Tech companies settle lawsuit alleging they overcharged the US Army

WASHINGTON — Two companies agreed to pay the U.S. government $2 million each to settle a lawsuit that alleged the businesses fraudulently inflated the price of computers and other hardware sold to the U.S. Army, the Department of Justice announced on Tuesday.

Both Iron Bow — a company that resells technology products to the government — and Dell competed for contracts to sell basic hardware to the Army between 2020 and 2024, while Iron Bow also distributed Dell products, the lawsuit said. At the same time, the lawsuit alleged Dell gave Iron Bow discounts on Dell products to sell to the U.S. Army, while simultaneously offering the government higher prices than it offered to Iron Bow. The arrangement artificially increased the price of goods sold to the military while simultaneously providing the illusion of competition, the lawsuit said.

''This settlement demonstrates the department's commitment to hold accountable those who overcharge the government through collusion or other unlawful conduct,'' said Brian M. Boynton, head of the Justice Department's Civil Division.

Dell agreed to pay the U.S. government $2.3 million, while Iron Bow agreed to pay just over $2 million. In separate settlement documents, Dell denied the allegations made in the lawsuit, while Iron Bow said the settlement was reached "to avoid the delay, uncertainty, inconvenience, and expense of protracted litigation." Neither of the company agreements included an admission of liability.

''Dell has entered into a settlement agreement because we believe it is in the best interest of Dell, our customers and partners,'' a spokesperson for the company said in an email.

A message seeking further comment were left Tuesday for the media contact at Iron Bow.

The executive of a different technology company, Brent Lillard, filed a lawsuit in Northern Alabama District Court against Dell and Iron Bow in 2020 under a whistleblower provision in the False Claims Act, which allows private citizens to sue on behalf of the government if they believe that there has been a fraudulent application for government funds. Under the law, Lillard will receive $345,000 of the $2.3 million owed by Dell.