Government Contracts Monitor

“Most Favored” Pricing to the Government Means Just That

July 13, 2012

On June 26, 2012, New York-based General Services Administration (“GSA”) contractor Ward Diesel Filter Systems agreed to pay $628,000 to resolve False Claims Act lawsuit.  The company, which manufactured filtering systems for diesel engines on fire trucks, allegedly overcharged the government by failing to provide it with “most favored” customer status.

The settlement arose from a lawsuit, U.S. ex rel. Siska v. Ward Diesel Filter Systems, Inc., No. 10-011-JL (D.N.H.), filed by a whistleblower, who will receive $94,200 of the settlement. The lawsuit alleged that Ward Diesel Filter Systems sold over $4 million to the government under its GSA contract, and that Ward Diesel Filter Systems breached its certification that the government received most favored customer status.  The lawsuit alleged that the true most favored customer pricing was 30% less than what it charged the government for one unit, and 25% less for 5 or more units of the company’s “no smoke” diesel exhaust filter systems.  The lawsuit also included summary charts to reflect the different pricing.

The simple message from this case is that if you are on the GSA schedule and agree to most favored pricing to the government, follow through and give that pricing.  The different prices to other customers are easily provable, and with potential whistleblowers lurking around every corner looking for a pay day, it is far easier and more cost effective to simply abide by contract pricing requirements.

Brian Stolarz is the attorney responsible for the content of this article.