Morsell v. Symantec Corporation

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA ex rel. :

LORI MORSELL, et al., :

:

Plaintiffs, : Civil Action No.: 12-800 (RC)

:

v. :

: Re Doc. Nos.: 298, 299, 348, 354

NORTONLIFELOCK, INC. :

(f/k/a SYMANTEC CORPORATION), :

:

Defendant. :

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Relator Lori Morsell brought this qui tam action in 2012 alleging that her employer,

Symantec, 1 had violated the False Claims Act in connection with General Services

Administration (“GSA”) Schedule contract. At the heart of this case is Symantec’s practice, like

many large companies, of offering non-standard discounts above and beyond its standard list

prices in order to achieve more sales, and whether that was appropriately disclosed to GSA

during the negotiations and the life of the contract. This case has been exhaustively litigated

since then, and eventually culminated in a four-week bench trial in February and March 2022.

Following the trial, the parties submitted proposed findings of fact and conclusions of law, as

well as subsequent briefs in opposition. The Court now makes its Findings of Fact and

Conclusions of Law, as required by Rule 52(a)(1) of the Federal Rules of Civil Procedure. For

the reasons discussed in detail below, the Court will enter partial judgment in favor of the United

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During the litigation, Symantec’s name changed to NortonLifeLock. Because the relevant

events and much of the deposition testimony refers to the company by its prior name, the Court

will either refer to the Defendant as “Norton” or “Symantec” based on the relevant time period

being discussed.

States in the amount of $1,299,950.16 in damages and penalties, and partial judgment to

California in the amount of $379,500 in penalties.

I. BACKGROUND

For clarity in following the Court’s specific findings of fact and conclusions of law, the

Court first provides a brief overview of the facts underlying this case and a summary of the

case’s procedural history and current posture.

A. Factual Overview

Symantec began negotiations with the GSA in 2006 for a GSA Multiple Award Schedule

(“MAS”) contract, which is a pre-approved pricelist from which federal agencies can purchase

commercial goods without independently analyzing whether the prices are fair and reasonable.

Like all government contracts, MAS contracts are subject to extensive rules and regulations set

by the government, including many standard clauses. At the same time, each MAS contract is

the product of a bilateral negotiation between the contractor and GSA that sets its own discounts

and key terms.

The negotiators of the particular contract at issue here were Gwendolyn Dixon, the

contracting officer for GSA, and Kimberly Bradbury, a Symantec employee. During that

negotiation, Bradbury provided Dixon with large amounts of information, including information

about Symantec’s sales and discounting practices. As the Court will explain in more detail, not

all of that information was accurate and complete, as it is required to be by GSA’s standard

contracting terms. The information did, however, make clear that GSA was not being offered

Symantec’s best price in all circumstances and that Symantec offered non-standard discounts to

commercial customers for a variety of reasons.

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After negotiations, the parties eventually signed the final contract on January 25, 2007.

Among other things, the final contract specified that Symantec’s “basis of award customer,” to

whom GSA’s discounts were tied, was Symantec’s entire “commercial class of customers.” The

final agreement also incorporated a chart of Symantec’s various discounts from which the parties

could calculate the “price/discount relationship” and thereby ensure that GSA’s relationship to

the basis of award customer remained stable. The final version also specified that GSA was only

receiving Symantec’s best price “under similar terms and conditions.”

During the life of the contract, Symantec continued offering non-standard discounts to

commercial customers, often exceeding 90% even on relatively small sales. Symantec did not

report those discounts to GSA or offer it a corresponding price reduction, and in fact routinely

certified that its sales practices had not changed. Problems started to become apparent around

the time that GSA initiated a pre-award audit in connection with the contract’s renewal. After

Morsell, who had by that time joined Symantec, eventually raised concerns internally about

compliance with the GSA contract, Symantec decided to cancel its contract altogether. A

post-award audit was initiated but eventually gave way to the present litigation.

B. Procedural History

This case began as a qui tam action brought by Lori Morsell, a Symantec employee, who

came to believe that the company had violated certain contractual obligations to the United

States. She filed an action as Relator against Symantec under the False Claims Act (“FCA”) in

May 2012. See Compl., ECF No. 1. The United States intervened, as did the States of California

and Florida, and Morsell elected to assert claims on behalf of New York State. See United

States’ Notice of Election to Intervene, ECF No. 21; Notice of the People of the State of

California of Election to Intervene, ECF No. 28; Notice of Election to Intervene by State of

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Florida, ECF No. 29; Notification that Relator Intends to Proceed with Action on Behalf of New

York State, ECF No. 40. The United States, Florida, California, and Morsell on behalf of New

York filed an Omnibus Complaint asserting all their collective claims in October 2014. See

United States’, California’s, Florida’s, & Relator’s Omnibus & Restated Compl. in Intervention,

ECF No. 41.

1. Dispositive Motions

Symantec then moved to dismiss, and the United States moved for partial summary

judgment. See ECF Nos. 46, 54. The Court issued a combined Memorandum Opinion

addressing both motions, which denied the Government’s motion and granted Symantec’s

motion in part while also denying it in part. United States ex rel. Morsell v. Symantec Corp., 130

F. Supp. 3d 106, 110 (D.D.C. 2015) (“MTD Mem. Op.”). The Court found that California,

Florida, and Morsell had failed to state claims, but granted them leave to amend their complaints.

Id. at 126. They did so, and the operative Omnibus Complaint includes nine counts brought by

the United States, two each from California and Florida, and three from Morsell on behalf of

New York. See United States’, California’s, Florida’s, and Relator’s First Am. Omnibus &

Restated Compl. & Compl. in Intervention (“Omnibus Compl.”), ECF No. 70. Discovery was

extensive, spanning from November 2015 to March 2019, with multiple extensions. See

Scheduling Order, ECF No. 75; Min. Order of Oct. 31, 2018 (granting final extension of

expert discovery).

At the close of discovery, Symantec moved for summary judgment and the United States

moved for partial summary judgment, and the Court granted in part and denied in part both

motions. See United States ex rel. Morsell v. Symantec Corp., 471 F. Supp. 3d 257, 267 (D.D.C.

2020), reconsideration denied sub nom. United States ex rel. Morsell v. NortonLifeLock, Inc.,

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560 F. Supp. 3d 32 (D.D.C. 2021) (“MSJ Mem. Op.”). Specifically, the Court determined that

the United States was entitled to summary judgment on some of the discrete elements of its

breach of contract and negligent misrepresentation claims, namely the existence of a valid

contract and a duty on the part of Symantec with respect to the Commercial Sales Practices

Disclosures and the Modifications Clause, but it determined that material issues of fact remained

with respect to the remaining breach-of-contract elements and the remaining claims. Id. at 281–

95, 297, 299. The Court also granted partial summary judgment to Symantec on the claims of

unjust enrichment and payment by mistake between Symantec and the United States because the

existence of a valid contract between those parties precluded those quasi-contract claims, but it

allowed those counts to proceed with respect to sales between the United States and the resellers.

Id. at 309. 2

2. Evidentiary Pretrial Motions

On the same day the Court issued its summary judgment opinion, it issued a separate

opinion addressing two cross-motions seeking to exclude certain experts. United States ex rel.

Morsell v. Symantec Corp., No. 12-cv-800, 2020 WL 1508904, at *1 (D.D.C. Mar. 30, 2020)

(“Expert Mem. Op.”). Relevant here, the Court excluded the testimony of one of the United

States’ proposed experts, Charles Harris, who would have testified that he evaluated a dataset of

transactions and made a determination about whether or not the transaction triggered the price

reduction clause as he understood it. Id. at *6.

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Norton moved for reconsideration of that opinion, which the Court denied in August

2021. United States ex rel. Morsell v. NortonLifeLock, Inc., 560 F. Supp. 3d 32, 36 (D.D.C.

2021) (“Recons. Op.”). Another motion for reconsideration filed by Norton was likewise denied

in September 2021. See Min. Order of Sept. 10, 2021.

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The Court agreed with Norton that the proposed testimony crossed the line into improper

legal conclusions and risked confusing or misleading the jury. Id. at *6–7. In so holding, it

summarized its reasoning:

It appears that Harris was essentially a middleman between Dr. Holt and Dr. Gulley,

and that he simply agreed with counsel that the transactions Dr. Holt had identified

looked like the kinds of transactions he would have flagged. These transactions

were passed along to Dr. Gulley with Harris’s imprimatur. Rather than having

Harris testify to liability, and possibly confuse a jury with his purported expertise,

the Government could instead show Dr. Gulley the transactions identified by Dr.

Holt and ask him to assume liability. This would avoid confusing the legal question

of liability with the factual questions to which experts may properly testify. The

Government has explained that Harris’s “opinions are being proffered in

connection with a complex damages analysis,” but it has not argued that the

damages calculation is impossible without his input. Because, as the Court

understands it, there is an alternative means of introducing testimony concerning

damages—though it may require an update to Dr. Gulley's report—the exclusion

of Dr. Harris will not prejudice the government by seriously undermining its ability

to present a calculation of damages.

Id. at *8 (record citation omitted). The Court further noted that it would entertain a narrow

motion for reconsideration if the United States believed Harris’s opinion was in fact necessary to

its damages calculation, id. at *8 n.3, but the United States did not file one—even after the trial

was converted from a jury trial to a bench trial, see Stipulation Withdrawing Jury Demand &

Dismissing Mot. Bifurcate, ECF No. 233.

The parties submitted numerous motions in limine prior to trial, as well, which the Court

resolved in August 2021. See United States ex rel. Morsell v. NortonLifeLock, Inc., 567 F. Supp.

3d 248, 256–57 (D.D.C. 2021) (“MIL Mem. Op.”). Among other evidentiary determinations,

the Court denied Norton’s motion to exclude the testimony of the United States’ damages expert,

Dr. Gulley, on the basis that it improperly relied on the stricken opinions of Harris. Id. at *277.

The Court stated that:

Gulley appears to have relied on Harris only to determine which transactions Gulley

should consider in his calculations, and the Government plans to prove that same

information using different evidence. It is unnecessary for Gulley to update his

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report merely to clarify that the transactions he considered are now provided as an

assumption by the Government—to be proved by the Government at trial—rather

than provided by Harris. If the Government does fail to prove that the transactions

considered by Gulley were the right ones to consider, the Government’s claim may

fail on its own for lack of proof.

Id. That opinion also partially granted the motions in limine of both sides on other grounds,

limiting the scope of the proposed expert testimony to some extent. Id. at 283. The parties

revised their demonstrative exhibits in accordance with the Court’s ruling, and the Court

resolved an additional motion in limine regarding those changes in January 2022. United States

ex rel. Morsell v. NortonLifeLock, Inc., No. 12-cv-800, 2022 WL 278773, at *1 (D.D.C. Jan.

31, 2022).

2. Pretrial Resolution of Florida’s and New York’s Claims

Prior to the commencement of trial, the state of Florida and Norton reached an agreement

resulting in a stipulated dismissal with prejudice of Florida’s claims in September 2021. See

Stipulation of Vol. Dismissal with Prejudice by Florida, ECF No. 267. Although the bench trial

had been set to begin shortly thereafter, it was continued in light of the ongoing health risks of

the COVID-19 pandemic. At the start of the rescheduled bench trial in February 2022, the

parties informed the Court that the Relator and Norton had reached a tentative settlement of the

New York claims, and would therefore refrain from presenting New York’s case while the

agreement was finalized. Tr. at 4:18–25. Morsell later voluntarily dismissed her claims asserted

on behalf of New York. See Stipulation of Vol. Dismissal with Prejudice, ECF No. 358.

C. Bench Trial

The Court conducted a four-week bench trial from February 28, 2022 to March 24, 2022.

During that time, the parties presented testimony from thirty-one witnesses both in person and by

video. In an effort to call each witness only once, the parties reached an agreement to limit scope

objections on cross examination. See Tr. at 9:15–25. Both parties likewise introduced a

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substantial volume of exhibits and designated deposition testimony for the Court’s consideration

over the course of the trial.

At the close of the United States’ case and California’s case, Norton moved for judgment

under Federal Rule of Procedure 52(c). See Motions for Judgment, ECF Nos. 298, 299. Also

during trial, Norton raised multiple objections to testimony and evidence related to the excluded

expert testimony of Harris. The Court deferred ruling on those objections and ordered additional

post-trial briefing on the subject, see Min. Order of April 4, 2022 (setting post-trial briefing

schedule), which the parties have provided, see NortonLifeLock, Inc.’s Br. Supp. Objections to

Evidence Reflecting Legal Concls. of Charles Harris (“Norton’s Harris Br.”), ECF No. 303;

United States’ Resp. to Norton’s Trial Objections to United States’ Summ. Exs. 1, 4, & 5 & Dr.

Gulley’s Testimony that Relies Thereon (“U.S.’s Harris Br.”), ECF No. 339; NortonLifeLock,

Inc.’s Reply Supp. Objections to Evidence Reflecting Legal Concls. of Charles Harris (“Norton’s

Harris Reply”), ECF No. 341.

Following the close of trial, each party submitted proposed findings of fact and

conclusions of law. See United States’ Proposed Findings Fact & Concl. Law (“U.S.’s Prop.

FF&CL”), ECF No. 347; NortonLifeLock, Inc.’s Proposed Findings Fact & Concl. Law for the

United States’ Claims (“Norton’s Prop. Fed. FF&CL”), ECF No. 345; State of California’s

Proposed Findings Fact & Concl. Law (“Cal.’s Prop. FF&CL”), ECF No. 344; NortonLifeLock,

Inc.’s Proposed Findings Fact & Concl. Law for California’s Claims (“Norton’s Prop. Cal.

FF&CL”), ECF No. 346. The parties have also responded to each other’s filings. See

California’s Resps. to NortonLifeLock’s Proposed Findings Fact & Concl. Law for Cal. Claims

(“Cal.’s Resp.”), ECF No. 349; United States’ Resp. to Norton’s Prop. Findings Fact & Concl.

Law (“U.S.’s Resp.”), ECF No. 350; NortonLifeLock, Inc.’s Resp. to United States’ Proposed

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Findings Fact & Concl. Law (“Norton’s U.S. Resp.”), ECF No. 351; NortonLifeLock, Inc.’s

Resp. to Cal.’s Proposed Findings Fact & Concl. Law (“Norton’s Cal. Resp.”), ECF No. 352.

In addition, Norton has moved to strike two appendices to the United States’ Proposed

Findings of Fact and Conclusions of Law on the same basis as its prior objections to the Harris

testimony, and that motion is likewise ripe. See NortonLifeLock, Inc.’s Mot. Strike Appendices

to United States’ Proposed Findings Fact & Concl. Law (“Norton’s 1st Mot. Strike”), ECF No.

348; United States’ Opp’n to Norton’s Mot. Strike Appendices to United States’ Proposed

Findings Fact & Concl. Law (“Opp’n 1st Mot. Strike”), ECF No. 353; NortonLifeLock, Inc.’s

Reply Supp. Mot. Strike Appendices to United States’ Proposed Findings Fact & Concl. Law

(“Reply 1st Mot. Strike”), ECF No. 355; NortonLifeLock, Inc.’s Mot. Strike Appendices C &

A.1 through A.15 to United States’ Post-Trial Submissions (“Norton’s 2d Mot. Strike”), ECF

No. 354; United States’ Opp’n to Norton’s 2d Mot. Strike (Opp’n 2d Mot. Strike”), ECF No.

356; NortonLifeLock, Inc.’s Reply Supp. Mot. Strike Appendices C & A.1 Through A.15 to

United States’ Post-Trial Submissions (“Norton’s 2d Mot. Strike Reply”), ECF No. 357.

II. LEGAL STANDARDS

A. Rule 52(a) of the Federal Rules of Civil Procedure

Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, in an action tried without

a jury, the Court “must find the facts specifically and state its conclusions of law separately.”

Fed. R. Civ. P. 52(a)(1). The Court’s “[f]indings and conclusions may be incorporated in any

opinion or memorandum of decision the court may file.” Defenders of Wildlife, Inc. v.

Endangered Species Scientific Auth., 659 F.2d 168, 176 (D.C. Cir. 1981); see also Fed. R. Civ.

P. 52(a)(1) (“The findings and conclusions . . . may appear in an opinion or a memorandum of

decision filed by the court.”).

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The Court’s findings must be “sufficient to indicate the factual basis for the ultimate

conclusion.” Kelley v. Everglades Drainage Dist., 319 U.S. 415, 422 (1943); see also Lyles v.

