HP Canada agrees to pay Feds $146 million

HP Canada Friday announced that it has agreed to pay the Government of Canada $146 million to resolve a contract dispute.

The vendor and government reached the amount following a series of discussions that began in March.

“”People

say, ‘Why did you settle quickly?’ We agreed to this for a number of reasons,”” said HP Canada spokesperson Rob Ireland. “”HP determined that it was important for the company to honour its contractual obligations. This is despite the fact that there is no evidence HP employees derived any improper benefit from the scheme.””

The dispute between the government and HP is rooted in a filing that the vendor made to the U.S. Securities and Exchange Commission in January. The vendor claimed that it was owed $10 million for work done for the Department of National Defence.

The DND performed its own review of “”irregularities”” in a contract that was first awarded to Compaq Canada in 2000. (Compaq was bought out by HP in 2001.)

The situation came to a head several months ago when the deputy minister of Public Works sent a letter to HP demanding that the company repay $160 million that government claimed was fraudulently invoiced.

HP initially refused to submit the amount, pointing the finger at six unidentified subcontractors it claimed were hired at the government’s request to perform work for the DND.

The $146 million that HP has now agreed to pay is shy of the original amount demanded, but “”that’s the amount that, through discussions, was determined the appropriate amount given the audit work that has been conducted,”” said Doug Drever, a spokesperson for the DND.

He said that the government is satisfied that HP has now fulfilled its contractual obligations. According to Drever, HP’s last contract expired in 2003. In the interim, the government established a bridge contract with the Baxter Group. The total value of contracts between the government and HP for hardware, software and services between 1991 and 2003 was $366 million.

Ireland said HP did want to become involved in protracted litigation with the government, so will seek recompense from the parties “”that were really responsible for this alleged fraud.”” HP still isn’t naming the six parties it claims were behind the dispute but Ireland said that pending civil litigation could include individuals and companies in Canada.

Howard Grant, founding partner and president of Ottawa-based Partnering Procurement Inc., commented that “”99.99 per cent of all transactions between the public and private sector are done in an open, fair and transparent manner.””

PPI provides procurement services to public sector clients and helps develop contractual relationships between the public and private sector. Grant said that the swift resolution to the HP/government dispute is commendable and “”enables everybody to just focus and move forward. It will remove the cloud over the private sector and the public sector that this stuff is systemic.””

Drever said that Public Works would be the body to determine any future government undertakings with HP, “”however the answer to that is that they are a valued supplier to the Government of Canada and obviously acted in good faith with these negotiations. That speaks for itself, I think.””

Comment: info@itbusiness.ca

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