Federal agents from the FBI and the Defense Criminal Investigative Service (DCIS) raided the headquarters of Carahsoft Technology Corp. in Reston, Virginia, on Tuesday.
Carahsoft is known as “The Trusted Public Sector IT Solutions Provider,” specializing in supporting Federal, State, and Local Government agencies, as well as Education and Healthcare sectors.
Founded in 2004, the company’s primary focus is on selling IT hardware, software, and related services to government entities.
It has longstanding ties with tech giants such as Google, Microsoft, Crowdstrike, Oracle, and more.
Eyewitnesses reported federal agents, including members of the FBI and Defense Criminal Investigative Service (DCIS), entering Carahsoft’s offices early Tuesday morning, seizing documents and computers.
The federal action was first reported by NextGov, with additional details coming from John Weiler, CEO of the IT-Acquisition Advisory Council, who confirmed the operation based on insider information.
Mary Lange, a representative for Carahsoft, confirmed that agents from the Department of Justice (DoJ) were at the office as part of an investigation but declined to provide specific details, according to Bloomberg.
“Representatives from the Department of Justice came to the Carahsoft office today as they are conducting an investigation into a company in which Carahsoft has done business in the past,” said Lange.
“Carahsoft is fully cooperating on this matter. We are operating business as usual,” she added,
While the FBI declined to elaborate, a spokesperson confirmed the agency’s “court-authorized law enforcement activity” at the Reston office
“We can confirm that the FBI conducted court-authorized law enforcement activity on Sunset Hills Road this morning. We decline to comment further,” FBI spokesperson Mollie Halpern told Bloomberg.
This raid comes on the heels of an ongoing investigation into Carahsoft’s involvement in a False Claims Act case that accuses the company of defrauding the government.
According to court documents, Carahsoft is suspected of conspiring with other companies to manipulate pricing, rig contracts, and inflate costs on IT products, including software and cloud services, sold to the DoD and other agencies.
The DoJ has been pursuing this investigation aggressively, demanding Carahsoft provide thousands of documents related to its contracts. However, despite acknowledging that it holds these documents, the company has so far produced 2,650 documents—only a fraction, significantly delaying the investigation.
Federal News Network reported:
DoJ asked Carahsoft in June 2022 for information related to the False Claims Act case, which included “13 interrogatories and 18 requests for documents.”
According to court documents from July 2023, “Carahsoft has acknowledged that it has in its possession, custody or control thousands of documents that are responsive to the Civil Investigative Demand (CID) but that it has failed to produce.”
[…]
Carahsoft has dealt with charges of violating the False Claims Act previously. In 2015, the company and VMWare agreed to pay a fine of $75.5 million to settle allegations that it misrepresented their commercial pricing practices and overcharged the government on VMware software products and related services purchased under the General Services Administration schedule.
Additionally, court documents show two other recent allegations of False Claims Act violations that DoJ decided not to pursue.
Carahsoft won more than $1.4 billion in federal contracts in fiscal 2023, with the Defense Department being the company’s biggest customer, accounting for more than $653 million, according to USAspending.gov.
So far in 2024, Carahsoft has won more than $960 million in prime awards.
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