United States, 759 F.2d 941, 943 (D.C. Cir. 1985) (“One of [Rule 52(a)’s] chief purposes is to

aid the appellate court by affording it a clear understanding of the ground or basis of the decision

of the trial court.” (internal quotation omitted)). “But the judge need only make brief, definite,

pertinent findings and conclusions upon the contested matters; there is no necessity for

over-elaboration of detail or particularization of facts.” Fed. R. Civ. P. 52(a) advisory

committee’s note to 1946 amendment; accord Paleteria La Michoacana, Inc. v. Productos

Lacteos Tocumbo S.A. DE C.V., 188 F. Supp. 3d 22, 34 (D.D.C. 2016); Wise v. United States,

145 F. Supp. 3d 53, 57 (D.D.C. 2015); Moore v. Hartman, 102 F. Supp. 3d 35, 65 (D.D.C.

2015). The Court is neither “require[d]” nor “encourage[d]” “to assert the negative of each

rejected contention as well as the affirmative of those which they find to be correct.” Schilling v.

Schwitzer-Cummins Co., 142 F.2d 82, 84 (D.C. Cir. 1944); Paleteria La Michoacana, 188 F.

Supp. 3d at 34. Similarly, “the court need not ‘address every factual contention and

argumentative detail raised by the parties,’ or ‘discuss all evidence presented at trial.’” Moore,

102 F. Supp. 3d at 65 (quoting Mayagüez v. Corporación Para El Desarrollo Del Oeste, 824 F.

Supp. 2d 289, 295 (D.P.R. 2011); see also Wise, 145 F. Supp. 3d at 57 (“[T]he Court need not

address all the evidence presented at trial, and must simply make findings sufficient to allow the

appellate court to conduct a meaningful review.”).

In accordance with these standards, the Court has cited portions of the record, including

trial testimony, trial exhibits, and designated deposition testimony, to support its findings of fact.

The Court has not, however, exhaustively identified every portion of the record upon which it

has relied to make its findings of fact, and the omission of a citation to a particular portion of the

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record does not necessarily mean that the Court did not rely on that portion to make its findings

of fact. Rather, the Court has considered the record in its entirety, including the Court’s own

determination of witnesses’ credibility, and its citations to portions of the record are primarily

intended to provide helpful references for the basis of its findings. The Court has also not noted

every instance in which a finding it adopts was purportedly disputed by a party but in which that

disputing party failed to make a substantive argument against the finding. The Court has

addressed those substantive arguments that present a material dispute of fact. The Court

therefore has not addressed most instances in which a party purported to dispute a proposed

finding but only raised legal arguments concerning the legal consequences or implications of the

proposed finding, without actually challenging the validity of the fact. Legal arguments are

addressed in the Court’s conclusions of law section.

B. Burden of Proof

The parties agree that as in most civil trials, the plaintiffs must prove each element of

their case “by a preponderance of the evidence.” Norton’s Prop. Fed. FF&CL at 64; U.S.’s Prop.

FF&CL at 103. That same burden applies across the claims in this case. See 31 U.S.C.

§ 3731(d) (“[T]he United States shall be required to prove all essential elements of the [FCA]

action, including damages, by a preponderance of the evidence.”); Pryor v. United States, 85

Fed. Cl. 97, 104 (2008) (applying preponderance of evidence standard to federal contract

claims); Cal. Gov’t Code § 12654(c) (California False Claims Act). “In the simplest of terms,

preponderance of the evidence means more likely than not[.]” La Botz v. Fed. Election Comm’n,

889 F. Supp. 2d 51, 59 (D.D.C. 2012). The standard “demands only 51% certainty.” Nat’l Lime

Ass’n v. EPA, 627 F.2d 416, 453 n.139 (D.C. Cir. 1980).

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C. False Claims Act

“Originally enacted during the Civil War to combat unscrupulous government

contractors, the FCA enables a qui tam plaintiff, known as a Relator, to initiate a civil action on

behalf of the United States to recover monies paid on account of false or fraudulent claims.”

MSJ Mem. Op., 471 F. Supp. 3d at 275–76 (citing 31 U.S.C. § 3730; United States v. Kellogg

Brown & Root Servs., Inc., 800 F. Supp. 2d 143, 146–47 (D.D.C. 2011)). The FCA, as amended,

creates liability for any person who “knowingly presents, or causes to be presented, a false or

fraudulent claim for payment or approval,” 31 U.S.C. § 3729(a)(1)(A), “knowingly makes, uses,

or causes to be made or used, a false record or statement material to a false or fraudulent claim,”

id. § 3729(a)(1)(B), or “knowingly conceals or knowingly and improperly avoids or decreases an

obligation to pay or transmit money or property to the Government,” id. § 3729(a)(1)(G). These

three types of liability are referred to as “presentment” claims, “false statement” claims, and

“reverse” false claims, respectively. “Knowingly” is defined under the act to encompass actual

knowledge, deliberate ignorance, or reckless disregard of the truth or falsity of the information,

id. at § 3729(b)(1)(A), and “material” is defined as “having a natural tendency to influence, or be

capable of influencing, the payment or receipt of money or property,” id. § 3729(b)(4).

1. Presentment Claims

Claims under § 3729(a)(1)(A) are known as “presentment” claims. See United States ex

rel. Tran v. Computer Scis. Corp. (“Tran”), 53 F. Supp. 3d 104, 117 (D.D.C. 2014). The

elements of presentment claims are that: “(1) the defendant submitted or caused to be submitted

a claim to the government, (2) the claim was false, and (3) the defendant knew the claim was

false.” Id. at 121–22 (citation and alteration omitted). “In the paradigmatic case, a claim is false

because it ‘involves an incorrect description of goods or services provided or a request for

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reimbursement for goods or services never provided.’” United States. v. Science Applications

Intern. Corp. (“SAIC”), 626 F.3d 1257, 1266 (D.C. Cir. 2010) (quoting Mikes v. Straus, 274

F.3d 687, 697 (2d Cir. 2001)). In addition to the paradigmatic case, courts have developed two

theories of legal falsity—the implied certification theory and the fraudulent inducement theory.

The Supreme Court has endorsed an implied certification theory, meaning that “if [a]

claim fails to disclose the defendant’s violation of a material statutory, regulatory, or contractual

requirement, . . . the defendant has made a misrepresentation that renders the claim ‘false or

fraudulent’ under § 3729(a)(1)(A)” “at least where two conditions are satisfied: first, the claim

does not merely request payment, but also makes specific representations about the goods or

services provided; and second, the defendant’s failure to disclose noncompliance with material

statutory, regulatory, or contractual requirements makes those representations misleading half-

truths.” Universal Health Servs., Inc. v. United States ex rel. Escobar (“Escobar”), 579 U.S.

176, 180, 190 (2016). The Court expressly left open whether liability could arise from false

claims that lacked the “specific representations” required for the first of these conditions. See id.

at 188–89. In this Circuit, a claim need not necessarily “express contractual language

specifically linking compliance to eligibility for payment,” but it “must show that the contractor

withheld information about its noncompliance with material contractual requirements.” SAIC,

626 F.3d at 1269; see also United States ex rel. Scutellaro v. Capitol Supply, Inc., No.

10-cv-1094, 2017 WL 1422364 at *19 n.23 (D.D.C. April 19, 2017) (explaining that Escobar did

not change the SAIC standard in this Circuit). The withheld information about noncompliance

must meet the “demanding” standard for materiality, which requires more than simply showing

that “compliance with a particular statutory, regulatory, or contractual requirement [is] a

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condition of payment” or “that the Government would have the option to decline to pay if it

knew of the defendant’s noncompliance.” Escobar, 579 U.S. at 194.

The final theory of legal falsity, fraudulent inducement, allows for liability “for each

claim submitted to the Government under a contract which was procured by fraud, even in the

absence of evidence that the claims were fraudulent in themselves.” United States ex rel. Bettis

v. Odebrecht Contractors of Cal., Inc., 393 F.3d 1321, 1326 (D.C. Cir. 2005) (applying theory to

“claims” under an earlier version of the FCA). One recognized variation of the fraudulent

inducement theory “requires that false statements induced the government to make the initial

contract or caused it to agree on particular contract terms or modifications.” United States v.

DynCorp Int’l, LLC, 253 F. Supp. 3d 89, 105 (D.D.C. 2017) (internal citation omitted).

2. False Statement Claims

In contrast to “presentment” claims, false statement claims under § 3729(a)(1)(B) create

liability for any person who “knowingly makes, uses, or causes to be made or used, a false record

or statement material to a false or fraudulent claim.” 31 U.S.C. § 3729(a)(1)(B). The required

elements are that “(1) the defendant made or used [or caused to be made or used] a ‘record or

statement;’ (2) the record or statement was false; (3) the defendant knew it was false; and (4) the

record or statement was ‘material’ to a false or fraudulent claim.” United States ex rel. Hood v.

Satory Global, Inc., 946 F. Supp. 2d 69, 85 (D.D.C.2013). The false statements provision is

“designed to prevent those who make false records or statements . . . from escaping liability

solely on the ground that they did not themselves present a claim for payment or approval.”

United States ex rel. Totten v. Bombardier Corp., 380 F.3d 488, 501 (D.C. Cir. 2004).

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3. Reverse False Claims

31 U.S.C. § 3729(a)(1)(G) establishes a cause of action for “reverse” false claims by

creating liability for any person who “knowingly conceals or knowingly and improperly avoids

or decreases an obligation to pay or transmit money or property to the Government.” 31 U.S.C.

§ 3729(a)(1)(G). “Obligation” is defined broadly to mean “an established duty, whether or not

fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee

relationship, from a fee-based or similar relationship, from statute or regulation, or from the

retention of any overpayment.” 31 U.S.C. § 3729(b)(3). 3

D. Contract Claims

“Courts must . . . apply the federal common law of contracts to the interpretation of

contracts with the federal government.” Red Lake Band of Chippewa Indians v. U.S. Dep’t of

Interior, 624 F. Supp. 2d 1, 12 (D.D.C. 2009). Under federal common law, the elements of a

breach of contract claim are “(1) a valid contract between the parties, (2) an obligation or duty

arising out of the contract, (3) a breach of that duty, and (4) damages caused by the breach.” Id.;

see also Pryor v. United States, 85 Fed. Cl. 97, 104 (2008) (same). With respect to the fourth

element, “[o]nly once Plaintiff has proven that it in fact suffered a loss (i.e., suffered damages),

such that Defendants are liable for a breach of contract claim, does the Court move to the next

stage—i.e., the damages determination stage.” Red Lake Band of Chippewa Indians, 624 F.

3

Several portions of the FCA, including this definition, were amended as part of the

Fraud Enforcement and Recovery Act of 2009 (“FERA”). See FERA, Pub. L. No. 111–21, 123

Stat. 1617 (2009). By its terms, the FERA amendments only apply (at earliest) to claims

pending on or after June 7, 2008, which falls in the middle of the relevant contract period here.

However, both parties appear to agree that the FERA amendments do not alter the substantive

analysis because all claims were presented directly to the United States rather than through an

intermediary. See United States’ Mem. P. & A. Supp. Mot. Summ. J. at 93 n.54, ECF No. 128-1

(making this point).

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Supp. 2d at 13. Therefore, “a plaintiff need only show that ‘responsibility for damages is clear,’

not that ‘the amount thereof be ascertainable with absolute exactness or mathematical

precision.’” Id. (citations omitted).

E. Negligent Misrepresentation

The parties agree, and the Court has already determined, that federal law applies to the

negligent misrepresentation claim. 4 See MSJ Mem. Op., 471 F. Supp. 3d at 309 n.17. They

continue, however, to formulate the relevant standard slightly differently. The United States

formulates the standards as (1) negligence in expressing inaccurate statements, (2) a duty to

speak, (3) expectation that the United States would rely on the statements, and (4) that the United

States relied on the statements and was harmed. U.S.’s Prop. FF&CL at 111 (citing Marcus v.

AT&T Corp., 938 F. Supp. 1158, 1172 (S.D.N.Y. 1996); Parr v. Ebrahimian, 70 F. Supp. 3d

123, 128–29 (D.D.C. 2014); & Restatement (Second) of Torts § 552 (1977)). Norton formulates

the standard as “(1) a misrepresentation by defendant; (2) justifiable reliance by the plaintiff; and

(3) damage from that reliance.” Norton’s Prop. Fed. FF&CL at 90 (citing La Crosse Garment

Mfg. Co. v. United States, 432 F.2d 1377, 1381–82 (Ct. Cl. 1970)).

4

It is undisputable that the “obligations to and rights of the United States under its

contracts are governed exclusively by federal law.” Boyle v. United Techs. Corp., 487 U.S. 500,

504 (1988). Although negligent misrepresentation is traditionally a tort, here it is closely related

to the formation and performance of a federal procurement contract, thus implicating uniquely

federal interests. See id. at 505–06 (applying federal common law on question of liability for a

third party procurement contractor); see also United States v. Kimbell Foods, Inc., 440 U.S. 715,

726 (1979) (“[F]ederal law governs questions involving the rights of the United States arising

under nationwide federal programs.”). At least one other court has held that a uniform rule of

federal law should govern a negligent misrepresentation claim by the federal government relating

to the disbursement of federal housing funds as part of a nationwide program. See United States

ex rel. Mei Ling v. City of Los Angeles, No. 11-cv-974, 2018 WL 3814498, at *29–31 (C.D. Cal.

July 25, 2018).

16

Another case cited by Norton, United States ex rel. Mei Ling v. City of Los Angeles,

determined in a similar context that the Second Restatement of Torts provided the proper rule for

negligent misrepresentation claims under federal common law. United States ex rel. Mei Ling v.

City of Los Angeles, No. 11-cv-974, 2018 WL 3814498 at *31–32, (C.D. Cal. July 25, 2018).

The Restatement provides that:

One who, in the course of his business, profession or employment, or in any other

transaction in which he has a pecuniary interest, supplies false information for the

guidance of others in their business transactions, is subject to liability for pecuniary

loss caused to them by their justifiable reliance upon the information, if he fails to

exercise reasonable care or competence in obtaining or communicating the

information.

Restatement (Second) of Torts § 552(1) (1977). “To prevail on a negligent misrepresentation

claim under the Restatement’s rules, a plaintiff ‘must present some evidence establishing the

element of causation, in the sense of actual and justifiable reliance upon misrepresentations or

omissions of material fact.’” Mei Ling, 2018 WL 3814498, at *32 (quoting Smolen v. Deloitte,

Haskins & Sells, 921 F.2d 959, 964 (9th Cir. 1990)).

The Court perceives that these different formulations largely align and considers it prudent

to draw primarily on the Second Restatement, which “is a widely cited authority that can be

applied across varied jurisdictions and ensure consistent adjudication of negligent

misrepresentation claims.” Id. at *31. Synthesizing the various formulations, the Court will

apply the following elements of the negligent misrepresentation claim: (1) a duty to exercise

reasonable care or competence in obtaining or communicating information, (2) a

misrepresentation of that information, where (3) the defendant understood the plaintiff would

rely upon the information, and (4) the plaintiff actually and justifiably relied upon the

information, (5) resulting in harm to the plaintiff.

17

F. California Law

The California False Claims Act (“CFCA”) was modeled after the federal FCA, making

federal decisions “persuasive authority” in adjudicating CFCA claims. See United States v.

Shasta Servs., Inc., 440 F. Supp. 2d 1108, 1111 (E.D. Cal. 2006); MSJ Mem. Op., 471 F. Supp.

3d at 310. Like the federal FCA, the CFCA creates liability for “[a]ny person who . . . (1)

[k]nowingly presents or causes to be presented a false or fraudulent claim for payment or

approval . . . [or] (2) [k]nowingly makes, uses, or causes to be made or used a false record or

statement material to a false or fraudulent claim.” Cal. Gov’t Code § 12651(a)(1), (2).

III. FINDINGS OF FACT

A. United States

1. The Regulatory Framework

1. The GSA is an executive agency tasked with supporting the operations of the federal

government through acquisition, property management, and procurement of other goods and

services. See 40 U.S.C. § 301; Tr. at 2840:20–22 (Morrison). To expedite the procurement

process for agencies and contractors, GSA solicits, negotiates, awards, and administers MAS

contracts. 40 U.S.C. § 501(b); FAR § 8.402.

2. MAS contracts are “indefinite delivery/indefinite quantity contracts” for various products and

services used by the federal government. Tr. at 2841:8–11 (Morrison). The MAS program is

designed both to streamline government purchasing and leverage the federal government’s

buying power. Id. at 2841:11–14. Put simply, the federal government collectively is a major

purchaser of goods and services, but it would lose both efficiency and negotiating power if each

governmental unit had to negotiate independently each time it wanted to buy common goods and

services such as desks, notepads, or computer software. By collectively negotiating in advance

18

to make common goods and services available through a MAS contract, GSA can achieve a

better price and make purchasing more efficient for the numerous federal government

components. See also U.S. Ex. 493 (PIB 97-14) at 2 (“As a representative of the taxpayers, the

primary objective of the contract specialist is to buy competitively and wisely.”).

