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SOFTWARE INDUSTRY NEWS |
Oracle gets on the wrong side of the US government |
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The United States government's Department of Justice has filed a complaint under the False Claims Act against Oracle Corporation and Oracle America Inc., alleging that the company defrauded the United States on a General Services Administration (GSA) software contract in effect from 1998 to 2006, which involved hundreds of millions of dollars in sales.  The lawsuit against Oracle contends that it misrepresented its true commercial sales practices, ultimately resulting in inferior deals with government customers as compared to those with its commercial customers. Under the contract, GSA used Oracle’s disclosures about its commercial sales practices to negotiate the minimum discounts for government agencies who bought Oracle software. The contract required Oracle to update GSA when commercial discounts improved and extend the same improved discounts to government customers. Some reports said Oracle was required to offer the US government discounts between 40% and 70% in line with offerings to similar-sized customers. Instead, in over 90% of corporate deals, Oracle gave larger discounts to non-government customers and manipulated deals in ways to exclude their reporting. Oracle's sales to the US government over the duration of the contract were reported at just over a billion dollars in software and product support. The fraud amount is expected to become clear at the trial. The suit was originally filed on by Paul Frascella, Senior Director of Contract Services at Oracle. The False Claims Act allows private citizens with knowledge of fraud to file whistle-blower suits on behalf of the United States and share in any recovery. If the United States intervenes in the action and proves that a defendant has knowingly submitted false claims, it is entitled to recover three times the damage that resulted and a penalty of $5,500 to $11,000 per claim. "We take seriously allegations that a government contractor has dealt dishonestly with the United States," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "When contractors misrepresent their business practices to the government, taxpayers suffer." |
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