The suit's origins date back to 1998, when Oracle entered into a GSA Multiple Award Schedule contract to sell software licenses and technical support to federal agencies. As part of the contract, vendors agree to disclose commercial pricing policies and practices, including the best discounts it gives to customers.
However, a whistleblower from within the company named Paul Frascella filed suit against the company in 2007 claiming that Oracle was not providing the government discounts that were as low as some other customers were receiving, even though the company said it was.
"Because of these allegedly fraudulent dealings, the United States alleges that it accepted lower discounts and ultimately paid far more than it should have for Oracle products," according to the DOJ.
Frascella will receive $40 million for his role in the case, according to the DOJ, which joined him in the case last year.
With the federal government aggressively working to cut its IT costs, GSA Inspector General Brian Miller said in a statement it's important "to make sure that taxpayer dollars are not wasted on higher prices. We will not let contractors victimize the taxpayers by hiding their best prices."
Even though Oracle agreed to a settlement, a spokesperson said it denies any wrongdoing and settled the case to "avoid the distraction and high cost of litigating" it.
"The company has always had strong controls in place to insure that the government agencies who purchased from the GSA schedule received fair pricing," said Oracle spokesperson Deborah Hellinger in a statement. "Oracle never committed any fraud whatsoever."
The DOJ has recovered more than $7.8 billion in False Claims Act cases since January 2009, it said.
Join us for GovCloud 2011, a day-long event where IT professionals in federal, state, and local government will develop a deeper understanding of cloud options. Register now.
Join us for a roundup of the top stories on InformationWeek.com for the week of December 14, 2014. Be here for the show and for the incredible Friday Afternoon Conversation that runs beside the program.