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VMware to pay big settlement over accusations of over-billing

The Justice Department said Tuesday that it has reached a $75.5 million settlement with enterprise software company VMware and contractor Carahsoft Technology over claims that the two companies defrauded the federal government.

The DOJ alleged that VMware (VMW) and Carahsoft gave the General Services Administration, a federal agency that handles administrative services, incorrect pricing information on its products, which led to the agency to pay more than it should have compared to what other business pay.

VMware, whose virtualization technology lets customers cut back on the amount of hardware they must buy for their data centers, sells a lot of its products on discount, according to a complaint that details the case. While the company was offering discounts to companies as a way to attract businesses, it apparently didn’t do so for the U.S. government, the complaint alleges.

“Indeed, VMware offered governments outside of the United States better discounts than were offered to commercial customers,” the court documents state.

According to Cotchett, Pitre & McCarthy, the law firm representing the U.S. government, the settlement is “one of the five largest recoveries against a technology company in the history of the False Claims Act.”

VMware provided the following statement to Fortune in an email:

“VMware cooperated fully with the DOJ and GSA in connection with their multi-year investigation regarding VMware’s government sales practices covering the period between 2006 and 2013. VMware believes that its commercial sales practice disclosures to the GSA were accurate and denies that it violated the False Claims Act. The Company nevertheless elected to settle this lawsuit rather than engage in protracted litigation with one of its important customers – the federal government.”