3. The MAS program is governed by a complex statutory and regulatory framework, including

Title 48 of the Code of Federal Regulations, which is also known as the Federal Acquisition

Regulation (“FAR”), 48 C.F.R. § 8.402 et seq. Additional regulations establishing procedures to

be followed by GSA contracting officers are found in the GSA Acquisition Regulation

(“GSAR”), 48 C.F.R. § 501.101 et seq., the entirety of which is also incorporated into the GSA

Acquisition Manual (“GSAM”), U.S. Ex. 342 (2004 GSAM). Authorized Contracting Officers

and Contracting Specialists negotiate MAS contracts on GSA’s behalf, and only Contracting

Officers have the authority to bind the federal government. Tr. at 2841:15–22 (Morrison).

4. The GSAM instructs Contracting Officers to “seek to obtain the offeror’s best price” while

also recognizing “that the terms and conditions of commercial sales vary and there may be

legitimate reasons why the best price is not achieved.” GSAM § 538.270(a). The GSAM

includes a list of factors for Contracting Officers to consider when determining price negotiation

objectives, such as volume of sales, discounts offered to commercial customers, and length of the

contract period. Id. § 538.270(c)(1–7). It instructs Contracting Officers that “[i]f the best price

is not offered to the Government, you should ask the offeror to identify and explain the reason

for any differences.” Id. § 538.270(c)(7). A Contracting Officer may award a MAS contract

with a less favorable price than the best price as long as “(1) The prices offered to the

Government are fair and reasonable, even though comparable discounts were not negotiated” and

the “(2) Award is otherwise in the best interest of the Government.” Id. § 538.270(d).

19

5. Contracting Officers exercise broad discretion to determine whether an award is fair and

reasonable. Tr. at 2907:4–14, 2910:5–7 (Morrison).

2. Negotiation and Structure of GSA MAS Contracts

6. GSA publicly posts an invitation for contractors to submit solicitations for MAS contracts.

Tr. at 2844:3–10 (Morrison). The solicitation requires certain information and clauses that are

later included in the contract. Id. at 2844:6–9.

7. Of key importance in the information provided with the solicitation are the “Commercial Sales

Practices,” or “CSP” disclosures. See GSAM § 515.408 (standard format for the CSP

disclosures). The CSP Form instructions provide that the offeror must provide information that

is “current, accurate, and complete” as of fourteen calendar days prior to submission. Id., Figure

515.4-2. The offeror is also told “[y]ou must . . . disclose any changes in your price list(s),

discounts and/or discounting policies which occur after the offer is submitted, but before the

close of negotiations,” and, “[i]f your discount practices vary by model or product line, the

discount information should be by model or product line as appropriate.” Id.

8. The standard CSP Form asks offerors whether the discounts and concessions offered to the

Government are “equal to or better than your best price . . . offered to any customer acquiring the

same items regardless of quantity or terms and conditions?” Id. § 515.408. Question 4(a)

requires disclosure of information about discounting policies, and question 4(b) asks whether

“any deviations from [these] written policies or standard commercial sales practices . . . ever

result in better discounts (lower prices) or concessions than indicated?” Id.

9. A chart below question 4 must be filled out with details about the lowest discounts the offeror

makes available—whether these are offered to the government or other customers. Id.

20

(containing instructions for filling out the chart). The information about discounts can also be

presented “in an equivalent format developed by the offeror.” Id.

10. After receiving a solicitation, a Contracting Officer reviews it to ensure that all the required

information was received and will notify the offeror if the solicitation is incomplete. Tr. at

2920:20–2921:2 (Morrison). The Contracting Officer then reviews the materials, does a pricing

analysis, and prepares a pre-negotiation memorandum. Id. at 2921:25–2922:10.

11. During the course of evaluating the offer and negotiating, a Contracting Officer may

request clarification or additional information for anything they do not understand. Id. at

2913:17–24.

12. Following negotiation, the Contracting Officer writes a post-negotiation memorandum

memorializing the agreement that has been reached. Id. at 2914:18–23.

13. All MAS contracts also contain standard clauses designed to ensure that the prices

negotiated for government purchasers are appropriately advantageous at the time of negotiation

and that they remain so during the life of the contract.

14. The first of these, the Price Adjustment Clause, reads in relevant part:

(a) The Government, at its election, may reduce the price of this contract or contract

modification if the Contracting Officer determines after award of this contract or

contract modification that the price negotiated was increased by a significant

amount because the Contractor failed to: (1) Provide information required by this

solicitation/contract or otherwise requested by the Government; or (2) Submit

information that was current, accurate, and complete; or (3) Disclose changes in the

Contractor’s commercial pricelist(s), discounts or discounting policies which

occurred after the original submission and prior to the completion of negotiations.

GSAM § 552.215-72.

15. Violations of the Price Adjustment Clause are typically identified during an audit. Tr. at

2855:17–22 (Morrison). GSA cares about those violations and brings enforcement actions to

recover overpaid amounts on this basis. Id. at 2856:14–2857:4.

21

16. During the life of the MAS contract, the contractor may submit changes to the contract,

such as adding or deleting items or reducing prices. GSAM § 552.243-72(a)–(b). The relevant

provision governing these requested changes, the “Modifications Clause,” requires the contractor

to submit either updated CSPs for the new items or provide confirmation that the previous CSPs

have not changed. Id. at 552.243-72(b)(ii) (“[S]ubmit the information requested in paragraphs 3

through 5 of the Commercial Sales Practice Format. If this information is the same as the initial

award, a statement to that effect may be submitted instead.”); see also Tr. at 2857:10–24

(Morrison) (confirming that contractors must submit updated CSPs or affirm that the CSPs have

not changed when submitting modifications).

17. The designated 30(b)(6) witness for GSA, John Walsh, agreed that if certain non-standard

discounting reasons were disclosed in the CSPs and the actual practices were consistent with

those disclosures, it would not constitute a price reduction. In the hypothetical provided during

the deposition, GSA agreed that “if an offeror tells GSA in the CSP that it deviates from standard

pricing to satisfy a disgruntled customer, and then an IG auditor comes upon such a deviation

during an audit, then as you just said, that that wouldn’t trigger the price reductions clause.”

JX001 at 92:6–11 (Walsh Dep.). Walsh further agreed that if the contractor disclosed that such

discounts occurred “a hundred times a year,” it would not constitute a change to a commercial

practice to do so 101 times in a year during the life of the contract. Id. at 92:19–93:20.

Although at some point any variations from those disclosures would become a “change” to the

commercial sales practices, GSA further admitted that it does not provide guidance to contractors

on where to draw that line. Id. at 99:9–100:3. However, Walsh separately stated that the

disclosures would not “necessarily impact the price reduction clause of the contract.” Id.

at 95:2–4.

22

18. The final relevant clause is the Price Reduction Clause (“PRC”), which is designed to

account for changes in the offeror’s pricing over the life of the MAS contract. GSAM

§ 552.238-75. The PRC requires that GSA and the offeror agree on a customer or category of

customers that will serve essentially as a point of comparison for the government’s discounts.

See id. § 552.238-75(a). The offeror must keep the Contracting Officer apprised of prices being

offered to that customer or category of customers throughout the life of the MAS contract, and

PRC ensures that the Government’s prices are reduced if this customer or category of customers

is given lower pricing or increased discounts. Id. § 552.238-75(b)–(c).

19. The PRC identifies three events which trigger price reductions when they occur. Id.

§ 552.238-75(c)(1). The first “PRC trigger” occurs when the contractor “[r]evises the . . .

pricelist . . . upon which contract award was predicated to reduce prices.”

Id. § 552.238-75(c)(1)(i).

20. The second PRC trigger occurs when the contractor “[g]rants more favorable discounts or

terms and conditions than those contained in the commercial catalog, pricelist, schedule or other

documents upon which contract award was predicated.” Id. § 552.238-75(c)(1)(ii).

21. The third PRC trigger occurs when the contractor “[g]rants special discounts to the

customer (or category of customers) that formed the basis of award, and the change disturbs the

price/discount relationship of the Government to the customer (or category of customers) that

was the basis of award.” Id. § 552.238-75(c)(1)(iii).

22. The PRC clause also identifies certain exceptions to those triggers, including sales that

exceed the agreed-upon “maximum order threshold” for that contract. Id. § 552.238-75(d).

23. When a price reduction occurs, the GSAM obligates the contractor to offer the price

reduction to eligible GSA purchases “with the same effective date, and for the same time period,

23

as extended to the commercial customer (or category of customers).”

GSAM § 552.238-75(c)(2).

24. The Court provides a highly simplified example to demonstrate this concept: an MAS

contract provides for the sale of widgets to GSA for $10, and the basis of award is Customer A,

who purchases widgets for only $8. If, during the life of the contract, the contractor sells widgets

to Customer A for only $7, the discount relationship has been disturbed, and GSA is entitled to a

proportional discount on its own sales price. If, however, that discount was given to Customer A

for a single large order exceeding the Maximum Order Threshold, the PRC would not be

triggered.

B. Defendant NortonLifeLock

1. The Veritas/Symantec Merger and Legacy GSA MAS Contracts

25. Symantec was an early leader in computer security software. Tr. at 239:14–19 (McGee). It

sold security products that helped customers keep their information safe from hackers, viruses,

and other threats. Id. at 804: 2–4 (Robbins).

26. Symantec acquired Veritas, a company that specialized in data backup and availability. Id.

at 240:23–241:3 (McGee). The merger of the two companies was announced in 2005, id. at

1714:2–3 (Bradbury), and finalized in early November 2006, U.S. Ex. 57.

27. Prior to the merger, Veritas had a GSA MAS contract for its availability products. That

contract had been negotiated by Kimberly Bradbury, then a Veritas employee, with the

assistance of Kari Reinhardt, whom Bradbury hired to assist her in preparing the offer. Tr. at

2024:1–2025:5 (Bradbury). The Veritas GSA contract was set to expire in December 2006. Id.

at 2067:7–9.

24

28. Prior to the merger, legacy Symantec did not have a direct MAS contract with GSA; rather,

it sold Symantec products through the GSA contract of one of its resellers, Immix. Id.

at 2067:10–18.

29. In October 2005, Symantec made the decision to pursue a direct GSA contract rather than

use the Immix contract. Id. at 2068:6–9 (Bradbury); U.S. Ex. 518.

30. The initial offer for GSA included only legacy Symantec products. Id. at 1094:15–16

(Reinhardt); id. at 2070:15–2071:13 (Bradbury). As the expiration for the Veritas contract

neared, however, Symantec updated its offer to include the Veritas products, as well. Id. at

2071:10–17 (Bradbury).

2. Symantec’s Pricing Practices

a. The “Pricing Waterfall”

31. One helpful visualization of how Symantec’s pricing practices work was the “pricing

waterfall.” The pricing waterfall was more of a conceptual tool than an actual policy, but the

Court and numerous witnesses referenced it and agreed with its theoretical accuracy when

discussing Symantec’s pricing techniques, and the Court agrees that visual element is helpful to

understanding the overall pricing structure. Id. at 485:16–23 (Knox). The Court therefore

includes the below demonstrative exhibit for the purpose of explaining Symantec’s pricing

practices:

25

U.S. Demon. Ex. 1.

b. Buying Program “Band” Discounts

32. The first column in the pricing waterfall, “Base MSRP,” is the suggested retail price prior

to any discounts. McGee Aff. ¶ 6, U.S. Ex. 1833. The next column, Banded MSRP, is the price

after applying the “band” discounts that the customer was entitled to for a given purchase under

the relevant buying program.

33. As the Veritas–Symantec merger finalized, the company rolled out new buying programs

that became effective in November 2006. U.S. Ex. 7B (slides describing new programs).

34. “Express” was the most basic program. Within Express, there were nine different “band

levels” that provided for more favorable pricing based on the order volume. Id. at 2–4. The

Express program was designed for commercial end users that were not government or academic.

Tr. at 160:23–161:5 (McGee).

35. Separate from Express, there were also “Government” and “Academic” buying programs

that provided similar banded discounts based on purchase volume. U.S. Ex. 7B at 2, 12, 16.

26

36. The Express, Academic, and Government programs were all order-specific, meaning the

relevant band and discount was determined by the volume of each order alone. Tr. at 161:6–11,

22–25 (McGee); U.S. Ex. 7B at 16.

37. In contrast, the “Rewards” buying program was akin to a frequent flyer program, in which

customers accumulated points across multiple orders that allowed them to achieve progressively

more favorable bands of pricing. U.S. Ex. 7B at 18–22. The customer’s points were tracked

across purchases using the customer’s unique “SAN” number and expired two years later. Id.;

Tr. at 163:2–13 (McGee).

38. The pricing under the Rewards program was more favorable than the Express program,

with the lowest band of Rewards discounts approximately picking up where the highest band of

Express discounts left off. Tr. at 204:2–10, 18–21 (McGee).

39. Finally, the most advantageous buying program was Enterprise. There were multiple

programs within Enterprise, including site licenses and Enterprise Flex, under which customers

made a large up-front payment and debited downloads of Symantec products from that credit.

U.S. Ex. 7B at 24–26; Tr. at 212:10–213:25 (McGee). The discounts for Enterprise Flex were

negotiated off of Base MSRP rather than a specific band. Tr. at 214:1–4 (McGee).

c. Channel Margins

40. Most of Symantec’s sales were not made directly between Symantec and an end user;

rather, they were made through distributors, resellers, and original equipment manufacturers,

collectively known as “channel partners.” Tr. at 244:25–245:2, 245:14–23 (McGee) (estimating

that approximately 80–90% of Symantec’s sales during the life of the GSA contract went

through channel partners).

41. Those channel partners received an additional discount off of the banded MSRP that

accounted for their profit margin. Id. at 615:19–616:1 (Cochran); id. at 149:6–21 (McGee).

27

Symantec preferred to make sales through the channel partners because those entities provided

additional services such as credit checks and storing inventory. Id. at 246:7–11 (McGee).

42. In some instances, channel partners operated in a one-tier model, where resellers sold

directly, and in other instances resellers purchased from distributors and received an additional

channel margin. Id. at 150:3–8, 246:18–25.

43. The “standard buy price” was the price for a product after factoring in the applicable

channel margins and buying program discounts. Id. at 151:4–8.

d. eSPA and Non-Standard Discounting

44. In addition to the buying program and channel discounts, Symantec’s sales team offered

deal-specific “non-standard” discounts. Id. at 151:9–15.

45. Non-standard discounts required approval, with higher overall discounts requiring

progressively higher levels of discount approval authority from management in sales leadership

and finance. Id. at 250:2–17. The level of approval authority required was based on the total

percentage discount off of Base MSRP for the order as a whole. U.S. Ex. 229B at SYM439069.

46. Non-standard discount approvals were processed through a system known as “eSPA,” the

functionality of which was later transferred to a platform called SFDC. 5 Tr. at 494:1–4 (Knox);

id. at 152:2–17 (McGee). Specially negotiated terms and conditions were approved through a

separate system called “eSTA.” 6 Id. at 494:17–22 (Knox).

5

There was some disagreement among the witnesses as to whether eSPA stood for “Electronic

Special Pricing Application” or “Electronic Special Pricing Authorization,” but any difference is

immaterial. For ease of reference, the Court refers to this program, both before and after its shift

to the SFDC platform, only as “eSPA.”

6

The function provided by eSTA was likewise later moved to another program called SymArt,

see Tr. at 199:22–25 (McGee), but the Court refers to both programs merely as “eSTA.”

28

47. Symantec’s policies and guidelines for non-standard discounting were memorialized and

circulated in various iterations of its “Global Discount Authority Guidelines.” U.S. Ex. 229B

(2008 version); U.S. Ex. 1474 (2010 version).

48. Most requests that were submitted in eSPA were approved, but that was in part because

there had been prior negotiations with the approver and the sales representative. Tr. at 765:22–

766:2 (Simon) (“I can tell you the ones that hit my desk, you know, I’m sure most of them were

approved because there had been prior conversations. I wasn’t seeing it for the first time. There

had been verbal negotiations back and forth to make sure it was something that both the

customer can support and I can support.”).

49. After a deal was made, orders were booked through a separate department called “Orders to

Cash” 7 that ensured that all the correct information was entered into Symantec’s sales system,

Oracle ERP. Tr. at 170:19–23 (McGee). If an order contained a non-standard discount, it would

need to have an eSPA number indicating approval, otherwise the transaction would be

automatically put on hold and could not proceed until the correct approval was obtained and

entered into the field by a member of the Orders to Cash team. Id. at 694:2–695:1 (Thompson).

50. The Orders to Cash team conducted frequent internal and external audits. Id. at 698:15–

699:16.

e. Rebates

51. Finally, Symantec routinely offered back-end rebates to resellers as an incentive, usually as

a percentage of total volume sales from the previous quarter. See Tr. at 618:17–22 (Cochran).

7

The Orders to Cash group changed names at various points during the life of the contract, see

Tr. at 683:17–21 (Thompson), but for simplicity’s sake the Court refers to it only as Orders to

Cash.

29

52. Some of those rebates were offered as incentives for registering new “opportunities” with

Symantec. See U.S. Ex. 186C (flyer advertising rebate programs). Some of those back-end

rebates were as high as 16%. See id. (advertising the opportunity registration rebates for

Platinum partners as having a 12% opportunity registration rebate and 4% partner program

rebate, combined with the 8% front-end rebate, for a total of 24%).

