US Government to sue Oracle for alleged fraud

News 17 Jun, 2010

The US Department of Justice has joined a whistleblower's case against Oracle, which has been accused of overcharging the US Government.

Oracle is being sued by the US Department of Justice (DoJ) for allegedly overcharging and has been accused of trying to defraud the US Government.

Former Oracle worker Paul Frascella and the DoJ have taken the lawsuit to the software giant, claiming that the company did not disclose discounts to the government that it had offered to favoured commercial customers.

A complaint has now been filed in a federal court in Alexandra Virginia which says that under General Services Administration contracts, companies should offer the best prices to the government, according to a Bloomberg report.

The complaint claimed that the government had been overcharged by tens of millions of dollars.

Frascella, while at Oracle, had been involved in multiple award schedule deals that are negotiated by the US General Services Administration (GSA). These make it simpler for government agencies to place orders as they go through a GSA schedule rather than via procurement programmes.

The government is then supposed to receive “equal to or greater than the discount given to that firm’s most favoured customer” and the contracted firm is required to report on these discounts, the complaint said.

It claimed that Oracle had used “various schemes” enabling the company “to give commercial customers deeper discounts than the GSA schedule provided”.

Frascella had originally launched the case in 2007 under the False Claims Act, which allowed the whistleblower to sue on behalf of the government. The DoJ then joined the case in April this year.

If a court orders a payout then Frascella is likely to get a cut.

Oracle had not responded to IT PRO's request for comment on the claims made in the complaint at the time of publication.

If a court battle ensues, this will not be the first time Oracle has been involved in a legal dispute. In recent years, the software giant was involved in a notable copyright case with rival SAP.