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CSC settles with feds over kickback allegations

As part of broader investigation, major contractor agrees to pay $1.37 million after complaint that it took pay-outs from tech vendors in violation of government contract rules.

The U.S. Department of Justice has closed the books on one of its cases targeting allegations that high-powered companies swapped unlawful kickbacks in government agency technology contracts.

Nearly four years after whistleblowers filed a lawsuit that named, among other companies, Computer Sciences Corp., CSC has agreed to a $1.37 million settlement with the Justice Department to resolve the allegations.

CSC--a major government contractor that specializes in consulting, systems design, and outsourcing--had been accused in September 2004 of "knowingly solicit(ing) and/or receiv(ing) payments of money and other things of value, known as alliance benefits, from a number of companies with whom it had global alliance relationships," according to the Justice Department, which announced the settlement Tuesday.

The Justice Department conducted an investigation after the suit was filed and ultimately intervened in the case. The agency said it had determined that those business relationships amounted to kickbacks and undisclosed conflicts of interest, violating federal rules governing contracts in the process.

The settlement is part of a broader investigation into the relationships between government technology vendors. Last April, the Justice Department said it had joined a case against Hewlett-Packard, Sun Microsystems, and Accenture alleging that they paid unlawful kickbacks in federal contracts. Those companies have denied the charges. Much of the case remains under seal, so details are scant, but a Justice Department spokesman confirmed Tuesday that litigation involving those companies is still happening.

The original court complaint claims that alliance of kickback swappers consisted of "virtually all of the major sellers of hardware and software in the United States," but the government has not agreed to intervene with regard to all of the companies named, including Microsoft and Dell.

IBM and PriceWaterhouseCoopers agreed to pay the United States more than $5.2 million to settle similar allegations last summer.

CSC did not immediately respond to requests for comment on Tuesday. The Falls Church, Va.-headquartered company has been awarded, among other things, a major contract for shepherding a much-criticized overhaul of the Internal Revenue Service's aging computer systems.