Hewlett-Packard Company (NYSE:HPQ) agreed to pay $32.5 million to settle the overcharging allegations of the U.S. Postal Service (USPS), according to the Department of Justice (DOJ).


USPS allegations against Hewlett-Packard

The USPS accused Hewlett-Packard Company (NYSE:HPQ) of breaching the pricing terms of its contract between 2001 and 2010 including the requirement at it must “provide prices that were no greater than those offered to HP customers with comparable contracts.”

In addition, the USPS alleged that Hewlett-Packard Company (NYSE:HPQ) misrepresented the pricing and plans during the negotiations of the contract to ensure that it would provide the required most-favored customer pricing.

The DOJ’s Civil Division investigated the allegations together with the USPS and the Office of the Inspector General. According to the Justice Department, the settlement resolves the allegation only, and there has been” no determination of liability” on the part of Hewlett-Packard Company (NYSE:HPQ).

In a statement, Stuart F. Delery, Assistant Attorney General, Civil Division of the DOJ said,

“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice. We will continue to ensure that when the government purchases commercial products, it receives the prices to which it is entitled.”

On the other hand, Thomas Frost, Special Agent in Charge, Major Fraud Investigations Division (MFID), Postal Service Office of Inspector General said, “The Postal Service and the public must have complete confidence in the procurement process, and MFID will continue to work diligently to make that happen.”

USPS financial performance

The USPS reported a net loss of $1.9 billion in May, bringing its total loss for the fiscal year to $3.2 billion. The government postal service also warned that it reached its $15 billion credit limit last year, and defaulted on $11.1 payment obligations. USPS also expected to default additional $5.6 billion payments this September.

At the time, USPS CFO Joe Corbett emphasized that the agency’s continuing losses and almost $50 billion obligations demonstrate the need for immediate legislative reform that would provide them the autonomy to execute the Five-Year Plan and return to profitability.