NetApp settles GSA dispute for $128M

NetApp Inc. has agreed to pay the government $128 million to settle a dispute with the Justice Department and the General Services Administration.

NetApp is one of several manufacturers that have had run-ins with the GSA’s inspector general over pricing on the GSA Schedule 70. Justice and the inspector general have been investigating the price-reduction clauses of manufacturers such as Cisco Systems Inc., Sun Microsystems Inc., EMC Corp. and Panasonic Corp.

In NetApp’s case, they were looking at sales that occurred between August 1997 and February 2005, NetApp said in a filing with the Securities and Exchange Commission.

The settlement is “neither an admission nor denial by NetApp of any of the claims alleged” by Justice, the filing states. The company settled as part of a compromise to avoid more litigation and more risk.

NetApp will pay the $128 million plus 3 percent on an annual rate, calculated from Feb. 18, 2009. The company is required to pay by April 27.

The investigation started as a fraud claim filed by Igor Kapuscinski, under the False Claims Act. According to the agreement, Kapuscinski will be paid $19.2 million out the settlement funds. The text of the settlement is available here.