Grainger accused of over-billing the U.S.

W.W. Grainger Inc., the Lake Forest-based building maintenance supplies distributor, was sued by a former employee-turned-whistleblower claiming the company over-billed the federal government, according to an unsealed federal court complaint.

The company exceeded its contractually agreed upon 26 percent product mark-up in billing more than 40 different government accounts, former district sales manager Brian Holbrook said in the complaint filed at the U.S. District Court in Milwaukee.

"Grainger attempted to obtain federal funds through the submission of false or fraudulent claims for payment," Holbrook said. The suit, which was first filed under seal two years ago, was unsealed Jan. 29 after the U.S. government decided to intervene on Holbrook's behalf.

Grainger fell $2.43, or 3.1 percent, to $76.65 at the close of New York Stock Exchange composite trading Friday. The company employs more than 17,000 people and had $6.42 billion in revenue in 2007, according to its Web site and Bloomberg data.

The company has about $750 million in annual sales to the government, according to the complaint.

"The company takes this allegation seriously," Grainger said in a statement. "Although Grainger believes the company has fully complied with its contract, it intends to carefully review the allegations to ensure it meets its obligations to its customers."

Grainger first entered into the contract with the General Services Administration in 1999 and the pact was extended in 2004, the company said. The Department of Justice told Grainger on Dec. 13 the company may not have complied with the disclosure and pricing provisions of the contract and the government may have been overcharged, the company said.

"The Justice Department had indicated it is willing to meet to discuss these matters and Grainger anticipates that a meeting will soon be scheduled," it said.

Holbrook's lawsuit seeks a court order barring the company from further overcharges, together with damages of at least $5,000 but not more than $10,000 for each instance of overcharging.

Industrial Distribution magazine ranked Grainger fourth in its 2007 "Big 50" list of the largest industrial distributors.