DOJ sues Oracle for alleged overcharging

Justice Department joins a whistleblower lawsuit against Oracle that accuses the company of defrauding the U.S. government.

The U.S. Justice Department has joined a whistleblower suit against Oracle that accuses it of defrauding the U.S. government.

Filed back in May 2007 under the False Claims Act, the suit claims Oracle overcharged the federal government tens of millions of dollars by failing to offer it the same deep discounts the company offers commercial customers. That's a real problem, because Oracle was obligated to do just that under the terms of the General Services Administration contract by which it was bound.

"The whole idea of GSA schedule discounts is that the government, in the aggregate, is likely to be one of the largest purchasers of a company's products, and is entitled to take advantage of the discounts that its large buying power should command," the complaint claims. This is tough to do if the discounts given to most favored customers are never disclosed.

The GSA contract is supposed to be a guarantee of best price, an agreement that allows the government to purchase products and services without having to negotiate a new contract every time it does so. Evidently, in this particular case, it wasn't. End result: taxpayers "overpaid for each Oracle software product by the amount of discounts and reductions from other commercial pricing practices that should applied to each such purchase."

Oracle has not yet responded to a request for comment.

 

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