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W.W. Grainger to Pay $70 Million to Settle Dispute With Government

W.W. Grainger (NYSE: GWW  ) on Wednesday announced the resolution of a long-standing contract dispute with two U.S. government agencies, the United States Postal Service (USPS) and the General Services Administration (GSA). The issue related to disclosure language included in contracts with the USPS and GSA, implemented more than 10 years ago, the company said.

The Illinois-based hardware distributor has agreed to pay $70 million to resolve allegations it submitted false claims under contracts with the GSA and USPS, the Department of Justice reported. The government alleged in part that Grainger failed to meet contractual obligations that led to government customers overpaying for items under a Grainger contract.

W.W. Grainger does not admit to any wrongdoing, and maintains it complied with all contractual disclosure requirements. It also said the  GSA and USPS "remain long-standing and important Grainger customers."

W.W. Grainger had set aside a $70 million pre-tax reserve in October, and established a  $6 million pre-tax reserve for resolving tax, freight and miscellaneous billing issues with these government customers.

The USPS and GSA contracts accounted for 17% of W.W. Grainger's 2011 $8.1 billion in revenues. 


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W.W. Grainger CAPS Rating: ****