Oracle Faces Whistleblower Lawsuit for Overcharging U.S. Government
Oracle Corp., the world’s second- biggest software maker, faces a lawsuit brought by a whistleblower and the U.S. Justice Department claiming it overcharged the government by tens of millions of dollars. Oracle failed to disclose discounts that it gave its most favored commercial customers, according to a complaint in federal court in Alexandria, Virginia.
Oracle, like thousands of others vendors, sold products to the United States Government through Multiple Award Schedule agreements, which are negotiated by the General Services Administration (GSA). Once companies secure such contracts, government agencies may order products on GSA schedules without going through elaborate procurement programs. In return, the government is required by federal regulation to receive discounts equal to or greater than the discount given to that firm’s most favored customer, and contractors are supposed to report such discounts to the government.
The complaint alleges “various schemes Oracle used to give commercial customers deeper discounts than the GSA schedule provided.” Taxpayers “overpaid for each Oracle software product by the amount of discounts and reductions from other commercial pricing practices that should applied to each such purchase,” according to the complaint.
In October 2006, Oracle paid $98.5 million to settle a False Claims Act lawsuit over GSA Multiple Award Schedule pricing disclosures at PeopleSoft Inc., a software maker. Oracle bought PeopleSoft in January 2005 for $10.3 billion. PeopleSoft was accused of understating the discounts it provided to commercial customers, including one that got up to 74 percent off the listed price.
The case is U.S. v. Oracle Corp., 1:07-cv-00529, U.S. District Court, Eastern District of Virginia (Alexandria).