FBI Raids Offices of Major Government Contractor Carahsoft

The FBI, in coordination with the Defense Criminal Investigative Service (DCIS), has conducted a raid on the Reston, Virginia headquarters of Carahsoft Technology Corp., a prominent IT and cybersecurity services provider to U.S. government agencies. The raid was reportedly part of an ongoing Department of Justice (DOJ) investigation.

Carahsoft, a major distributor of IT products and services, has long been a trusted partner for federal agencies, securing billions of dollars in contracts, including with entities like the Department of Defense, the Securities and Exchange Commission, and the Social Security Administration. While it is not itself a biometrics company, Carahsoft partners with a wide range of technology vendors, some of whom are involved in biometrics and digital identity solutions. It has established relationships with major vendors like Microsoft, Oracle, and AWS, which have offerings that can intersect with biometrics, such as cloud-based identity management and security solutions.

Employees of Carahsoft were informed via an internal email from company President Craig Abod that the raid was related to an investigation involving a company with which Carahsoft had previously conducted business. The company emphasized that it was fully cooperating with authorities and continued its operations as usual.

This raid is reportedly connected to a broader DOJ investigation into potential price-fixing involving software, cloud services, and related hardware sold to government agencies. Documents filed in court suggest that the investigation has been ongoing since at least 2022, with Carahsoft being served a Civil Investigative Demand related to possible violations of the False Claims Act. The DOJ has been exploring whether Carahsoft and its partners conspired to inflate prices and defraud the federal government through coordinated bids and overcharges.

Carahsoft has faced legal challenges before. In 2015, the company and VMware paid $75.5 million to settle False Claims Act allegations related to overcharging the government on software products. More recently, the DOJ has scrutinized the company’s practices, seeking thousands of documents to determine whether Carahsoft engaged in fraudulent activity. While Carahsoft has produced some documents, the DOJ claims that the company has yet to fully comply, further complicating the investigation.

The raid underscores the ongoing legal complexities faced by Carahsoft and raises broader questions about procurement practices in the government IT services industry. With billions of dollars in contracts at stake, the outcome of this investigation could have far-reaching implications for both Carahsoft and its numerous public sector clients. The full extent of the allegations remains unclear as the DOJ continues its inquiry into the company’s business dealings.

Sources: Nextgov/FCW, Federal News Network, Newsweek

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September 26, 2024 – by Cass Kennedy and Ali Nassar-Smith