Thursday, the US Justice Department filed suit against Oracle Corporation. The leading provider of database software stands accused of committing fraud against the government in relation to a $1.1B contract with the General Services Administration between 1998 and 2006.
The Justice Department is claiming that the General Services Administration (GSA) “was induced to believe that Oracle’s negotiations were honest and forthright, which they were not; that Oracle’s certifications of its overall commercial sales practices were accurate, complete and current, which they were not.” In other words, they’re claiming that Oracle lied to them in negotiations about their discount policies and practices, and then manipulated transactions with the government so that they could provide deeper discounts to commercial customers and charge the government higher prices.
According to the complaint, Oracle failed to update GSA when discounts improved, and failed to pass these discounts on. The government is also claiming that Oracle manipulated their commercial sales practices to avoid having to provide the government with legally required discounts. Oracle’s contract specifically required them to offer the government the same discounts as commercial customers.
Internal communications from Oracle apparently revealed that high level executives were aware of the “various schemes available to them to provide deeper discounts to commercial customers while evading their obligations” as a GSA supplier.
The suit was filed in federal court in Virginia by Paul Frascella, Oracle’s senior director of contract services, using the whistleblower protections of the False Claims Act. The Department of Justice then decided to intervene in the case. If Oracle is found guilty, they could potentially lose access to millions of dollars in future government contracts in addition to any fines.
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