Bid for equipment contract becomes expensive for bidder
Device Regulation Alert: Safety, Compliance and Reimbursement News, June 18, 2007
Siemens Medical Solutions USA, Inc. (Siemens) recently was sentenced to pay more than $2.5 million after admitting to misleading the court in a lawsuit over a bid award. The United States District Court, Northern District of Illinois issued the sentence after accepting a plea agreement in which the company admitted committing obstruction of justice.
Siemens must pay a $1 million fine and more than $1.5 million in restitution. In the plea agreement, the company admitted it misled a federal court during a lawsuit which claimed that Siemens employees misrepresented facts in a bid to win a contract to equip a county hospital with radiology equipment.
Siemens representatives allegedly presented a sham joint venture in a bid for a $49 million contract and then tried to cover up the sham in a subsequent lawsuit contesting the bid award. Two Siemens employees were also indicted as was the joint venture partner, according to a 2006 press release regarding the Siemens indictment.
According to the plea agreement, Siemens had misrepresented its joint venture relationship with a contractor qualifying as a Minority Business Enterprise (MBE) in order to submit its bid, claiming that the MBE had a share of the profits from the venture.
However, Siemens had agreed to pay the MBE a flat fee. To qualify for the contract, the joint venture had to include an MBE with an ownership and profit sharing interest in the venture. The plea agreement acknowledges that Siemens employees "intentionally misled the County" about the joint venture relationship in the bid process.
Siemens' joint venture was awarded the contract but another bidder challenged the award in court. The plea agreement admits that during those court proceedings, a Siemens representative presented "false and misleading" testimony about the financial arrangements and payments between Siemens and the MBE.
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