Oracle Pays $199.5 Million To Settle GSA Claims - InformationWeek
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02:09 PM

Oracle Pays $199.5 Million To Settle GSA Claims

Justice Department wins largest false claims settlement ever from Oracle, which is accused of not giving proper discounts on government technology purchases.

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Oracle will pay the General Services Administration (GSA) more than $199.5 million to settle a lawsuit that accused the vendor of overcharging the federal government for software and services.

The payment--which will include interest as well--is the largest False Claims Act settlement the GSA has ever won, according to a statement by the Department of Justice.

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.

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