Oracle pays $46M to settle false-claims charges against Sun

Justice says Sun solicited kickbacks, rigged prices

Oracle Corp. has agreed to pay $46 million to settle claims related to a suit against Sun Microsystems Inc., according to a Justice Department announcement.

This settlement resolves allegations under the False Claims Act and Anti-Kickback Act that Sun, which was acquired by Oracle in 2009 for approximately $7.4 billion, “knowingly paid kickbacks to systems integrator companies in return for recommendations that federal agencies purchase Sun’s products,” the Justice statement said.

“Sun executed agreements with consulting companies that provided for the payment of fees each time the companies influenced a government agency to purchase a Sun product. These kickback allegations are part of a larger, ongoing investigation of government technology vendors that has resulted in settlements to date with six other companies,” Justice added.

The announcement said the settlement also resolves claims under the False Claims Act that Sun’s 1997 and 1999 GSA Schedule contracts were defectively priced because “Sun provided incomplete and inaccurate information to GSA contracting officers during contract negotiations, as well as claims that the incomplete and inaccurate information resulted in defective pricing of Sun’s contract with the U.S. Postal Service and GSA Schedule contracts held by two resellers of Sun products.”

Justice said Sun’s contracts with GSA to sell IT products and services to federal agencies required the company “to fully and accurately disclose to GSA how it conducted business in the commercial marketplace so that GSA could use that information to negotiate a fair price for government customers using the GSA contracts to purchase Sun products and services.”

The defective pricing information that Sun disclosed to GSA was subsequently relied on by the Postal Service in negotiating a contract with Sun, as well as by GSA in negotiating contracts with two resellers of Sun products, the statement added.

Calls to Oracle were not returned.

The Justice statement said the allegations were part of a bigger investigation into government technology vendors. Other companies who have been the target of similar investigations include NetApp, EMC, and Cisco.

Sun was also accused of not providing accurate information in some price negotiations over government contracts.

The settlement also covers those pricing allegations from the late 1990s.

The suit was first filed in 2004 by two whistleblowers in Arkansas, and the government later joined the investigation.

Oracle Corp., of Redwood Shores, Calif., ranks No. 88 on Washington Technology’s 2010 Top 100 list of the largest federal government contractors.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

Reader Comments

Wed, Feb 2, 2011 Go Figure

No surprise here. Sun and Oracle both employ business practices that are shady at best. They treat their clients like dogs, especially post-merger. I refuse to do business with them any more.

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