Federal agents raided the headquarters of Carahsoft Technology Corp., a major IT services provider to the U.S. government, on Tuesday, September 24, in what the FBI described as “court-authorized law enforcement activity.”
The FBI confirmed it had visited Carahsoft’s offices on Sunset Hills Road in Reston, Virginia, but declined to provide further details. Defense Criminal Investigative Service (DCIS) agents were seen at the company’s headquarters in Reston gathering documents and employee computers, John Weiler, chief executive officer of the IT-Acquisition Advisory Council, told Fortune.
Carahsoft, which bills itself as “the Trusted Public Sector IT Solutions Provider,” is a major distributor of information technology products and services to government agencies. The privately-held company reported approximately $13 billion in revenue in 2022.
The company currently holds task order-type contracts worth $2.6 billion that are set to expire over the next two years, according to Bloomberg Government data. Carahsoft is also the second-largest vendor in the IT-Product submarket as defined by the General Services Administration, with $3.5 billion in prime contracts.
Carahsoft partners with thousands of vendors, resellers, system integrators, and managed service providers to offer IT solutions to public sector customers across the U.S. and Canada. Its vendor partners include major technology companies such as Microsoft, Google, Oracle, AWS, Palo Alto Networks, and CrowdStrike.
A Carahsoft spokesperson said the company is “fully cooperating” with the investigation, which they claim relates to “a company with which Carahsoft has done business in the past.”
The spokesperson added that Carahsoft is “operating business as usual”. A Carahsoft-hosted SAP event taking place over September 25 and 26 in San Francisco appears to be going ahead with speakers including AI futurist Zack Kass and executive vice president of technology for the San Francisco 49ers, Costa Kladianos.
FBI, Federal Bureau of Investigation Headquarters, on Pennsylvania avenue, Washington DC, United States – December 29, 2016. The FBI raided the headquarters of Carahsoft, a major federal cyber contractor, on September 24, 2024.
FBI, Federal Bureau of Investigation Headquarters, on Pennsylvania avenue, Washington DC, United States – December 29, 2016. The FBI raided the headquarters of Carahsoft, a major federal cyber contractor, on September 24, 2024.
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The raid appears to be part of a broader Department of Justice (DOJ) investigation into potential price fixing on sales to U.S. military and other government entities. Court records filed in Baltimore indicate that DOJ lawyers have been investigating since at least 2022 whether SAP, the German software giant, illegally conspired with Carahsoft to fix prices.
More recently, Carahsoft was served with a Civil Investigative Demand in 2022 as part of a False Claims Act investigation into whether the company and its affiliates “conspired to make, made, or caused to be made false claims to the Department of Defense by coordinating the bids, prices, and/or market for software, cloud storage, and related hardware and services.”
The raid and ongoing investigation are not the first time Carahsoft has faced government scrutiny. In 2015, the company and VMware agreed to pay $75.5 million to settle allegations that they had violated the False Claims Act by misrepresenting commercial pricing practices and overcharging the government.
SAP, for its part, has had its own recent legal troubles. In January 2024, the company agreed to pay over $220 million to resolve investigations by the DOJ and Securities and Exchange Commission into violations of the Foreign Corrupt Practices Act. The resolution stemmed from schemes to pay bribes to government officials in South Africa and Indonesia (U.S. Department of Justice).
As part of that agreement, SAP entered into a three-year deferred prosecution agreement with the DOJ. The company admitted to engaging in bribery schemes between 2013 and 2018 to obtain improper advantages in contracts with various South African and Indonesian government agencies and state-owned enterprises.
“SAP has accepted responsibility for corrupt practices that hurt honest businesses engaging in global commerce,” said U.S. Attorney Jessica D. Aber for the Eastern District of Virginia, at the time. “We will continue to vigorously prosecute bribery cases to protect domestic companies that follow the law while participating in the international marketplace.”
Newsweek reached out via email to Carahsoft, SAP, and the FBI for comment.
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