53. One rebate program, operated during 2006 and 2007, was known as the GSA Master

Aggregator Rebate program, which gave a 5% rebate to certain resellers where they acted as a

distributor in connection with a GSA sale (i.e., where another reseller was the direct seller and

that reseller used DLT, Carahsoft, or UNICOM to process the transaction). That specific rebate

ended when the GSA Master Aggregator program was revamped in 2008. U.S. Ex. 187B (slides

describing changes to program); U.S. Ex. 189 (email addressed to Bradbury regarding changes

to program).

54. Rebates varied by reseller and some of the rebate programs changed during the life of the

contract. See U.S. Ex. 397B at 12–19 (chart summarizing rebate programs in Symantec

discovery response).

3. SKUs and Overall Sales Practices

55. Symantec assigned an identifier to each product known as a “stock-keeping number,” or

“SKU.” However, each product had a different SKU for every band of every buying program.

Tr. at 209:11–15 (McGee); id. at 592:15–18 (Pugh).

56. The result of this SKU-labeling process was that each product had numerous SKUs,

sometimes over 30. Tr. at 593:1–11 (Pugh). After the merger with Veritas, the total number of

SKUs ballooned from about 100,000 to over 600,000. Id. at 496:4–7 (Knox).

30

57. The total number of SKUs declined somewhat thereafter, but remained in the hundreds of

thousands, which was astronomically high when compared with similar competitors in the

market. See id. at 236:3–4 (McGee) (commenting that Symantec’s total number of SKUs was

“ridiculous”); U.S. Ex. 1180 (identifying the number of SKUs as a business problem in a 2010

presentation and noting that at the time Symantec had twice as many SKUs as its top ten

competitors combined).

58. Complicating matters, the eight-digit SKUs in effect at the time of the merger were

assigned without any particular pattern, meaning that there was no way to track a single product

across different bands and buying programs. Tr. at 231:23–232:5 (McGee).

59. An alphanumeric “intelligent SKU” system was rolled out in approximately 2010 that

allowed users to discern key information about the product as well as the program and pricing

bands, but those SKUs were assigned on a going-forward basis only. U.S. Ex. 122 (Symantec

guide explaining the intelligent SKU rollout).

60. During the entire life of the GSA contract, Symantec did not have any functionality in its

systems that allowed it to track a single product—and therefore its pricing—across SKUs. U.S.

Ex. 400 ¶¶ 56–58 (admissions of Symantec).

C. The GSA-Symantec Negotiations

61. The Court heard extensive testimony from the key individuals involved with the

preparation and negotiation of Symantec’s GSA contract: Kimberly Bradbury, Kari Reinhardt,

Gwendolyn Dixon, and Matthew Percival. Reinhardt and Dixon had little to no recollection of

the events so many years ago, so while their testimony was credible, it added relatively little

beyond the documentary evidence. Percival’s testimony was credible and informative with

respect to the limited role he played.

31

62. Bradbury had by far the best recollection of events and testified in detail over several days.

Although the Court credits her testimony in many respects, it discounts it in others. Specifically,

the Court believes that a good deal of Bradbury’s remarkably clear memory resulted from her

own post-hoc reconstruction and rationalization of the relevant events and was shaped by her

own desire for self-preservation. Throughout her testimony Bradbury was often defensive and

refused to acknowledge even minor error. Some of her assertions were inconsistent with prior

testimony and other aspects of the record. Contemporaneous emails in the record also suggest

that she was less than forthright when she thought it served her interests. Accordingly, the Court

gives comparatively less weight to her testimony.

1. The Initial Offer

63. Symantec submitted its initial offer for a GSA MAS contract on February 28, 2006. See

U.S. Ex. 4A (initial offer). The initial offer included only legacy Symantec products, not Veritas

products. Tr. at 1508:22–25 (Bradbury).

64. The initial offer contained the following:

a. A cover letter, U.S. Ex. 4A at 2–3;

b. A Standard Form 1449 for solicitations, id. at 4–5;

c. Pages 3 through 82 of the standard solicitation terms and questions, and Symantec’s

responses, id. at 6–86;

d. A chart entitled “G.4(4) Summary of Non-Published Discounts offered by SKU for

sales in 2005,” which depicts the total quantity of line items sold and percentage of

occurrences for each discount decile from 0–10% to 90–100%, id. at 87–88;

e. A chart entitled “Discount Reason Codes” on the same page as a chart entitled

“Management Discount Approval Levels,” id. at 89;

32

discounts and any concessions which you offer to the Government equal to or better than your

best price (discount and concessions in any combination) offered to any customer acquiring the

same items regardless of quantity or terms and conditions?” Symantec answered “no” to that

question. Id. at 81.

67. The next question, 4(a), requested information about written discounting and commercial

sales practices for each SIN in the provided chart “or in an equivalent format.” Id. The chart

format, which contained columns for customer, discount, quantity/volume, FOB term, and

concessions, was not completed in the initial offer. Id. Instead, the annotation read “Reference

Attached Sheets.” Id.

68. The next question in the CSP Format, 4(b), asked whether “any deviations from your

written policies or standard commercial sales practices disclosed in the above chart ever result in

better discounts (lower prices) or concessions than indicated?” Id. That question was answered

“no.” Id.

69. The attached pages did not correspond to the same format as the chart. Rather, there were

pages about discounts offered to distributors and resellers and discounts offered under the

different bands of the buying programs in effect at that time. Id. at 87–102. The first of those

attachments was titled “G.4(4) Summary of Non-Published Discounts offered by SKU for sales

in 2005.” Id. at 87–88. Referred to during trial by the shorthand “Frequency Chart,” this

spreadsheet provided information on the total quantity of SKUs sold, percentage of occurrences,

and category of customer, grouped by decile from 0–100%. Id. According to the chart, the

discounts were consistently distributed in a “bell curve” shape, with the vast majority of

discounts (88%) occurring in the 31–40% range. Id.

34

70. The Frequency Chart was prepared by Matthew Percival, an outside consultant and

Bradbury’s brother. Tr. at 1710:14–16, 2068:18–22 (Bradbury). Percival’s background was in

software engineering and he had no specific expertise on GSA regulatory compliance. Tr. at

1200:1–13 (Percival).

71. Percival compiled the chart by merging sales data with multiple pricelists to calculate

discounts. Id. at 1204:2–5. He did not know about the built-in band discounts provided to

customers or the channel margin discounts provided to resellers and distributors. Id. at 1219:12–

1220:5 (not recalling at trial but acknowledging prior deposition testimony to that effect).

72. Although the title in the submission stated that it summarized “non-published” discounts,

the chart in fact contained both standard and non-standard discounts. This makes perfect sense

given the information that was provided to Percival and his lack of knowledge about the

difference between standard and non-standard discounts. See id. at 1222:9–14. Indeed, when

submitting his findings to Bradbury, Percival represented only that the chart was a “discount

distribution” in the general sense. See U.S. Ex. 46 (initial email sending Percival results to

Bradbury).

73. When she first received the results, Bradbury identified the standard discounts to

distributors as the most likely reason for the high concentration of discounts in the 30–40% range

in an email forwarding those results internally. U.S. Ex. 47. However, Bradbury testified that

when she opened the underlying data, she only found the names of end user customers, with no

indication of whether the sale was direct or made through a channel. Tr. at 1724:14–1725:6

(Bradbury). After determining that no distributor names appeared in the data, she appears to

have simply assumed that they were not included and labeled the chart accordingly. See id. at

1710:17–19 (Bradbury acknowledging that she believed she added the heading herself).

35

74. That assumption was irresponsible at best. Bradbury was aware that Symantec tracked the

end user even for sales through distributors, id. at 1725:19–25, and had herself requested that

“[s]ales to distributors, OEMs, [value-added resellers] and end users” be included in the data sent

to Percival, U.S. Ex. 38.

75. The Government’s expert, Dr. Holt, recreated Percival’s chart using the Symantec sales

data in order to demonstrate how he reached those numbers. Tr. at 3453:9–12 (Holt). The Court

found Dr. Holt’s analysis to be reliable, thorough, and informative. In her attempt to recreate the

table, Dr. Holt determined that Percival had included individual line items separately rather than

at the order level, removed international transactions, excluded items where the SKU did not

appear on the pricelist, dropped all items with a 0% discount (meaning no discount), treated all

sales as direct and calculated the discount off of banded MSRP, and did not include the Veritas

data. Id. at 3457:24–3459:11.

76. Many of those choices were reasonable under the circumstances. The problem was that the

inclusion of a large number of standard channel margin discounts made it an unreliable

representation of how often Symantec varied from its formal discounting policies. Nevertheless,

in the form that it was provided to GSA, the Frequency Chart falsely purported to summarize

“non-published” discounts despite the fact that Percival had not intended it to do so and

Bradbury had reason to believe it did not. Furthermore, the underlying data was never disclosed

to GSA. Tr. at 1726:19–24 (Bradbury). It was, in a word, inaccurate.

77. Dr. Holt’s “corrected” Frequency chart further illustrates why the Frequency Chart was

misleading. Because the data did not track whether a given sale was a direct or channel sale, Dr.

Holt excluded any sales that exactly matched the standard buy price (the channel partner price)

under the assumption that those sales were, in fact, to channel partners. Tr. at 3461:12–25

36

(Holt). Then, if the sale price fell between MSRP and standard buy price, Holt calculated the

discount off of MSRP, and if the sales price was less than the standard buy price, assumed that a

channel discount had applied and calculated the discount off of standard buy price. Id. at

3462:1–10. Those assumptions were reasonable under the circumstances and in fact

conservative, as they would have reduced the calculated discount for direct sales that were more

generous than the standard buy price.

78. After adding in additional pricelists and the Veritas products, the corrected Frequency

Chart showed a much more evenly distributed range of discounts across deciles, as opposed to

the large bell curve in the 30–40% range that appeared in Percival’s Frequency Chart. Id. at

3462:11–3464:1. As Dr. Holt explained through her testimony with the aid of a visual

demonstrative, the side-by-side comparison of the Percival and Corrected Frequency Charts

appears as follows:

Slide 11 of Dr. Holt’s testimony, U.S. Demon. 5.

37

79. Although the percentages in the corrected chart are still fairly low across the board, it is

clear that there are substantially more transactions in the high discount deciles than were

disclosed to GSA, even though the total number of transactions is lower.

80. Norton’s expert, Mr. Tucker, criticized Dr. Holt’s inclusion of the Veritas products, which

had generally higher discounts than the legacy Symantec products, and Dr. Holt’s exclusion of

the many line items that she believed did not receive a non-standard discount, as “really

completely different transactions.” Tr. at 4307:10–24 (Tucker). The question is not so much

which chart came closer to the absolute truth, however, but rather whether it accurately depicted

what it claimed to show. The Percival Frequency Chart purported to depict non-published

discounts, but it was distorted by a large number of standard channel margin discounts.

Although the Veritas products were not submitted with the initial offer, as explained below, the

Frequency Chart was never updated, making the failure to disclose them misleading.

81. In addition to the Frequency Chart, the initial offer included a chart giving the percentage

of occurrences of each “Discount Reason Code[]” for the non-published discounts. U.S. Ex. 4A

at 89. That same page included the management approval required for progressive discount

percentages off of list price. Id.

82. The categories on that list were: Pro-rated Appliance Add-ons, Pro-rated Maintenance /

Subscription, Contract Pricing, Competitive Price Match, Quarter end discount, Other, Customer

Satisfaction Issue, Product Bundle, Enterprise License Agreement/True up Non-Com[p]liance,

Previous Purchase Price Match, Error Quoted an old pricelist, Non-Profit, Promotional Special -

New Product, and Multi-year Incentive. Id. Most of those reasons can be deemed “competitive”

but a few clearly can not, such as “quarter end discount,” which was indicated to occur 3% of the

time and “non-profit” which occurred 1% of the time. Id. Others are essentially opaque labels

38

that provide very little information, such as “contract pricing,” and “other.” Id. Perhaps

unsurprisingly, one Symantec approver explained that the codes “told me very little” about the

justification for the discount at issue. Tr. at 757:10–12 (Simon).

83. Bradbury prepared the Reason Code Chart herself, with assistance from Reinhardt, by

exporting data from eSPA and using Excel to categorize and group the reason codes. U.S. Ex.

1832 ¶ 22(c) (Bradbury Affidavit). This chart, which accompanied the Frequency Chart, makes

it abundantly clear that the title “Non-Published Discounts” referred to non-standard discounts

approved in eSPA. However, the data in the two charts did not line up. The Percival Frequency

Chart listed 129,630 line items, but the eSPA data Bradbury used to compile the Reason Code

Chart had only 6,954. Compare U.S. Ex. 4A at 87–88 (Frequency Chart), with U.S. Ex. 41

(2005 eSPA data relied on by Bradbury). This is yet another reason Bradbury was, or should

have been, aware that the Percival Frequency Chart contained standard discounts in addition to

non-standard ones.

2. The Supplemented Offer

84. In April 2006, Symantec decided to update its submission to include the Veritas products

rather than renewing the existing Veritas GSA contract that was set to expire at the end of the

year. U.S. Ex. 49. Around that time, Reinhardt reached out to Percival requesting that he

provide an updated summary of the discounting policies for the Veritas products as well. Id.

85. On June 21, 2006, Symantec sent GSA its updated submission that added the Veritas

products. U.S. Ex. 53 (email informing GSA contracting officer Boulware of the updated

submission). The June Supplement was stamped “received” by GSA on June 23, 2006. U.S. Ex.

5B. The only three documents included in the June Supplement were a legacy-Symantec

39

proposed GSA pricelist, a Veritas proposed GSA pricelist, and a “discount key” with the

following proposed GSA discounts:

See U.S. Ex. 4C at 83 (receipt-stamped copy of the discount key in GSA file); Tr. at 910:12–24

(Reinhardt) (agreeing that she believed the two pricelists and discount key were the attachments

to the June Supplement and did not recall any others); U.S. Ex. 52 (email from Reinhardt

confirming that “[a]ll 10 pounds, 9.4 ounces of price list is on the way to GSA” (emphasis

added)).

86. Although Bradbury stated at one point that she believed the June Supplement contained

“the discount policies for Veritas,” the Court does not credit that particular statement. See

2100:1–3; 2216:13–16 (Bradbury). When pressed on redirect, Bradbury dialed back her prior

certainty. Id. at 2217:10–21. The failure to mention any additional attachment or updated CSPs

in the emails and cover letter connected to the June Supplement makes it doubtful that such

information was included. Moreover, even though Reinhardt had asked Percival to prepare a

discount summary for the Veritas products in April, emails demonstrate that Percival continued

to respond with updated charts on June 28, 2006—a week after the June Supplement had already

been sent to GSA. U.S. Ex. 54A.

40

3. The October Supplement and Meeting

87. After the June Supplement, Bradbury continued to reach out to the assigned GSA contract

specialist, Boulware, but was not able to set up a meeting. See U.S. Ex. 57 (email chain

following up during August and September). At some point during that period, Dixon took over

responsibility from Boulware for the Symantec solicitation. Id.

88. On October 5, 2006, Bradbury emailed Dixon to let her know that as a result of the merger,

Symantec was updating its buying programs. U.S. Ex. 7A (email sending October Supplement).

Bradbury attached a PowerPoint presentation explaining the new buying programs that would

become effective November 8, 2006 and indicated that Symantec would “be updating our offer

to reflect the new product SKUs and the new discounting policies.” Id.; U.S. Ex. 7B

(attachment). That PowerPoint described in general terms the Express, Rewards, and Enterprise

buying programs that were soon to take effect, but it did not include pricing under the respective

programs. U.S. Ex. 7B.

89. On October 9, 2006, Dixon responded that she was “confused” and that they should discuss

the policies at the “meeting on Wednesday.” U.S. Ex. 58.

90. Dixon and Bradbury subsequently met in person on Wednesday, October 11, 2006. Tr. at

1517:19–21 (Bradbury). Reinhardt was not present at the October meeting. Id. at 1517:22–

1518:1.

91. Dixon had no recollection whatsoever of that meeting. Id. at 3151:24–25 (Dixon).

Bradbury recalled Dixon bringing the hard copies of the submission up to that point and that they

went through those materials together. Id. at 1518:11–22 (Bradbury). Bradbury recalled that

they went through the buying program PowerPoint and discussed the Rewards program, and that

Dixon quickly discarded the Reward program as an option after learning about the requirements

41

for participation. Id. at 1616:14–25, 1626:7–10. Bradbury did not recall whether GSA ever

received a pricelist or any other information that indicated just how favorable the Rewards

pricing was compared to Express, id. at 1626:11–25, but Symantec admitted that “[a]t no point

during the negotiation of the contract did Symantec disclose to GSA the pricing provided under

the Rewards buying program,” see U.S. Ex. 400 ¶ 22 (request for this admission); Tr. at 1629:1–

25 (noting that Symantec changed its response to the relevant question to admit during the

corporate designee deposition).

