California official quits in Oracle scandal

A top official in California Gov. Gray Davis' administration resigns in a growing controversy over a $95 million software contract with software maker.

A top official in California Gov. Gray Davis' administration has resigned in a growing controversy over a $95 million software contract with Oracle.

Barry Keene, director of the state's Department of General Services, quit after a highly critical state audit said the contract--awarded without competitive bids and for software that is little used--could cost taxpayers $41 million.

Davis, who announced Keene's resignation, ordered state Attorney General Bill Lockyer to expand an investigation into the contract to determine whether any state laws were broken.

In his resignation letter to Davis released late Friday, former State Senator Keene said, "The Oracle controversy was due mainly to an error of judgement in which I relied upon data not properly validated and facts incompletely disclosed."

Keene wrote that he approved the contract "the day after a serious and destabilizing development in my marital relationship."

Keene's department is responsible for negotiating and signing most of the government's contracts with suppliers.

The agreement reached last May between Oracle and the General Services Department and two other state agencies was aimed at saving taxpayers money by entering into a six-year contract and purchasing the database software in a large quantity.

A state audit released on April 17 questioned why officials in the three agencies went ahead with the no-bid deal when a survey indicated few state workers had an interest in using the software.

The audit offered a blistering review of the contract in which state negotiators worked with little legal oversight and had no idea that an Oracle partner, consultant Logicon, a unit of Northrop Grumman, stood to reap $28 million from the deal.

The report also asked Lockyer to look into whether the deal was legal because it was awarded without competitive bids as well as to investigate Logicon's role as a consultant.

The audit revealed that almost a year into the contract the three departments were still figuring out how to pay for the software, and that as of mid-March no state workers were using the product.

State Auditor Elaine Howle said that Logicon used "shaky" assumptions in calculating the state savings and that taxpayers could end up doling out $41 million more than if they had bought the software separately.

Story Copyright © 2002 Reuters Limited. All rights reserved.

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