Workrite Companies to Pay $7.1 Million to Settle Alleged Furniture Overcharges

Ergonomic office furniture maker Workrite Ergonomics LLC, a Delaware company, and its parent, Knape & Vogt Manufacturing Co. (collectively, Workrite), have agreed to pay $7.1 million to resolve allegations under the False Claims Act that they overcharged the federal government for office furniture under General Services Administration (GSA) contracts, the Department of Justice announced today. 

“Companies that do business with the United States are expected to charge the government appropriately for their services,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Civil Division.  “We will continue to protect the American taxpayers and hold accountable those who misuse federal funds.”

“Federal contractors must be honest and forthcoming,” said U.S. Attorney David L. Anderson of the Northern District of California.  “Contractors that overcharge the American taxpayer will be held accountable.”

“American taxpayers deserve fair prices and accurate information from GSA contractors,” said GSA Inspector General Carol Fortine Ochoa.  “I appreciate the hard work and dedication that led to this significant recovery.”

“The settlement is a positive outcome that holds Workrite accountable for its questionable business practices,” said Special Agent in Charge Bryan D. Denny, Defense Criminal Investigative Service (DCIS), Western Field Office.  “This is but one example of the law enforcement and oversight communities’ on-going, joint efforts to be good stewards of American taxpayer dollars.”

This settlement relates to a contract under which Workrite provided office furniture to government entities from 2009 to 2017 through GSA’s Multiple Award Schedule (MAS) program.  The MAS program provides the government with a streamlined process to procure commonly used commercial goods and services.  The settlement resolves allegations that Workrite did not fulfill its contractual obligations to provide GSA with accurate information about its commercial sales practices during contract negotiations, and did not subsequently extend lower prices to government customers as required by the GSA contract’s price reduction clause. 

The allegations were originally made in a lawsuit filed under the whistleblower provisions of the False Claims Act by Michael J. Franchek, of Park City, Utah, a former Workrite sales manager.  The Act permits private parties to sue for false claims on behalf of the United States and to share in any recovery.  Franchek will receive approximately $1.27 million from the settlement proceeds.

The settlement with Workrite was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Northern District of California, the GSA’s Office of the Inspector General, the Department of State’s Office of Inspector General, the DCIS, the Defense Contract Audit Agency, and the U.S. Department of Veterans Affairs’ Office of Inspector General. 

The lawsuit is captioned United States ex rel. Franchek v. Workrite Ergonomics, LLC, No. 16-cv-02789 (N.D. Cal.).  The claims resolved by the settlement are allegations only and there has been no determination of liability.

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