CrowdStrike, Carahsoft Under Fire for IRS Security DealCrowdStrike, Carahsoft Under Fire for IRS Security Deal

We appear to know more about an FBI raid at the headquarters of Carahsoft Technology Group in Virginia last fall.

A new report from Bloomberg, citing "people familiar with the matter," says the government is investigating a $32 million deal between Carahsoft and CrowdStrike, which dealt with its own challenges last year after its security software update took down Windows operating systems around the world.

The reported investigation by the Securities and Exchange Commission and the U.S. Justice Department centers on a $32 million deal between CrowdStrike and Carahsoft, the provider of IT solutions to government agencies. Carahsoft was supposed to provide CrowdStrike security tools to the Internal Revenue Service in 2023, but the IRS never bought the products, the sources told Bloomberg.

A CrowdStrike spokesperson told the financial news and information company that it stands by the sale agreement.

Carahsoft isn't new to controversy, as the federal government is separately investigating if the company has been involved in overcharging for products. Furthermore, Carahsoft and VMware agreed to pay a $75 million fine 10 years ago after the government accused them of violating the False Claims Act by "misrepresenting their commercial pricing practices and overcharging the government on VMware software products and related services," the Department of Justice said at the time.

Related:FBI Raids Carahsoft HQ Amid Overcharging Allegations

Friday's news wasn't great for CrowdStrike stock, which fell nearly 7%, though that likely wasn't the only impetus for the drop since the Nasdaq was down more than 2% for the day. Bloomberg speculated that the deal between CrowdStrike and Carahsoft was big enough to have had an impact on the security company's fiscal 2023 earnings report. It's share price jumped 10% after the report landed.