Oracle to pay $200M in largest GSA false claims settlement

Friday - 10/7/2011, 6:19am EDT


By Jack Moore
Federal News Radio

Software giant Oracle Corp. has agreed to pay nearly $200 million to the government for failing to meet obligations to the General Services Administration under a contract first awarded more than a dozen years ago.

It is the largest false claims settlement ever obtained by GSA, the Justice Department said in a release Thursday.

Oracle signed a contract with GSA in 1998 to sell software license and technical support to the government through the agency's Multiple Award Schedule program. However, MAS contract awardees must disclose their commercial pricing policies, including discounts.

A whistleblower lawsuit alleged the company gave government clients — including the State, Energy and Justice Departments — "far inferior" deals and failed to notify GSA of commercial discounts.

Because of these dealings, which DOJ alleged were "fraudulent," the government accepted lower discounts and ultimately paid "far more than it should have for Oracle products," according to DOJ.

With Oracle's settlement payment, the allegations of fraud have now been resolved, the government said.

But Oracle continues to deny any wrongdoing on its part. A company spokeswoman told Federal Times in an email that "strong controls" would have insured government customers received fair prices. Noting the length of time since the contract was originally awarded, the spokeswoman said Oracle decided to settle to "avoid the distraction and high cost of litigation."

The settlement marks the ending of a years-long whistleblower lawsuit filed by former Oracle employee, Paul Frascella, on behalf of the U.S. government. The Justice Department joined the lawsuit in July 2010.

Frascella will receive $40 million as his share of the recovery in the case, according to DOJ.

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