92. Bradbury also testified that they did not begin price negotiations at that meeting. Id. at

1520:1–2. She also claims, however, that at that meeting Dixon ruled out using distributors,

resellers, and original equipment manufacturers as the relevant class of customer for the basis of

award. Id. at 1522:6–1523:1 (discussing deposition testimony to that effect). Bradbury’s

testimony is uncorroborated anywhere else, and she backtracked on her level of certainty when

pressed on this point. See id. at 1520:10–11 (“She said that GSA was not entitled to that class of

customer.”); id. at 1522:6–11 (“[S]he decided that GSA was not that -- that class of customer;

that they were not a distributor, they were not a reseller, they were not an OEM.”). Even if

credited, a statement that GSA was not entitled to the same discounts as channel partners is

different from excluding them from the basis of award. Thus, to the extent that a discussion of

definition of those channel partners occurred that day, the Court does not believe it involved an

unequivocal exclusion of those categories from what would later become the basis of award.

93. Shortly after the October 11 meeting, Dixon sent Bradbury an email expressing pleasure at

the progress they had made and attaching an administrative letter that they had discussed in the

meeting. U.S. Ex. 59B. That letter included a list of deficiencies that Dixon concluded were

missing from Symantec’s solicitation. U.S. Ex. 59A. One item on that list, titled “G.4

42

Commercial Sales Practices (CSP-1),” stated “clarification is needed for the insertion

sheets/discounts Symantec has provided along with the commercial sales and projected sales.”

Id. at 2. It also included a list of questions, one of which was “Does Symantec Corporation offer

better rates and/or terms and conditions to other customers? If yes, please provide pricing

information.” Id. at 5.

94. Bradbury replied by email on October 20, 2006, providing several documents and a

response letter. U.S. Ex. 8A. In response to the request to provide the completed CSP-1 form,

Symantec wrote “Commercial discounting policies were submitted with Symantec’s initial offer,

updated offer and during meeting on October 11, 2006. Updated comparison pricelist is included

with this submission . . . .” Id. at SYM382004. The comparison price sheets reflected discounts

for “commercial MSRP, Academic price, Government Price, Distributor Price, Value Added

Reseller price, [and] proposed GSA price.” Id.

95. In response to the question about whether other customers receive better prices or

concessions, Symantec wrote:

Any deviations from published discounts require management approval.

Deviations must be documented and approved in accordance with the following

guidelines: As previously disclosed to GSA as part of Symantec’s established

discounting policies, the Worldwide Sales discounting tool referred to as “eSPA”

was established to allow Symantec the flexibility to respond to competition. This

process provides non-standard competitive pricing to strategic accounts by

requiring commitments from the identified account for annual quantity purchases,

or to meet one of the following guidelines; which are provided as examples:

1. To meet market competition or displace a named competitor at a customer site;

2. Customers who agree to standardize on Symantec products and services;

3. New Market or market segment penetration;

4. Educational, including prime contractors, or Charitable organizations or

institutes;

5. Introduction of new product and services through more aggressive discounts in

exchange for press or customer references.

Id. at SYM382003.

43

96. Although the text of this explanation was largely copy-pasted from previous

submissions that Bradbury had worked on at Compaq and Veritas, Tr. at 1749:6–9

(Bradbury), it accurately reflected the function of the eSPA system for non-standard

discounts. See id. at 760:22–761:1 (Simon) (testifying when reviewing the description at

DX 23 that it was an accurate description of Symantec’s non-standard discounting

practices). Symantec’s sales team, perhaps predictably, took a broad view of what

constituted market competition or strategic customers. See Tr. at 798:24–25 (Robbins)

(“Every sales rep I’ve ever talked to will tell me, ‘Hey, this account is strategic to me.’”);

id. at 761:7–10 (Simon) (“[D]id everyone within Symantec, to your knowledge, have the

exact same idea of what constituted a strategic account? A. I’m quite sure they didn’t.”);

id. at 260:10–13 (McGee) (agreeing that “different sales teams could have different views

of . . . whether any given account was a strategic account”).

97. However, the wording of this section further underscores the inaccuracy of the

Frequency Chart, which in theory should have disclosed the frequency and depth of the

non-standard, non-published discounts approved through eSPA, but in fact contained a

significant number of standard channel partner discounts.

98. Also in that administrative letter, Dixon noted that “[t]he maximum order . . . is

$500,000 for the SIN’s [sic] Symantec Corporation is offering. Why has Symantec

Corporation stated $100,000?” U.S. Ex. 59A at 4. In the October Supplement

responding to that question, Bradbury simply wrote that “Symantec agrees to lower the

order limitation.” U.S. Ex. 8A at SYM00382001. Bradbury acknowledged in her

testimony that part of the goal for seeking a lower maximum order threshold was “to

provide Symantec flexibility to offer non-standard discounts on large orders with large

44

customers who purchased more than a hundred thousand dollars at a time.” Tr. at

1733:16–22 (Bradbury). Bradbury had also sought an even lower maximum order

threshold on the Veritas contract she had previously negotiated, which that contracting

officer had rejected because they “[knew] that the threshold will be used as a way to offer

commercial customers better discounts and circumvent the price reduction clause.” U.S. Ex.

76. Still, there was some benefit for GSA in a lower threshold because government

purchasers were required to ask for a higher discount on purchasers over the maximum order

threshold. Tr. at 1732:25–1733:3 (Bradbury). In any event, Dixon must have agreed,

because the proposed threshold made it into the final contract.

4. The November Meeting and Follow-Up Disclosures

99. Dixon then reviewed the October Supplement and met with her supervisors about the offer.

U.S. Ex. 64. On November 29, 2006, she reached out to Bradbury with additional concerns, and

suggested postponing their meeting that was scheduled the next day. Id.

100. One of Dixon’s questions was why Symantec had estimated annual sales at $19 million

when a sales report only showed prior sales of $3 million. Id. She noted that based on the

projected sales, Symantec would need to undergo a pre-award audit. Id. Bradbury understood

that projected sales over $10 million would trigger an EEO audit. Tr. at 2280:3–6 (Bradbury).

101. In response to that email, Bradbury suggested that they meet in person to go over Dixon’s

questions. U.S. Ex. 64.

102. Bradbury, Reinhardt, and Dixon attended the November 30, 2006 meeting the next day. Tr.

at 920:9–17 (Reinhardt). At that meeting, they discussed Dixon’s concerns and went over the

comparison pricelists that had been provided in the October Supplement. See Tr. at 2133:19–

2135:8 (Bradbury).

45

103. Bradbury sent Dixon additional information as a follow-up to their meeting on December 2,

2006. DX 103 (email). Among other attachments, she included an updated comparison pricelist

for the new buying programs. DX 103.01 (attachment). The email and attachment alike

contained a summary list of proposed GSA discounts, which were calculated off of “commercial

MSRP” or “Gov Price,” depending on the product. Id.; DX 103.

104. Bradbury also testified that she discussed the projected sales estimate with Dixon during

the November meeting. Tr. at 2137:11–18. Bradbury explained that she told Dixon they based

the estimate off of the Immix sales. Id. Bradbury also testified that at that meeting, Dixon asked

her to lower the projected sales below $10 million to avoid an audit. Id. at 2137:16–18,

2227:24–25 (“She told me to revise the numbers because she didn’t want the audit. Not me.”).

Although Dixon did not remember any specific details regarding the meeting or the Symantec

contract, when asked whether she ever told Bradbury to estimate sales under $10 million in order

to avoid an EEO audit, she stated in no uncertain terms that “[w]e wouldn’t do that, sir.” Id. at

3135:25–3136:3 (Dixon). In contrast, she agreed that there was nothing improper about asking

Symantec why its projected sales were inconsistent with its submitted financial records. Id. at

3186:2–14.

105. In fact, Bradbury did revise the projected sales to be just under $10 million. Id. at 1840:2–5

(Bradbury). She even used an excel spreadsheet to reduce her previous estimates proportionally

so that they added up to exactly $9.9 million. Id. at 1840:6–14; U.S. Ex. 67 (spreadsheet). She

submitted the revised estimate to Dixon by email on December 7, 2006. See U.S. Ex. 10A

(email); U.S. Ex. 10B (attachment with revised estimate).

46

106. The Court concludes that Dixon did not instruct Bradbury to alter the sales estimate and

discredits any assertions by Bradbury to the contrary. 8 Rather, the Court believes the following

occurred: Dixon raised a concern that the estimates were too high based on the information that

she had, and Bradbury validated that concern by reasoning to Dixon that the sales might actually

be lower than had been the case under the Immix contract because Symantec planned to provide

additional letters of supply, meaning the proposed contract would not be the only avenue for

GSA sales of Symantec products. Dixon may have been satisfied with that response, but her

tacit acceptance was far from an instruction to provide inaccurate information. See Tr. at

1842:9–16 (Bradbury) (testifying that she did not recall any follow-up on the revision, favorable

or unfavorable).

107. What’s more, Bradbury failed to bring to Dixon’s attention that the $19 million estimate

included in the initial offer submission was only for legacy Symantec products and had not been

updated after the Veritas products were added. In an internal email from that summer, Bradbury

noted that the existing Veritas GSA contract accounted for $50 million in sales each year, and

that she anticipated a projected $70 million in annual sales under the combined GSA contract—

approximately $50 million plus $19 million. Tr. at 1835:3–7, 18–25.

8

Further undermining Bradbury’s credibility on this point and bolstering the Court’s view that

this recollection is Bradbury’s post-hoc rationalization, is the fact that such a major assertion was

not found anywhere in her deposition testimony. See Tr. at 2235:1–13 (“Q. You don’t mention

in response to [the deposition question] Ms. Dixon asked me to decrease them, correct? A.

Correct. Q. But that’s exactly what you responded to Mr. Douglass when he asked you the exact

same question yesterday, correct? A. Because I -- of course she asked me to do it. Why else

would I have done it? Q. To avoid the review? A. In this testimony I was telling you how I

could justify in my mind that there was going to be more than one GSA contract to lower it to

$10 million. I was going through my mental process of how I could justify lowering it. You did

not ask me if she told me to do it, but that’s exact -- she obviously told me to do it. Why else

would I have done it?”).

47

108. In light of the information available to Bradbury, the revision of the projected sales

estimates was knowingly false.

5. The Pre-Negotiation Memorandum

109. Dixon wrote a “pre-negotiation memorandum,” memorializing her objectives for the

negotiation, that was dated December 22, 2006. U.S. Ex. 70 at 12.

110. In that memorandum, Dixon relied on the $9.9 million sales estimate to determine that an

EEO audit was not required. Id. at 6.

111. The memorandum also stated the following: “Based on the foregoing, it has been

determined that the best discount is offered to Symantec Corporation Government customer

under this proposal. Therefore, for the purpose of the price reduction clause, commercial

customer shall be the customer for which the resultant award shall be predicated upon.” Id. at

11.

112. That memorandum also noted that a better or equal price was offered to “Distributors,

Dealers/Resellers, VAR/System Integ., OEM, State and Local Govern, Educational &

Nonprofits, National & Corporate, Commercial End Users, Other Government” and that price

information had been provided for those categories of customer. Id. at 9. In that section, the

memo stated “[s]ee attached reference page under tab G.4 CSP.” Id.

113. At another point in the memorandum, Dixon wrote that she had conducted an independent

price analysis and determined that Symantec’s proposed GSA prices were “fair and reasonable.”

Id. at 11.

114. Dixon included her high, intermediate, and low price objectives for the negotiation as

follows:

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Id. at 12.

115. Overall, the Court finds the Pre-Negotiation Memorandum to have minimal evidentiary

value, given that it is internally contradictory in places, contains many boilerplate phrases, and

lacks significant detail. Further, Dixon confirmed in relation to the later Price Negotiation

Memorandum that she routinely used templates for the memoranda or copy-pasted from other

memoranda. Tr. at 3137:9–16. Given Dixon’s lack of specific recollection about this

memorandum, the Court does not afford it significant weight.

116. There was some urgency within Symantec around the time of the negotiations because the

Veritas GSA contract was set to expire at the end of December. See U.S. Ex. 68 (stating in a

December 8, 2006 email from Bradbury to Dixon that “[o]ur customers are starting to panic a

little”); Tr. at 1830:20–22 (Bradbury) (“Q. Folks within Symantec were also getting antsy to get

a contract awarded. Correct? A. I’m sure.”).

117. Bradbury had previously made overly optimistic representations to Symantec leadership

about how long it would take to get a new GSA contract awarded. See Tr. At 1821:12–1823:16

(reviewing an October 2005 email chain, U.S. Ex. 518, in which Symantec’s Joe Muscarella

relayed a “plan . . . to have Kim and her team submit a mod to GSA in the December timeframe

with the hopes to have all products on our SYMC GSA schedule effective April 1st”); U.S. Ex. 62

49

at SYM00766165 (stating in bold in an October 2006 email that “We anticipate a new GSA

contract award by November 24th”).

118. Bradbury was able to get a one-month extension of the Veritas contract that would last

through the end of January 2007. U.S. Ex. 69; Tr. at 1831:21–1832:3 (Bradbury).

6. The Draft Final Proposal Revision and the January Meeting

119. Bradbury drafted a “Best and Final Offer,” or “BAFO” 9 letter in December 2006. See U.S.

Ex. 11 (draft BAFO dated December 2006). She then submitted it to Symantec’s in-house

counsel, David Freedman and David Kessler, for their review, who in turn engaged outside

counsel to review it as well. Tr. at 1793:20–1794:2 (Bradbury). The legal team made some

changes, and eventually Freedman informed Bradbury that it was approved for submission on

January 3, 2007. U.S. Ex. 575.

120. Bradbury sent the draft BAFO letter to Dixon on January 11, 2007. U.S. Ex. 16A.

121. The BAFO Letter offered different proposed discounts for each SIN category that were all

“based upon Symantec’[s] commercial pricelist dated January 2007” and that were calculated as

a percentage off of either “commercial MSRP” or “Government End User MSRP.” U.S. Ex.

16B at SYM370747–48.

122. In that draft, Bradbury specified one of three different “basis of award” for each SIN as

well, either “Government End Users,” “Authorized Distributors,” or “Partner Level A.” Id. at

SYM370745–46. She testified the variation was only because there was no available end user

pricelist for some of the categories. Tr. at 2140:25–2142:12 (Bradbury).

9

The terms “Best and Final Offer” and “Final Proposal Revision” were used interchangeably for

the final negotiation documents, but for clarity the Court refers to Bradbury’s January 11, 2007

proposal as the “draft BAFO,” Dixon’s January 25, 2007 version as the “draft FPR,” and the

final signed version as the “final FPR.”

50

123. Bradbury’s draft BAFO included a section entitled “Price Reduction Monitoring” which

stated in part:

Discounts offered by Symantec under the following circumstances will have no

effect on the fair and reasonable prices included on the GSA contract, nor would

they invoke the price reduction clause:

1. Sales made to commercial customers under firm, fixed-price definite quantity

contracts with specified delivery in excess of the maximum order threshold

specified in the Pricelist;

2. Non-standard discounts offered to commercial customers as defined above;

3. Transactional based discounts on specific GSA orders;

4. Non-GSA sales made to Federal Government Agencies; including sales made

to Government prime contractors for the purpose of resale to the Federal

Government under indefinite delivery, indefinite quantity agreements;

5. Sales caused by error in quotation or billing.

U.S. Ex. 16B at SYM370749.

124. That same language appeared in a June 2006 email sent to Bradbury from a reseller with a

GSA contract, boasting “Look what I just slipped by [the Contracting Officer].” U.S. Ex. 80; Tr.

at 1817:1–14 (confirming the names in the email). Bradbury responded to that email “Good

job!” U.S. Ex. 80. When questioned about this email at trial, Bradbury was evasive, claiming

that exceptions 1, 3, and 5 were standard PRC exceptions and that the reseller was only

highlighting exception 4, which “wasn’t even an issue” when the Symantec contract was being

negotiated. Tr. at 1818:3–15 (Bradbury). When asked about exception 2, she only responded

“I’m assuming he got in all of the stuff. I don’t see his letter.” Id. at 1820:6–7. Based on

Bradbury’s evasive testimony, the context of the email, and the fact that Bradbury included the

same verbatim language in the draft BAFO, the Court concludes that she was also attempting to

slip the broad PRC exception in item 2 by Dixon.

125. Finally, the draft BAFO contained a conclusion paragraph that stated, “We are confident

that this Final Proposal Revision provides the Government with fair and reasonable prices for

Symantec Products.” U.S. Ex. 16B at SYM370750.

