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RPM International and Tremco pay millions to resolve allegations regarding false claims

RPM International Inc., Medina, Ohio, and its subsidiary, Tremco Inc., Beachwood, Ohio, have paid $60.9 million to resolve allegations that Tremco filed false claims in connection with two multiple award schedule (MAS) contracts with the General Services Administration (GSA) for roofing supplies and services, according to the Justice Department.

Tremco failed to provide the government with price discounts given to nonfederal government customers. Tremco also allegedly marketed expensive materials to government purchasers without disclosing the availability of the same materials at a lower cost that were manufactured and sold by the company. Tremco is a manufacturer of construction products and services and is a subsidiary of the RPM Building Solutions Group.

“Companies that knowingly skirt the rules for securing government business undermine the integrity of the procurement process and create an unfair advantage against companies that are playing by the rules,” says Stuart F. Delery, assistant attorney general for the Justice Department’s Civil Division. “We are committed to ensuring a level playing field and protecting taxpayer dollars.”

Allegedly, from January 2002 to March 2011, Tremco knowingly violated its contractual obligations to provide GSA with current, accurate and complete information about its commercial sales practices; report changes in discounts to comparable commercial customers; and pass those discounts on to government customers. As a result, the government allegedly paid more than it should have for Tremco’s services and products. In addition, Tremco allegedly improperly marketed generic products as a superior line of the same product and used a defective adhesive formula in its roof systems.

The GSA MAS program provides government purchasers with a streamlined process for procurement of commonly used commercial goods and services. To be awarded an MAS contract—therefore gaining access to the broad government marketplace and ease of administration that comes from selling to hundreds of government purchasers under one contract—contractors must agree to disclose commercial pricing policies and practices.

The settlement resolves a qui tam, or whistleblower, lawsuit filed on behalf of the government by former Tremco vice president Gregory Rudolph, who will receive more than $10.9 million as his share of the recovery in the case. Under the whistleblower provisions of the False Claims Act, private citizens can bring lawsuits on behalf of the government and share in any recovery. Rudolph’s lawsuit also includes allegations on behalf of several states under their false claims statutes. The settlement with the federal government does not resolve the state actions.

The claims settled by this agreement are allegations only, and there has been no determination of liability.

(From NRCA)