Oracle paying almost $200 million for bad sales practices

Oracle has been forced to pay the considerable sum of $199.5 million in the largest False Claims Act settlement yet dealt with by the General Services Administration. Both the Oracle corporation and Oracle America have agreed to pay over the massive sum, plus interest, after the lawsuit was settled by the GSA. The settlement stems from a lawsuit made by a former Oracle employee, according to ZDNet.

The employee, Paul Frascella, filed the lawsuit on behalf of the United States, following the whistleblower provisions of the False Claims Act. For filing the lawsuit, Frascella gets to hold onto $40 million of the settlement agreement. The case originated from a contract Oracle entered in 1998, with the GSA's Multiple Award Schedule program. The program provides the government and other GSA-authorized purchasers with a streamlined process for purchasing commercial goods and services.

Oracle did not follow through with the contract. By the time the dust settles from the lawsuit, the company will likely have paid out more than $200 million dollars. According to the lawsuit, the company made the following infringements:

  • Oracle lied to the General Services Administration about its sales practices and discounts.
  • Oracle did not provide current, accurate, or complete information about its sales practices and discount policy.
  • Oracle did not tell the GSA about discounts it gave to existing customers - which were higher than the discounts they had given the GSA and its associates.

Of course, the downside to these claims is that the lawsuit suggests the company knowingly made the infringements. If they are true, however, then Oracle has technically attempted to charge the United States government more than it charges companies within the United States for software. Suffice to say, the United States government would be angry with such a possibility, and because of the infringements, it isn't hard to see where the settlement fee comes from. Oracle released the following statement, despite the mess they found themselves in:

Oracle has settled a qui tam case with the General Services Administration relating to a contract that dates back 13 years ago to 1998. Oracle vigorously denies that it did not scrupulously adhere to the pricing requirements of that contract. The company has always had strong controls in place to insure that the government agencies who purchased from the GSA schedule received fair pricing. Oracle never committed any fraud whatsoever. Given that the events surrounding this case took place so long ago, not surprisingly many of the witnesses are no longer available or do not clearly recall these events. Oracle has therefore decided to avoid the distraction and high cost of litigating this case by settling. We remain committed to the highest principles of integrity in our relationships with Government customers.

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