Hewlett-Packard to pay $16.25M to settle E-Rate case

Hewlett-Packard has agreed to pay $16.25 million to settle allegations that it showered Texas school officials with gifts to win contracts funded by the E-Rate, a federal program that pays for Internet connections for schools and libraries.

The gifts included Super Bowl tickets and yacht trips for members of the Dallas Independent School District and Houston Independent School District. An investigation by the Federal Communications Commission and the Department of Justice accused HP contractors of defrauding the government's E-rate program. The contracts involved some $17 million in HP equipment. The government said the contractors were able to get inside information and gain an unfair advantage to win contracts that were supposed to be awarded through a competitive bidding process. Most of HP's $16.25 million fine will be returned to the E-rate program.