Feds Banish Oracle From Popular Contract Vehicle

Some federal agencies will have to find a new place to look to buy Oracle services next month, as the General Services Administration said Thursday that it had canceled Oracle's contract on the popular GSA IT Schedule 70. The GSA said all blanket purchase agreements for Oracle services made under the contract would be terminated as well.

The government is keeping tight-lipped about exactly what happened to cause the cancellation. Mary Davie, assistant commissioner of the Federal Acquisition Service's Office of Information Technology Services, said in a statement only that the Oracle contract "was not in the best interest of the government." A GSA spokeswoman declined to give additional details.

GSA's IT Schedule 70 is the federal government's single largest acquisition vehicle, and focuses exclusively on IT products and services. It's essentially a shopping list that gives federal agencies direct access to acquire products and services from more than 5,000 vendors. Agencies spent $15.7 billion on Schedule 70 in fiscal 2011 alone.

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Due to the cancellation, agencies won't be able to exercise options on existing task orders or place new orders after May 17, and blanket purchase agreements for Oracle services made under Schedule 70 will be terminated. That's a big hit for Oracle, because the government used Schedule 70 as the vehicle for $388 million in fiscal 2011 spending on Oracle products and services.

The services covered under the contract include operations and maintenance, system development, system analysis, design, integration, data conversion, network management, consulting, and assorted miscellaneous IT services--basically, everything that an agency might need.

Oracle did not respond to a request for comment.

This isn't Oracle's first rumble with GSA. In October, the company agreed to pay more than $199.5 million to settle a lawsuit filed under the False Claims Act that charged the vendor with overcharging feds for software and services. Specifically, the suit had claimed that Oracle was giving some agencies much deeper discounts than it was giving others or making publicly available.

That settlement was GSA's largest-ever False Claims Act settlement, but Oracle in agreeing to the settlement continued to deny any wrongdoing. "The company has always had strong controls in place to insure that the government agencies who purchased from the GSA schedule received fair pricing," an Oracle spokeswoman told InformationWeek at the time. Oracle shareholders have since sued the company for mishandling its settlement of the claim.

In October 2006, Oracle had agreed to pay the government $98.5 million to settle a case in which PeopleSoft--an Oracle acquisition--was alleged to have provided false pricing information to the GSA.

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