Oracle is target of Justice Department lawsuit

DOJ joins whistleblower case alleging company overcharged government

The federal government continues to join whistleblower lawsuits that allege contractors are not giving the government their best prices.

Oracle Corp. is the latest target of a federal lawsuit, which has been filed under the False Claims Act in the U.S. District Court in Alexandria, Va.


RELATED STORIES:

NetApp settles GSA dispute for $128M 

EMC vows to fight GSA pricing allegations 

Cisco, GSA fall out over schedule contract 

Sun withdraws from GSA Schedule


The case was instigated by a whistleblower, who claims that Oracle failed to disclose discounts that it gave to its favored commercial customers, Bloomberg reported.

The General Services Administration requires that schedule holders give the government its best prices.

The whistleblower is former Oracle employee Paul Frascella, who filed his complaint in May 2007. The Justice Department joined the lawsuit in April, according to Bloomberg.

Officials with Oracle declined to comment.

The case against Oracle comes on the heels of a settlement the Justice Department reached with EMC Corp., which agreed in May to pay $87.5 million to settle similar charges involving its pricing on the GSA schedule. 

In April 2009, NetApp Inc. paid $128 million to settle its dispute with the Justice Department and GSA.

The EMC and NetApp cases also were instigated by whistleblowers. In the NetApp case, whistleblower Igor Kapuscinski received $19.2 million as part of the settlement.

Other companies that have come under fire from the Justice Department and GSA inspector general include Cisco Systems Inc., Sun Microsystems and Panasonic Corp.

Often the issue of pricing comes up when companies attempt to renew their GSA schedule. The result has been that several companies, such as Sun and Cisco, decided to no longer hold their GSA schedules directly and instead use third parties to sell through GSA.

About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

Reader Comments

Fri, Oct 7, 2011

Time to protest at Oracle head quarters.

Tue, Aug 3, 2010 Mariedu

Nice to read that someone is paying attention to the ongoing misrepresentation of pricing from Oracle. If this sounds bad, someone should investigate the mess they've made of the higher ed market: monopolistic pricing, threats when pricing is discussed, blackmail pricing. And folks wonder why going to college is so expensive?

Thu, Jun 17, 2010 Charles Washington, DC

And this is surprising, why? Oracle has been playing / praying on department agencies by pitting programs against each other and not disclosing its discounts and getting away with it for a while. This is further complicated by the model of using small business to funnel sales through, which is a creation of the Federal government and ultimately has failed. This process of going through resellers not only leads to increased costs due to paying the middle man, but also confusion, because we as a Federal entity are required to bounce between multiple small vendors selling the same thing to ensure we are not doing directed sales. All this is fine and dandy for support services, but makes no sense for sale of software that I can only really get from Oracle in the first place and the small business is providing no value too. There is no, and I repeat no, benefit to funneling these purchases through small business.

Thu, Jun 17, 2010

Your closing point that certain companies are moving to resellers infers that this MAS contract compliance requirement then goes awawy. It doesn't, in fact resellers are now taking on this liability and the GSA IG is focusing in on this compliance provision. The key point here is that GSA needs to narrow their BOA (bases of award), get fair pricing, (NO BODY GETS BEST PRICING 24x7), and then the MAS Program becomes what it was founded on, i.e, COMMERICAL PRACTICES!!!!!!! Yes there is a need for the IG and DOJ but there is also a need for quality Commerical businesses to help the Federal Gov't meet it's missions 24x7! Let's focuse on making improvements - the new GSA Administraor has the recommendations and authority to correct what has become some gray areas in the MAS Program BOA/MFC (Most Favored Customer).

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