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U.S. joins suit accusing CA of overcharging government by $100M

CA Technologies in Islandia fell from 499th place

CA Technologies in Islandia fell from 499th place to 529 in Fortune’s annual rankings of firms by revenue. Two LI firms — Henry Schein Inc. and Cablevision — kept spots in the top 500. Credit: Kevin P. Coughlin

The U.S. Justice Department has joined a whistle-blower lawsuit accusing Long Island software maker CA Technologies of inflating public contracts and overcharging the federal government by more than $100 million.

The government's lawsuit, unsealed Thursday in Washington, accuses the Islandia company of concealing key pricing information during contract negotiations and billing the federal government at a higher rate than it charged private companies.

"Too many federal contractors think they can get away with overcharging the government," said Ronald C. Machen Jr., the United States attorney for the District of Columbia.

CA denied the allegations, saying it looked forward to resolving the suit. "We believe that the material aspects of the government's liability theories are unfounded and will vigorously contest them," said Jennifer Hallahan, a CA spokeswoman.

The Justice Department filed its suit as part of a whistle-blower case initiated in 2009 by Dani Shemesh, a former employee of CA's Israeli division. She filed her action under the False Claims Act, which allows individuals to sue on the government's behalf and share in any damages or fines.

The allegations center on CA's contracts with the General Services Administration, the agency that manages federal office buildings and provides government support services. Those contracts stipulated that CA disclose the rates it charged private companies so the government could negotiate a fair deal.

Yet, the lawsuit contends that as early as 2006, CA withheld information about discounts it offered in the private market, leading the government to overpay.

CA, formerly named Computer Associates, is Long Island's largest public company, based on its stock market value of $12.82 billion. The Justice Department announced its suit after Wall Street closed for the day. During regular trading Thursday, CA shares rose 5 cents to $28.95.

Last year the company paid $11 million to settle a lawsuit with federal prosecutors in New York who accused the company of overbilling numerous federal, state and local governments.

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