Dell pays $2.3 million to settle claims that it overcharged the US Army for computers

• Dell has agreed to pay $2.3 million to settle claims that it violated the False Claims Act.
• Dell and reseller Iron Bow overcharged the US Army for computers over four years, the DOJ said.
• Fraud in the government contract process costs taxpayers, said a US attorney involved in the case.

Dell has agreed to pay $2.3 million to resolve allegations it violated the False Claims Act in its business with the US Army.

The Department of Justice said the Texas-based tech giant and one of its resellers, Iron Bow, had overcharged on government contracts between May 2020 to April 2024.

This resulted in the Army overpaying for the Army Desktop and Mobile Computing 3 (ADMC-3) contract, of which Dell is a prime contractor, the DOJ said.

The government alleged that Dell sold certain computer hardware products at a discounted price to Iron Bow.

When both companies submitted bids for the ADMC-3 contract to the Army, Dell knowingly inflated its prices, "creating the false appearance of competition," the DOJ said. Iron Bow would win the contract, while Dell shifted stock.

The DOJ said this violated the False Claims Act, influenced the Army's selection process, and enabled Iron Bow to overcharge the Army for certain Dell products.

Iron Bow has agreed to pay just over $2 million to settle the claims, bringing the combined settlement to $4.3 million.

Brent Lillard, a whistleblower who raised concerns about possible collusion, will receive $345,000 from Dell's payment. Lillard is the CEO of a rival IT reseller, Govsmart.

There has been no determination of liability, the DOJ said.

"Dell has entered into a settlement agreement because we believe it is in the best interest of Dell, our customers and partners. The settlement is not an admission of guilt or liability," a Dell spokesperson told Business Insider.

While the $2.3 million payment is significant, it represents a tiny fraction of Dell's overall earnings. The tech company had revenues of $88.4 billion in its last full financial year.

The ADMC-3 contract is worth roughly $5 billion and is open to eight contractors, including Dell and Iron Bow.

Government officials had strong words for Dell after issuing the fine.

"The United States relies on competition to get the best value and price for the American taxpayers," said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division.

The Justice Department official added that the department was committed to holding "those who overcharge the government through collusion or other unlawful conduct" accountable.

"Fraud in the government contracting process costs taxpayers untold dollars each year," said US Attorney Prim F. Escalona for the Northern District of Alabama, where the case was brought.

The US government spends hundreds of billions annually on contracts with private companies. In 2023, the DOJ recovered nearly $2.7 billion from 543 settlements "involving fraud and false claims against the government." That was the most claim settlements in a single year.

Government contracts are under increasing scrutiny since Donald Trump named Elon Musk and Vivek Ramaswamy as leaders of a new unofficial "Department of Government Efficiency" — or DOGE.

Ramaswamy said on Sunday that DOGE could abolish entire federal agencies, reduce the head count in "bloated" areas of government, and make "massive" cuts to federal contracting.

Iron Bow did not respond to a request for comment from Business Insider, made outside normal working hours.