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126. Bradbury and Dixon met soon thereafter to go over the BAFO offer. Tr. at 1841:11–23

(Bradbury). Bradbury did not have a specific recollection about discussing the PRC in that

meeting. Id. at 1842:14–16. She did, however, recall going over the comparison pricelists and

recalled that Dixon requested a summary that showed how GSA’s discounts fit into the larger

pricing structure instead of the lengthy pricelists. Id. at 1843:6–14. Dixon also requested

explanation of the differences in terms and conditions that justified distributors and resellers

receiving better discounts than GSA. Id. at 1843:15–19.

127. Bradbury sent a follow-up email on January 24, 2007 that responded to those two concerns.

U.S. Ex. 3A. The attached chart, referred to during trial as the “Discount Relationship Chart,”

provided a list of terms and conditions applicable to resellers as well as the following chart:

U.S. Ex. 3B.

7. The Price Negotiation Memo

128. Dixon prepared a “Price Negotiation Memorandum” memorializing the negotiations on

January 23, 2007. U.S. Ex. 71. The Price Negotiation Memorandum was an internal GSA

document intended to memorialize the negotiation. Tr. at 3204:12–18 (Molina).

129. Dixon’s Price Negotiation Memorandum stated that the total value of the contract was $9.5

million and that negotiations had been held on January 22, 2007 with Bradbury. U.S. Ex. 71 at

1–2.

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130. The portion of the memorandum titled “summary of proposal with negotiation results”

appears to have been inadvertently copied from a wholly unrelated contract. Id. at 5; Tr. at

3137:9–24 (Dixon) (confirming that the error was possible and that she did not believe there was

any connection between Symantec and the other company, TalleyGenicom).

131. In fact, Dixon completed a Price Negotiation Memorandum for a company called

TalleyGenicom around the same time, and the respective portions of each memorandum are

identical. Compare U.S. Ex. 71 at 5 (Symantec Memorandum), with U.S. Ex. 344 at 5

(TalleyGenicom Memorandum). The Court determines that this section is just as it appears to

be—an accident. It therefore draws no conclusions from that portion, including the reference to

“commercial end users” being the basis of award.

8. The Last-Minute Changes to the Final FPR

132. The next day, January 25, 2007, Bradbury learned that she would be receiving a revised

BAFO from GSA and alerted Jim Russell, the Vice President of Public Sector at Symantec,

Russell’s assistant, and Freedman. U.S. Ex. 18. In that email, she noted that she was not sure

what changes GSA would make, but that she would run it by the legal team before sending it to

Russell for his signature. Id.

133. A few minutes later, Bradbury emailed Percival and Reinhardt asking for a GSA pricelist

with the discounting off of commercial MSRP, which she defined as Express pricing. U.S. Ex.

19.

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134. Dixon sent her revised Final Proposal Revision at 8:49 a.m. 10 on January 25, 2007. U.S.

Ex. 20A (email); U.S. Ex. 20B (attachment). Dixon’s draft Final Proposal Revision was

significantly different from Bradbury’s draft BAFO.

135. The draft FPR eliminated the “Commercial Discounts” section that had described eSPA and

the “Price Reduction Monitoring” section, where Bradbury had proposed exceptions to the PRC

for any non-standard discounts Symantec offered under that policy. See generally U.S. Ex. 20B

(draft FPR).

136. The concluding section now stated not that the prices were fair and reasonable, but that “the

discounts . . . given to the Government are either equal to and/or greater than what is granted to

any commercial and/or Government customer.” Id. at 6.

137. The separate references to different basis of award customers were removed, and instead

the first page stated, “the basis for negotiation and award for the offer is predicated on Symantec

commercial class of customers.” Id. at 1.

138. Bradbury reviewed and responded with a quick question within minutes. See U.S. Ex. 22

(asking at 8:56 a.m., “should I change the reference to refresh #17 to #19?” and one minute later,

at 8:57 a.m., saying “Nevermind . . . [p]lease disregard”).

139. At some point within approximately the next forty minutes, Bradbury and Dixon spoke by

phone. Tr. at 1857:23–1858:1.

140. During that call, Dixon informed Bradbury that the format of the agreement had to match

Dixon’s template, and that provisions that did not match the template had to be taken out or else

10

As was made clear at trial, several emails were produced in discovery with the time stamp of a

different time zone. The Court references here the timing in Eastern Standard Time, which all

parties agree is correct.

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Dixon would not make an award. Tr. at 1858:10–19 (Bradbury); see also id. at 1865:2–3 (“It

was like take it or leave it and I’m not going to make an award.”).

141. Bradbury testified that she understood that Dixon changed the basis of award because she

did not want the different categories listed out and was merely “going to call them commercial

class of customers. They were all part of the commercial class of customers.” Id. at 1854:25–

1855:3.

142. However, Dixon did agree to make a few small changes to the draft FPR. She agreed to a

change in language from certifying that products were manufactured in the U.S. to language

saying that products were made in the U.S. or a Trade Agreement Act-compliant country. See

id. at 1860:10–1861:1 (acknowledging the change); U.S. Ex. 23B at 2 (revised FPR). Following

a sentence that had stated that no exceptions had been taken by Symantec, the final FPR added

the phrase “[a] statement of clarification was provided by Symantec dated December 12, 2006.”

U.S. Ex. 23B at 2. That statement of clarification—a list of exceptions taken to certain FAR

clauses—was resent by Bradbury to Dixon a few minutes later. U.S. Ex. 25A (email); U.S. Ex.

25B (attachment).

143. Most significantly to the case at hand, Dixon agreed to modify the phrase in the closure that

stated “the discounts . . . given to the Government are either equal to and/or greater than what is

granted to any commercial and/or government customer.” Tr. at 1863:25–1864:6 (Bradbury).

The revised version added the clause “under similar terms and conditions.” Id. Bradbury

testified that she proposed the change because “there’s no way that we could certify that [GSA

was] getting the best discount to any commercial customers . . . . [W]e have eSPA . . . . We can’t

agree to that.” Id. at 1864:1–3.

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144. The inclusion of that language meant that GSA was not guaranteed the best price; rather,

“one would have to compare the terms and conditions of a commercial sale to the terms and

conditions of the GSA sale to determine if they’re comparable for price reduction clause

purposes.” JX 001 at 214:2–11 (GSA 30(b)(6)).

145. Bradbury sent Dixon a revision “with the changes we discussed” at 9:41 a.m. U.S. Ex.

23A.

146. One minute after sending the revised FPR to Dixon, she reached out to Freedman,

Symantec’s in-house counsel, and sent him the revised version. U.S. Ex. 24A (email); U.S. Ex.

24B (attachment). In her email to Freedman, she wrote, “The format is a little different, but

enclosed is the letter.” U.S. Ex. 24A.

147. At 10:07 a.m., Dixon responded that the revisions were acceptable and requested a signed

copy in order to award the contract number. U.S. Ex. 26.

148. Exactly one hour and one minute after having been sent the revised FPR, at 10:43 a.m.,

Freedman responded, “Approved.” U.S. Ex. 27.

149. Freedman testified that had Bradbury flagged the substantive changes in the document, his

usual practice would have been to review them more carefully and consult someone with more

knowledge on GSA contracts. Tr. at 2369:13–25 (Freedman). Instead, he trusted Bradbury’s

judgment that the changes were merely to the formatting. Id. at 2370:7–10. What’s more,

Freedman was located on the West Coast at the time. Id. at 2353:5. That means he received the

revisions at 6:42 a.m. local time and sent his approval at 7:43 a.m. local time, making it even

more improbable that he reviewed it in any level of detail or discussed it with Bradbury or

anyone else before approving.

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150. Two minutes after receiving Freedman’s approval, Bradbury sent it on to Russell, saying:

“Attached is the [Final FPR] along with legal approval. The discounts are identified below.

Please print, sign, and return . . . . I will return to GSA this morning.” U.S. Ex. 28.

151. The discounts listed in that email reflected another change, which was that some of the

GSA discounts were calculated off of Government MSRP rather than Commercial MSRP. Id.

Bradbury recognized that change and updated the Discount Relationship Chart, which had

previously been calculated entirely off of “Commercial MSRP” to reflect “exactly what was in

the FPR.” Tr. at 1470:16. Bradbury became significantly argumentative on this point and

insisted that there was no meaningful difference, but the Court doubts she would have made the

change in her email and Excel file if it was truly the same.

152. At 11:00 a.m., Bradbury emailed Dixon to let her know that legal had approved and that

Russell would be stepping out of a meeting to sign it. U.S. Ex. 29.

153. At 11:18 a.m., Bradbury sent the Final FPR, signed by Russell, to Dixon by email. U.S.

Ex. 30.

154. Dixon notified Bradbury that Symantec’s GSA contract was assigned contract number GS-

35F-0240T and was effective as of that date, January 25, 2007. U.S. Ex. 579.

155. Dixon noticed an error in the letterhead on January 29, and Bradbury updated the first page

at her request that day. U.S. Ex. 34. Dixon faxed Bradbury a signed SF-1449 and a welcome

letter on February 2, 2007. U.S. Ex. 35A.

D. The Contract Period

1. Molina is Assigned as Contracting Officer

156. In March 2009, the administration of Symantec’s GSA Schedule contract was transferred

from Dixon to another GSA Contracting Officer, Patricia Molina. Tr. at 3221:14–16 (Molina);

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U.S. Ex. 221. Molina was an experienced contracting officer whose supervisor from that time

period opined that she was “stellar” and the “strongest contracting officer” in the branch. Tr. at

2840:7–16 (Morrison). The Court found Molina to be knowledgeable and forthright, and her

testimony credible and helpful.

157. Molina reviewed the file for the Symantec GSA contract when it was assigned to her but

could not locate any per-SIN CSPs. Id. at 3222:10–17 (Molina).

158. Shortly after Molina took over administration of the Symantec contract, Bradbury emailed

her a copy of the Discount Relationship Chart, saying, “Attached is the Discounting Policy chart

Symantec submitted to GSA at the time of negotiations. It was the basis for determining the

category of customer in the Symantec FPR.” U.S. Ex. 321A.

159. When Molina asked Reinhardt in November 2009 “Why do your distributors receive a

larger standard discount than GSA[?]” and “Why doesn’t GSA receive a non-std discount?”

Reinhardt again sent her the Discount Relationship Chart and noted that it explained the

differences in terms and conditions between GSA and channel partners. U.S. Ex. 479.

160. Although the Discount Relationship Chart was not part of the FPR, Bradbury admitted that

it “explained things,” Tr. at 1455:21–1456:6 (Bradbury), and Molina understood it to reflect the

price discount relationship, id. at 3224:19–21 (Molina).

161. Molina utilized the Discount Relationship Chart when administering Symantec’s GSA

contract to evaluate modifications and invoices. Id. at 3225:1–5. She testified that other GSA

contracts also had similar charts and that she utilized them in the same way. Id. at 3230:11–16.

For example, in her internal memorandum documenting a modification that extended a GSA

price reduction based on changes to the commercial pricelist, Molina noted that “Symantec’s

Basis of Award (BOA) category of customer is commercial customers. See the attached for

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discounts between GSA and Symantec’s commercial customers”—and attached the Discount

Relationship Chart. U.S. Ex. 245 at US-GSA-00003221–22; see also U.S. Ex. 248 at US-GSA-

00003363 (including the same phrase for Modification 40).

2. Bradbury Leaves Symantec

162. Bradbury was in charge of administering the GSA contract and ensuring compliance up

until April 2010, when she was laid off. Tr. at 1423:3–5 (Bradbury).

163. Reinhardt was in charge of administrative tasks related to the GSA contract, primarily

submitting modifications and updating the GSA pricelist. Tr. at 966:10–22 (Reinhardt). As a

part of that process, she was responsible for certifying that the previously disclosed CSPs

remained consistent. Id. at 967:24–968:9.

164. Even while she remained at the company, Bradbury did not play any active role in

preparing the modifications or confirming that the CSPs had not changed. Id. at 1953:7–14

(Bradbury). Reinhardt only passively monitored for information that CSPs had changed and did

not conduct any affirmative research such as analyzing sales data or inquiring internally at

Symantec. See id. at 968:22–980:18, 1005:9–14.

165. Bradbury was laid off by her supervisor at the time, Gigi Schumm, the Vice President for

Public Sector at Symantec. Id. at 2669:16–24, 2674:4 (Schumm). Schumm testified that she

found Bradbury “antagonistic and hard to work with.” Id. at 2673:25–2674:2; see also id. at

2703:12–25 (“Ms. Bradbury was . . . hard to work with, antagonistic, not a team player, and at

the same time I was really looking for somebody in that role who would be my second in

command, kind of my chief of staff. She refused to come to the office . . . . and I just came to

understand that she was just -- we were never going to have that relationship where she would be

my second in command . . . .”).

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166. Schumm never took any steps to familiarize herself with the terms of the GSA contract or

the history of its negotiations because she believed that Bradbury, with the legal support of

Freedman, was able to monitor compliance. Id. 2671:10–25.

167. Paul Lokie was hired to replace Bradbury, as well as expand Bradbury’s role to include

sales operations, in May 2010. Id. at 2453:23–25, 2455:2–5 (Lokie).

168. After Bradbury was laid off, Reinhardt continued to perform the same administrative tasks

and did not assume any additional compliance or monitoring tasks with respect to the GSA

contract. Id. at 928:10–16 (Reinhardt). Although she did not recall at trial whether anyone was

ultimately responsible for PRC compliance after Bradbury’s departure, in her deposition

testimony Reinhardt acknowledged that “[i]t was ultimately me, I guess.” Id. at 928:17–929:10.

169. Reinhardt’s supervisor, Lokie, believed that compliance with the terms of the GSA

contract, including the PRC, was Reinhardt’s responsibility. Id. at 2456:4–13 (Lokie). He

further stated that monitoring changes in commercial sales practices was not his day-to-day

responsibility, and that if it was part of the GSA Schedule contract, it would have been

Reinhardt’s responsibility. Id. at 2457:6–16. Lokie also did not double check the information

that Reinhardt was providing to GSA in those modifications in his role as a supervisor. Id. at

2457:20–24. In fact, Lokie did not recall receiving any training on even basic elements of

Symantec’s GSA contract such as the basis of award customer, despite having presumably been

hired in part to replace Bradbury. Id. at 2458:4–16.

170. Reinhardt went on maternity leave starting in October 2010. Before leaving, Reinhardt put

together instructions for another Symantec employee, Dawn Foster, to be able to submit the

modifications in her absence. Id. at 1148:18–1149:5 (Reinhardt); U.S. Ex. 1243 (email advising

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Molina of Reinhardt’s upcoming leave). Reinhardt returned only briefly in January 2011 before

putting in her notice and leaving for another position. Tr. at 1038:23–1039:1 (Reinhardt).

171. Schumm was at a loss when it came to pinpointing who at Symantec had responsibility for

ensuring compliance with the GSA contract. She understood Bradbury’s “team” to be in charge

of compliance and thought that Reinhardt had primary responsibility after Bradbury was

terminated, but that Lokie had responsibility while Reinhardt was on leave and after Reinhardt

left. Id. at 2674:17–2676:16. Schumm insisted that “Symantec had systems in place to monitor

the discounting practices” but did not know whether any human being was monitoring the

information in those systems and never inquired. Id. 2678:5–2679:8.

172. The Court perceives that Bradbury’s termination was largely motivated by interpersonal

reasons and that none of the supervisors in the department thought through the ramifications for

GSA compliance. Reinhardt, who had only served in a secondary role and had responsibility for

administrative tasks, had the entire responsibility for the GSA contract essentially dumped in her

lap—but without clear guidance about what her role and responsibilities were. Nor did she

receive adequate supervision for those tasks, as neither Lokie nor Schumm placed a priority on

GSA compliance or even made an effort to understand the nuances of Symantec’s GSA contract.

173. Morsell began working at Symantec in March 2011. Symantec’s Answer to Am. Omnibus

Compl. ¶ 24, ECF No. 78 (admitting that Morsell “has been employed by Symantec since March

2011”). Her job responsibilities included submitting modifications, reporting IFF, handling a

CAV, renewing the GSA contract, and preparing for an audit. JX 004 at 89:19–90:7 (Morsell

Dep.).

174. Morsell took a leave of absence starting in June 2012. Tr. at 2570:1–3 (Barton). Bill

Barton was a state and local contract administrator at Symantec who filled in for Morsell during

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her leave of absence and until the GSA contract was cancelled in September 2012. Id. at

2570:15–18; see also U.S. Ex. 1684 (June 20, 2012 email from Lokie informing the public sector

team that Barton would be assuming responsibility for the GSA contract administration). Barton

nevertheless did not believe it was his responsibility to monitor Symantec’s compliance with the

PRC during that time and was not aware of anyone who did have that responsibility. See Tr. at

2571:6–2572:14 (acknowledging the truthfulness of his deposition testimony on those points).

3. Pricelist Updates and Understanding of PRC During Life of the Contract

175. During most of the life of the contract, Reinhardt worked with Percival to update the GSA

pricelist whenever Symantec updated its pricelists. Tr. 966:20–22 (Reinhardt). Whenever

Symantec updated one of the relevant pricelists, Percival used a specially designed software

program to import the pricelist into the database, apply the pre-determined discounts to the new

list price, and if applicable, calculate the new GSA price. Tr. 1294:12–25 (Percival).

