Civil Division, commented on the case, saying, “The United States relies on competition to get the best value and price for the American taxpayers. This settlement demonstrates our commitment to hold accountable those who overcharge the government through unlawful conduct.”

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

How One Insider Helped Expose the Fraud

The case was also made possible by the efforts of a whistleblower, Brent Lillard, who was an executive at a competing IT reseller. Lillard filed a lawsuit under the False Claims Act’s whistleblower provisions, which allow private individuals to sue on behalf of the government if they believe fraud has occurred in government contracting. For his role in uncovering the fraud, Lillard will receive $345,000 from the settlement.

Lillard’s lawsuit, which was filed in 2020, was instrumental in revealing the scheme, leading to the eventual resolution of the case. His reward is a reminder of the importance of whistleblowers in holding companies accountable and protecting public funds.

While neither Dell nor Iron Bow admitted to the allegations, the settlement underscores the importance of transparency and fairness in government contracting. The case highlights the dangers of non-competitive bidding and the role that fraudulent practices can play in driving up costs to the taxpayer.

For Dell and Iron Bow, this settlement puts an end to the legal battle but serves as a reminder of the need to maintain ethical standards in all government dealings. As government contracts continue to be a major part of the U.S. economy, the case also reinforces the need for vigilance in ensuring fair competition and protecting taxpayer dollars.

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