176. Symantec submitted numerous modifications to the GSA pricelist multiple times over the

life of the contract. See U.S. Exs. 206, 211, 214, 216, 219–20, 222, 224, 233–34, 239, 242.

Some of these contract modifications passed along price reductions to GSA under the Price

Reductions Clause. See DXs 33–34, 39, 44, 47.

177. Pricelists were updated as soon as GSA approved a modification, which would take

between four to eight weeks. Tr. 1149:14–19 (Reinhardt).

178. With each modification, Symantec provided a certification that “[t]he commercial

discounting policies and procedures disclosed by Symantec under the awarded contract dated

January 25, 2007 have not changed.” See, e.g., U.S. Ex. 206.

179. When submitting those modifications, Reinhardt did not take any steps to actively ensure

that her certification that commercial sales practices had not changed was accurate. Tr. at

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968:22–981:18, 1004:13–1005:14 (Reinhardt) (agreeing for a series of nearly identical

certifications that she did not do any independent analysis, review data, or reach out to anyone

else at Symantec in order to verify that the certification had changed). Reinhardt monitored an

internal website to learn about pricelist changes, id. at 1149:25–1150:5, but did not seek out

information about changes in non-standard discounting or rebates and instead waited passively to

be informed of them, id. at 1005:9–14.

180. Documents from the relevant time period also shed light on the contemporaneous

understandings of Bradbury, Reinhardt, and others at Symantec as related to the GSA contract:

a. In January 2008, Bradbury advised that where a reseller that would not “commit to

an initial order of any value,” discounts needed to be based on individual rather than

cumulative orders “[i]n order to avoid the price reduction clause on our GSA contract.”

U.S. Ex. 159 at SYM00364922. This demonstrates that Bradbury understood sales to

resellers to implicate the PRC, at least where terms and conditions such as initial order

value were the same.

b. In August 2008, a reseller sought to acquire Symantec products for its own internal use,

and Bradbury wrote that because the sale was considered commercial and the discounts

“exceed any discounts we offer to GSA . . . in order to avoid a price reduction on GSA

going forward, the Agreement . . . will have to include an upfront and/or annual

commitment that is non-cancellable.” U.S. Ex. 89 at SYM00362822. She noted that the

proposed site license would satisfy those requirements. Id. at SYM00362822–23.

c. In a December 2008 email, Bradbury admonished a sales representative who was

requesting an additional 5% discount off of the distributor price for a sale to a government

end user, saying, “You even indicate that there’s no competition . . . that just kills us with

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GSA. This will trigger a GSA price reduction which we have discussed with you many

times.” U.S. Ex. 164 at SYM01617690. She then suggested adding a specific clause

stating that the discount was to displace a named competitor. Id. at SYM01617691. This

shows that Bradbury understood sales to resellers, even those reselling to government end

users, to trigger the PRC. On the other hand, it also demonstrates that Bradbury believed

special approvals for competitive reasons would insulate the sale from the PRC.

d. In spring 2009, on an email involving Reinhardt and Knox, another public sector

employee, Deborah Vaughn, informed a sales representative that he needed approval for a

proposed discount of 67% off MSRP rather than 50% off of the distributor buy price as he

believed for a deal negotiated between Symantec and a state government agency. U.S. Ex.

93 at SYM00892587. Vaughn wrote, “Please note that this will trigger a price reduction

with GSA . . . so please provide in SymArt a compelling event for the price reduction so we

can show our auditors[,] [f]or example, to meet competitive pricing, or a customer

satisfaction issue, etc. . . .” Id. at SYM00892586. In a later email regarding the same deal,

Bradbury confirmed that the Texas sales representative “knows that if we offer Texas

pricing better than GSA it will trigger a price reduction on GSA.” U.S. Ex. 985 at

SYM01392707. This chain confirms that Bradbury and the public sector team understood

sales to state and local governments to trigger the PRC, but again thought that the concern

could be ameliorated with an eSPA approval.

e. A March 2010 email from Bradbury to three public sector employees (Reinhardt,

Foster, and Vaughn) explained, “[b]elow is the GSA price reduction clause along with my

redline comments specific to Symantec’s GSA contract” to provide them with guidance for

how to respond when state and local sales representatives “ask for clarification as to why

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they cannot offer [state and local] customer[s] a better discount or more favorable terms

and conditions than GSA customers.” U.S. Ex. 1126. In that email, Bradbury stated that

academic customers were not part of the Basis of Award, and that the Basis of Award was

“the Government Price List for products and maintenance and the commercial price list for

Professional Services.” Id. In that email, Bradbury indicated that the second PRC trigger

would be implicated “if Symantec offers higher discounts than GSA and/or better terms

and conditions to [state and local] customers . . . includ[ing] waiving the minimum order

thresholds applicable to discount bands.” Id. It also stated that the third PRC trigger would

be implicated by “[d]iscounts to [state and local] customers under the Government Pricelist

that are greater than the discounts to GSA, disturbs the price/discount relationship . . . .”

Id.

f. That same email identified several carve-outs to the PRC, including sales over the

maximum order threshold. Id. It also included the following:

Symantec also stated in its proposal that the following discounts to non-GSA

customer shall not constitute a price reduction:

Information regarding deviations from existing discounting policies was provided

in Symantec's original proposal submission. Any deviations from published

discounts require management approval. Deviations must be documented and

approved in accordance with the following guidelines: As previously disclosed to

GSA as part of Symantec’s established discounting policies, the Worldwide Sales

discounting tool referred to as “eSPA” was established to allow Symantec the

flexibility to respond to competition. This process provides non-standard

competitive pricing to strategic accounts by requiring commitments from the

identified account for annual quantity purchases, or to meet one of the following

guidelines; which are provided as examples:

(Note: these below examples should be included in any SymART request for [state

and local] discounts especially when the order doesn’t exceed the Maximum Order

Threshold)

1. To meet market competition or displace a named competitor at customer

site;

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2. Customers who agree to standardize on Symantec products and

services;

3. New market or market segment penetration;

4. Educational, including prime contractors, or Charitable organizations or

institutes;

5. Introduction of a new product and services through more aggressive

discounts and in exchange for press or customer references.

Id. This description makes clear that Bradbury believed—and instructed others who relied on

her guidance—that sales with non-standard discounts documented in eSPA or eSTA did not

trigger the PRC, at least under those conditions.

181. Ms. Morsell likewise understood during her time at Symantec that non-standard discounts

approved in eSPA for one of the disclosed reasons would not trigger the PRC. See DX 45

(stating in an August 2011 email to Harris that “[o]nly discount requests that meet one of the

deviations statements provided to GSA during negotiations are approved”).

4. CAV Visits

182. During the life of the contract, GSA conducted “Contractor Assistance Visits.,” colloquially

referred to as “CAVs” or “CAV Audits.” CAVs are conducted as interviews, lasting between 2

to 5 hours, during which the industrial operations analyst asks the contractor a series of questions

to determine if the contractor has an understanding of its contractual requirements and evaluate

whether the contractor has processes in place to ensure compliance. U.S. Ex. 405 at 4 (2008

CAV Manual); U.S. Ex. 409 at 4 (2011 CAV Manual).

183. Despite the colloquial name, CAVs are not audits. They are conducted by industrial

operations analysts who have minimal audit background. Tr. at 2965:8–2966:5 (Brady).

184. CAVs are not designed to determine compliance with the PRC. Id. at 2972:23–24; U.S. Ex.

405 at 35. The Industrial Operations Analyst only asks whether the contractor knows their basis

of award and has documentation identifying the basis of award, and if the contractor “has a

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system in place that monitors the pricing and discount relationship.” Ex. 405 at 36; Ex. 409 at

45.

185. Symantec had at least two CAVs during the life of the GSA contract, one in January 2009

and another in May 2011. U.S. Ex. 897 (2009 CAV Report); U.S. Ex. 1440 (2011 CAV Report).

186. Bradbury handled the January 2009 CAV on behalf of Symantec. U.S. Ex. 897 at 1. The

Report of the January 2009 CAV indicated that Symantec was aware of its Basis of Award and

“ha[d] a system in place to monitor the ‘Basis of Award’ discount relationship.” Id. at 3. In the

narrative section for “Basis of Award Findings,” the Industrial Operations Analyst wrote “[t]he

contractor insures [sic] that they do not discount at or below their GSA approved pricing to any

non GSA sales.” Id.

187. The May 2011 CAV was handled by Morsell. U.S. Ex. 1440 at 1. The report of that visit

again answered “yes” to both Basis of Award questions and noted that the Basis of Award had

been verified by reference to the FPR and SF-1449. Id. at 3. It also noted that Symantec had “an

effective monitoring system in place” and that GSA MAS refresher training was being developed

within Symantec. Id.

5. Internal Audit

188. From July through October 2010, Symantec’s Corporate Risk Assurance Team completed

an internal audit on Symantec’s discounting policies. U.S. Ex. 264B at 2 (Discounts Audit

Report). Steve Berney was the lead person conducting that audit. Tr. at 277:11–17 (Berney).

189. That audit was originally intended to examine discounting policies and guidelines,

particularly Symantec’s non-standard discounting policies. Id. at 288:16–19. At some point

during the audit interviews, the topic of the GSA contract came up and Berney discussed it with

his boss, Andrew Eacott. Id. at 313:4–11. At Eacott’s direction, Berney included a “light

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inquiry” into the GSA contract in the discounting audit. Id. at 313:10–14. Early in his light

inquiry, he was directed to Freedman and Lokie, who in turn directed him to Reinhardt. Id. at

316:6–317:10.

190. Berney and his colleague on the internal audit team, Sandra Amarante, held a meeting with

public sector sales team members, including Reinhardt and Lokie, on July 28, 2010. U.S. Ex.

259 (meeting minutes). They also followed up with Reinhardt and Lokie after the meeting,

collecting and reviewing various documents related to the GSA contract in the following weeks.

U.S. Ex. 1207; U.S. Ex. 288.

191. The final Discount Audit report was sent on December 7, 2010 to several individuals,

including Schumm and Reinhardt. U.S. Ex. 264A.

192. The report included several findings that implicated GSA compliance concerns. The

executive summary noted:

[I]informal communication processes between US sales teams (commercial, public

sector, and sales contracts) could create a situation whereby GSA discounts are no

longer competitive or in compliance with contractual terms, resulting in the

possible payment of restitution and/or fines to the US government. For

clarification, the GSA is an agency that ensures the government receives a discount

that is at or above the average discount being offered to a company’s non-

government customers. The lack of reporting, guidelines and communication

identified in the audit findings increases the risk of non-compliance with our

contract with the GSA.

U.S. Ex. 264B at 2.

193. The report also found that Symantec lacked “documented corporate strategies, goals, or

objectives that can be used to effectively guide the discounting practices of Symantec’s US sales

force,” and that creating a formalized discounting program was “not realistic at this point in

time” given the complexity of Symantec’s sales operations. Id. at 4. Relatedly, the report found

that there was inadequate data for historic discounting and suggested the key measure of adding

Base MSRP as a data field in the bookings database, and that discount reporting and monitoring,

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was done on an ad hoc basis. Id. at 5–6. The Audit Report also raised concerns with the process

for approving non-standard discounts, finding that approvals were inconsistent and often poorly

documented. Id. at 8.

194. Finally, the report raised the concern that a lack of formalized communication between the

commercial and federal sales teams resulted in the public sector team not learning about price

changes until after the fact and recommended including the public sector team on the “Channel

Notifications” distribution list. Id. at 9. That recommendation was completed in September

2010. Id.

195. The report was not sent to Freedman and he was not notified of the findings, although he

agreed at trial that it would have given him cause for concern if he had received them. Tr. at

2401:8–14, 2402:18–20 (Freedman). Lokie likewise did not recall seeing the report. Id. at

2461:1–5 (Lokie). Reinhardt was one of the recipients of the email and agreed that “any

information on [Symantec’s] discounting policies would have been important [for her] to know.”

Id. at 1041:7–14 (Reinhardt). However, the report was sent while she was on leave and she did

not recall reviewing it when she returned. Id. at 1039:18–23 (“[W]hen I came back from leave

. . . first day I came back, I put my two weeks’ notice in and I had hundreds of emails. So this

could have very well been overlooked.”).

196. In sum, despite raising major red flags for GSA compliance, none of the recipients of the

report took steps to follow up on those red flags.

6. Cancellation of the Contract

197. Not long after Morsell began working at Symantec, she started to have concerns about

Symantec’s compliance with the GSA contract. She raised those concerns with her supervisor,

Lokie, and her second-level supervisor, Schumm, sometime in 2011. Tr. at 2682:6–23

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(Schumm). Schumm asked Morsell to provide more data about the discounting policies that

concerned her, and Morsell told Schumm that she was having difficulty assembling

comprehensive data about discounting practices. Id. at 2689:23–2690:4.

198. In July 2011, GSA’s Office of Inspector General sent Symantec a letter informing

Symantec that GSA would be performing a pre-award audit of the CSP information that

Symantec would be submitting in connection with the upcoming extension of the GSA contract.

DX 637 at US-GSA-00213260–62.

199. Molina expressed concerns around this time, as well. In September 2011, she responded to

a modification request submitted by Morsell asking why some invoices to channel partners

indicated a higher discount than the discount percentages in the CSP. U.S. Ex. 106 at

SYM01355276. Although Morsell noted that one invoice included an additional discount based

on order volume, Molina noted that “the Government is also ordering a large dollar volume” and

“the CSP does not reflect that the [Most Favored Customer]/[Basis of Award] receives additional

discounts due to an order volume.” Id. at SYM01355274–75. Molina concluded that those

invoices appeared to be PRC violations, but that GSA could “handle [them] during the audit.”

Id. at SYM01355274. Molina likewise confirmed in her testimony that GSA would not typically

terminate a contract at that point over a potential violation but would instead address the

violations during the upcoming audit. Tr. At 3250:16–22 (Molina).

200. Also in September 2011, Morsell asked Molina to send her the original CSPs, noting that

Morsell only had the Discount Relationship Chart. DX 673 at SYM01351185. Molina

responded that she did not have the per-SIN CSPs, either, and Morsell observed that it was

possible that Symantec had not submitted per-SIN CSPs with the original offer. Id. at

SYM01351184; Tr. at 3252:19–3254:2 (Molina).

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201. Symantec submitted its renewal package for the GSA contract on November 29, 2011. See

U.S. Ex. 297A (first of several emails attaching renewal package).

202. Molina did not review the renewal package because she was waiting for the pre-award audit

to be completed. Tr. at 3261:18–23 (Molina). The pre-award audit was never completed,

however, because Symantec never provided the GSA Auditor with the data GSA was requesting.

Id. at 3030:13–16 (Harris); U.S. Ex. 1613 (email from March 2012 noting that “Symantec’s

inability to provide usable sales data, to date, has delayed our planned preaward examination”).

203. Instead, Symantec provided written notice to GSA on April 30, 2012 that Symantec would

be cancelling its GSA contract altogether, effective 30 days from the notification. U.S. Ex.

300B. Because the contract was cancelled, GSA also cancelled the pending pre-award audit for

the renewal. U.S. Ex. 482.

204. The stated explanation for the cancellation was to “align[] with Symantec’s commercial

business strategy to flow sales through our partner network.” U.S. Ex. 300B.

205. An email from Lokie to Schumm dated April 24, 2012 sent a draft cancellation letter and

noted that Lokie was “comfortable with the recommendation” but that Schumm was “struggling

with this decision because of lack of data.” U.S. Ex. 299 at 1. After receiving input from legal

counsel Freedman, Schumm agreed to cancel the renewal submission two days later. U.S. Ex.

1629 at 1.

206. Schumm testified that terminating the GSA contract was “largely a business decision”

based both on the fact that Symantec already had well-known resellers that could sell Symantec

products on their own GSA schedule contracts and the fact that Morsell had raised concerns that

Schumm did not fully understand. Tr. at 2706:6–24 (Schumm). She therefore determined that

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“it was just a risk/reward kind of decision that I felt like there would not be a significant risk to

our government business to not hold the schedule.” Id.

207. Symantec’s GSA contract terminated at the end of September 2012. Id. at 2570:12–14

(Barton); U.S. Ex. 2177B at 2 (“Operations Update” presentation noting that “Symantec’s GSA

. . . contract expired September 30, 2012”).

208. A slide deck providing an “Operations Update” from late 2012 explained that “[d]espite the

expiration of our GSA contract, Symantec still needs to maintain discipline with its discounting

practices” because Symantec submitted CSPs in connection with reseller letters of supply and

“not properly or fully disclosing our discounts” could give rise to FCA liability. U.S. Ex. 2177B

at 4.

209. Although GSA had not yet conducted the pre-award audit, because of the unusually abrupt

cancellation and awareness of some discounts in the data that might indicate PRC violations,

GSA decided to open a post-award audit to investigate Symantec’s compliance with the PRC.

Tr. at 3062:2–17 (Harris). On May 15, 2012, GSA’s OIG informed Symantec that it would be

opening the post-award audit. DX 641 at US-GSA-00221417.

210. During 2012 and early 2013, Symantec met with and provided information to GSA’s OIG

team in conjunction with the post-award audit. See U.S. Ex. 1800 (answering questions in a

January 2011 email and referencing earlier presentations the previous November). The post-

award audit was eventually ceased, however, and GSA’s OIG instead assisted the government in

the present case. Tr. at 3002:25–3003:7 (Harris).

E. Damages

211. The Court heard expert testimony from two experts for the United States, Dr. Holt and Dr.

Gulley, one expert for California, Dr. Nye, and one expert for Norton, Mr. Tucker. It discusses

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the United States’ experts first, along with Mr. Tucker’s criticisms of their work, and discusses

the damages evidence for California in a later section.

1. Testimony of Dr. Holt

212. In addition to recreating and correcting Percival’s Frequency Chart, as discussed above, Dr.

Holt also conducted analyses to: 1) Create similar frequency charts for other years; 2) Determine

transactions where “band jumping” occurred, meaning that the deal corresponded to a higher

band than the order volume or accumulated points entitled it to; 3) Match product SKUs across

bands and programs for single products; 4) Create a data set of transactions that potentially

violated the PRC based on counsel’s assumptions; and 5) Group the transactions identified as

potential violations with the other line items sold in the same order. Tr. at 3447:10–3448:3

(Holt).

213. Following the same process that she had used to create the “Corrected Frequency Chart,”

Dr. Holt created Frequency Charts for the subsequent years that the contract was in effect, 2007–

2012. Id. at 3449:15–18. The data used for the 2007–2102 charts indicated the type of

customer, obviating the need for any assumptions about which sales were to channel partners.

Id. at 3471:25–3472:9. When those decile distributions were plotted alongside each other and

the Percival Frequency Chart, the Percival Chart’s curve was the clear outlier.

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Slide 25 of Dr. Holt’s testimony, U.S. Demon. 5; Tr. at 3475:4–19.

214. Dr. Holt also broke down the discount ranges into the 0–40% and 40–100% ranges for each

of those years in order to emphasize the contrast between the Percival Chart (in which over 98%

of discounts were under 40%) and the actual distribution (which was generally more in the 60–

70% range). See Slide 23 of Holt’s Testimony, U.S. Demon. 5. Mr. Tucker took issue with the

use of the 40% cutoff, testifying that a 35% or 30% cutoff would have been more consistent with

the GSA discounts that were in fact negotiated and that gives a “much different impression” of

the discount distribution. Tr. at 4309:20–4311:23 (Tucker). The Court considers this

disagreement entirely beside the point. Not only is it just two different ways of depicting the

same data, GSA was provided with and evaluated a decile chart during the negotiations. Any

dispute between the parties about the best way to present that distribution after the fact is

immaterial.

215. With respect to the “band jumping” analysis, Dr. Holt combined data showing Rewards

points accumulation, as well as “conversion” points and manually added points, to create a total

of running points for customers at a given time, and compared that to sales data for purchases of

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less than $100,000 under the Rewards program to determine how many of those purchases were

at higher—and more advantageous—bands than the point total the customer was entitled to. Tr.

at 3480:6–3483:3 (Holt). She identified 15,101 line items that were sold at a band one level

higher than the Rewards points indicated; 6,983 line items sold at two bands higher; 1,899 line

items sold at three bands higher; and 1,138 line items sold at four bands higher. Id. at 3483:20–

23.

216. Dr. Holt conducted a similar analysis to identify band jumping on Government and Express

pricelists (excluding GSA sales) where the sales price was for a more advantageous band than

the order quantity would have qualified for. In both cases, Dr. Holt identified a significant

number of line items that were sold at a higher band price than the volume quantity of the order

entitled the purchaser to receive. Id. at 3486:23–3488:15.

217. With respect to the SKU comparison chart, Dr. Holt matched different SKUs for the same

product to create a key that would allow for simple comparison—the kind of “Rosetta’s Stone”

that Symantec lacked. That was relatively straightforward with the new SKUs, where the first 11

digits identified the product, and the final two digits indicated the buying program and band. Id.

at 3494:15–17. For the old SKUs, though, Dr. Holt had to use the product descriptions in the

“SYMOM” data, which were often abbreviated or inconsistent, to generate a consistent SKU

root. Id. at 3495:25–3496:22. She then used the cleaned up SKU description roots to assign a

unique identifier for each combination in SYMOM. Id. at 3496:24–3497:15. The result of this

complicated and sometimes manual review was a SKU Comparison Chart that allows the user to

identify the relevant SKUs for each product. U.S. Ex. 368.

218. Next, Dr. Holt created a dataset of sales that potentially violated the PRC, referred to as

the “Potential PRC Sales Chart.” She started by using Symantec’s sales data to filter out

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irrelevant sales, such as retail sales, invoice-only sales, and non-U.S. sales. Tr. at 3502:22–

3503:13 (Holt). She then further filtered the data to include only line items that received a non-

standard discount, products that were on GSA’s pricelist, orders less than $100,000, and only

Rewards and Express sales, and she excluded sales where the channel indicated Government or

Educational. Id. at 3504:2–3505:4. She then merged that filtered dataset with several other

datasets such as comment and reason fields from eSPA/SFDC data, any comments from the

Oracle sales data, the assigned SIN, product group, and “bucket” provided by counsel, and

several different SKUs from the SKU comparison chart. Id. at 3505:17–3507:3.

219. The resulting dataset of line items—which spanned three Excel sheets due to its size—

represented the universe of potential PRC violations. U.S. Exs. 1958, 1959, 1960. In those

datasets, Dr. Holt identified over 16,000 line item entries that did not have an eSPA or SFDC

entry. Tr. at 3518:25–3519:4 (Holt). Dr. Holt did not rely in any way on Mr. Harris when

compiling that data. Id. at 3589:21–23.

220. Norton’s expert, Mr. Tucker, had criticized Dr. Holt’s analysis in part because it was done

on a line item level rather than an order level. In response, Dr. Holt also assembled two order

level charts using a similar technique, one for commercial transactions and one for the

government buying program that excluded federal purchasers. Id. at 3524:24–3525:12. This

chart added back in line items that had been excluded in the previous data set because they did

not receive a non-standard discount and calculated the discount for the entire collective order.

Id. at 3525:23–3526:11. Dr. Holt could not, however, match the items to buckets in this

approach because a single order might contain different categories of products. Id. at 3527:15–

22.

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221. For both the line item and order level charts, the United States added two more columns

indicating whether or not each given line item should be included in Dr. Gulley’s damages

calculations based on two different theories of liability. U.S. Summ. Ex. 1. Those columns were

originally derived by the work product of Harris, the excluded expert. Tr. at 3640:21–22 (Holt).

2. Testimony of Dr. Gulley

222. The United States’ damages expert, Dr. Gulley, testified at length about the damages

calculations he performed in this case. Dr. Gulley performed his calculations with two different

data sets that were compiled by Dr. Holt and narrowed down by the United States. Dr. Gulley

did not independently assess the liability assumptions provided by counsel. Tr. at 3713:1–16

(Gulley).

223. The “FPR Review” data set included transactions that the United States believes violated

the PRC, meaning they were the transactions on which Symantec offered deep non-standard

discounts to commercial customers on standard orders under the maximum order threshold of

$100,000. U.S.’s Prop. FF&CL ¶ 488; U.S. Summ. Ex. 1.

224. The “FPR Plus Review” dataset included, according to the United States, transactions with

deep non-standard discounts to commercial customers that either had no eSPA entry or whose

eSPA entry was based on reasons dissimilar to those disclosed during negotiations. U.S.’s Prop.

FF&CL ¶ 493; U.S. Summ. Ex. 1.

225. Despite the rather confusing nomenclature, the “FPR Plus” dataset was actually more

generous to Norton because it excluded transactions based on the eSPA non-standard discounting

practices that were disclosed to GSA, such as sales made for competitive reasons that had an

eSPA approval. In fact, Bradbury testified that she understood transactions without an eSPA

would trigger a price reduction. Tr. at 1936:20–24 (Bradbury) (“Would a nonstandard discount

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to a customer in Symantec’s commercial class of customers on an order less than the maximum

order threshold that did not have an eSPA trigger a price reduction under Symantec’s PRC? A. It

would . . . .”). In other words, the FPR Plus dataset more closely aligned with Symantec’s own

subjective understanding of the PRC as it applied to the contract.

226. Within each of those datasets, Dr. Gulley used two separate methodologies referred to as

the “Base MSRP Method” and the “Banded MSRP Method.” As the names suggest, the Base

MSRP Method compared the actual sale price with the Base MSRP to measure discounting,

whereas the Banded MSRP Method compared the actual sale price with the standard buy price

(after calculating buying programs and channel discounts). Tr. at 3715:12–3716:7 (Gulley).

227. Dr. Gulley first compiled a set of actual GSA sales of Symantec products by using IFF

sales data, filtering out non-GSA purchases, and merged it with additional information from the

SKU comparison chart and Symantec’s pricelists. Id. at 3718:2–3720:4 (Gulley); Slide 10 of Dr.

Gulley’s Testimony, U.S. Demon. Ex. 6.

228. The way Dr. Gulley calculated the “should have received” discount varied between the

Base and Banded MSRP Methods. In the Base method, Dr. Gulley used a basic algebraic

formula: that the ratio between the price the government paid and the actual price charged to

commercial customers should have equaled the ratio between the identified GSA discount and

the identified commercial discount on the Discount Relationship Chart.

Slide 20 of Gulley Testimony, U.S. Demon. 6; Tr. at 3729:5–21 (Gulley).

229. The right-hand side of that formula, for which the different variables are available in the

Discount Relationship Chart, can be simplified to a single number referred to by Dr. Gulley as

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the “Discount Relationship,” or “RC.” Tr. at 3729:23–3730:7 (Gulley). So, for example, for a

SIN where the GSA discount was 27.5% off Commercial MSRP and the Distributor Discount

was 38% off Commercial MSRP, the Discount Relationship would be 1.1694: the ratio of (1-

0.275)/(1-0.380). Id. at 3731:10–21 (walking through the example on Slides 21–22).

230. Because the comparison of the prices paid by GSA and the applicable commercial customer

should, in theory, have the same discount relationship, Dr. Gulley was able to solve for the price

GSA should have paid by multiplying the actual commercial customer price by the discount

relationship. Or, in mathematical terms, PA = PB * RC. Id. at 3730:8–12.

231. Where there were ranges in the applicable commercial customer discounts, Dr. Gulley used

the highest discount. This was the most conservative estimate, because a higher commercial

discount would lead to a lower discount relationship ratio, and therefore a lower “should have

paid” GSA price. Id. at 3735:24–3737:20 (explaining and providing an example).

232. The process for calculating the should-have-paid discount was similar in the Banded

Method, except that in the Banded method Dr. Gulley assumed that the discounts for distributors

and resellers in the Discount Relationship Chart were the channel discounts and calculated off of

standard buy price instead of base MSRP. Id. at 3739:5–10.

233. Of course, the multitude of sales to both GSA and commercial customers did not neatly

align. On the instruction of counsel, Dr. Gulley therefore grouped the sales data into

“buckets”—unique combinations of SIN, product category, and quarter. Id. at 3720:16–21

(Gulley); Slide 13 of Gulley’s Testimony, U.S. Demon. 6; U.S. Ex. 1923 (bucket look-up table).

This allowed him to group products by type and time so that the comparisons between GSA and

commercial transactions would be an “apples to apples” comparison. Tr. at 3721:1–4 (Gulley).

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234. The bucketing approach was a logical one to use because the FPR (and the Discount

Relationship Chart) contained different discounts for each product group and SIN, whereas a

given commercial order might include multiple SINs as well as items that were not available on

the GSA pricelist.

235. One potentially concerning feature of the bucketing methodology is that because the

buckets were divided by quarter, some of the GSA sales for which Gulley calculated a discount

occurred before the allegedly PRC-triggering commercial transactions in the same bucket. Id. at

3872:6–13. Similarly, the first bucket included at least one GSA sale that was booked in the first

weeks of January 2007, before the contract became effective. Id. at 3872:17–21. Still, the

United States is correct that if deep discounts in preceding quarters would have likewise

triggered the PRC, any inconsistent timing within each bucket had at most a minimal effect on

damages. U.S.’s Resp. at 44–45.

236. Norton’s expert also criticized Dr. Gulley’s use of a line item, rather than order, analysis.

In response to that criticism, Dr. Gulley also conducted a separate order level review. Tr. at

3771:20–3772:2 (Gulley). He used the Banded MSRP method because the number of missing

MSRPs was significant at the order level and used time periods instead of buckets (since the

buckets were grouped by SIN and product type). Id. at 3772:9–3773:18. In each scenario under

this order level analysis, however, Dr. Gulley’s damages were significantly higher. Id. at

3774:2–3.

237. Mr. Tucker, on the other hand, calculated that applying order level discounts instead of line

item discounts would reduce Dr. Gulley’s estimated damages for the FPR Base Review by

$129.9 million and the FPR Plus Base Review by $117.7 million on a standalone basis. Tr. at

4400:12–19 (Tucker). He criticized Dr. Gulley’s “order level” analysis as faulty because it

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abandoned the bucketing approach. Id. at 4423:12–19. Mr. Tucker’s criticism here is well-

taken. Dr. Gulley did not convincingly explain why the order level discount calculated by Dr.

Holt could not be applied to the bucketing method. However, Mr. Tucker’s point also serves to

underscore the overall conservative effect that the bucketing approach had on the damages

calculation.

238. For each “bucket,” Dr. Gulley chose ten transactions that corresponded to either the FPR or

FPR Plus method. For the Base method, he then took the average discount for those ten

transactions and applied the Discount Relationship Ratio from the Discount Relationship Chart

to determine what GSA’s “should have received” discount for each bucket would have been. See

Tr. at 3741:14–3743:1 (Gulley) (explaining example on Slides 36–38). For the Banded method,

Dr. Gulley only averaged the ten discounts because the Banded method assumed that the

discounts in the discount relationship chart were the channel margin discounts. Id. 3743:3–13.

The “should have received” GSA discount for each bucket was compiled in a single table. U.S.

Ex. 360.

239. The ten transactions that were averaged for each bucket were identified by counsel. Tr. at

3778:6–9 (Gulley). This specific step in the process was unreasonable. Although bucketing by

line item was reasonable, ignoring the order level discounts for those line items when calculating

the “average” discount resulted in an unreasonably inflated average “should have received”

discount. For example, Norton points to an order in which a customer paid full price for two

years of service and received an additional month of service at a 96.7% discount, but Dr. Gulley

included the 96.7% discount for that line item in his analysis. See Tr. at 3853:23–3856:22

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(discussing order to Promise Technologies). 11 In his testimony, Mr. Tucker also pointed to other

examples in which Dr. Holt’s work identified order level discounts significantly lower than the

line item discount that Dr. Gulley selected and averaged when calculating the “should have paid”

discount for each bucket. See id. at 4395:9–4397:13 (Tucker) (describing two examples).

240. Dr. Gulley acknowledged that he had asked why ten line items were selected, and the

United States had explained that its position was that even choosing just the single, largest

transaction would have triggered the PRC; therefore using the average of ten transactions was an

attempt to be more conservative that would inure to Norton’s benefit. Tr. at 3869:11–25

(Gulley).

241. After deriving the “should have received” discounts for each bucket, Dr. Gulley conducted

eight separate damages analyses on the GSA sales data that varied by FPR or FPR Plus

assumptions, Base or Banded methodologies, and stratified or non-stratified calculations. Id. at

3745:14–17.

11

Dr. Gulley maintained that this discrepancy was because the final month fell into a different

“bucket” than the other two. Tr. at 3856:23–3858:15 (Gulley). On its own, the Court would not

find a single example of this situation problematic because grouping by some time period was

necessary, and lines had to be drawn at some point. Using larger time divisions could have

increased inaccuracies in the timing of PRC-triggering sales, which Norton also complains about,

and a shorter time period may have led to more incongruent cutoffs like the Promise Technology

example.

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Slide 42 of Gulley’s Testimony, U.S. Demon. Ex. 6. For both the FPR and FPR Plus datasets,

the Base Method Stratified calculation returned the most conservative estimate. Tr. at 3745:18–

23 (Gulley).

242. For each GSA line item sold, Dr. Gulley applied the “should have paid” discount for the

corresponding bucket and compared it to the actual sale price. Where the GSA sale price was

lower, no damages were attributed to that sale, but where the actual GSA sale price was higher

than the “should have paid” price, the d

This text is long and has been trimmed here. Open the source document for the complete record.