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Oracle settles with Feds over price gouging

Larry loses one – actually, 199.5 million of them

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Software giant Oracle has settled a fraud suit launched by the US government to the tune of $199.5m, the US Department of Justice has announced.

The DoJ complaint against Oracle was filed in June 2010 in the wake of a whistleblower lawsuit by former Oracle employee Paul Frascella, who was senior director of contract services at the company. That original lawsuit was filed by Franscella in May 2007 under the False Claims Act, which allows employees to file a private suit if they think their employer has defrauded the government.

In this case, Oracle has been a vendor that sells to the Federal government under a General Services Administration (GSA) contract multiple-award schedule, which allows vendors to provide pricing and terms once, and then sell into hundreds of government agencies without having to negotiate terms each time from scratch.

Under the GSA terms, Oracle has to let Uncle Sam know when it is giving customers killer discounts on wares, because the Federal government wants the best deal anyone is getting. Oracle has been a part of the GSA program since 1998, and the original lawsuit filed by Franscella alleged that Oracle had overcharged Uncle Sam by "tens of millions of dollars".

"It's more important now than ever before to make sure that taxpayer dollars are not wasted on higher prices,” said GSA Inspector General Brian Miller in a statement. "We will not let contractors victimize the taxpayers by hiding their best prices."

It is not clear how much overcharging Oracle did and what additional damages, if any, were added. The Feds settled for $199.5m, and under the False Claims Act, Franscella is entitled to $40m of that.

In February of this year, Oracle paid $46m to settle a similar GSA lawsuit that was filed against Sun Microsystems in 2004 by whistleblowers, who said that Sun paid kickbacks to resellers who recommended Sun hard and soft wares for government contracts. Those complaints dated back to 1997 and 1999.

El Reg hopes that Oracle has to pay interest on the penalties, like it has argued that SAP has to in the TomorrowNow settlement, and that Ellison & Co. have received. ®

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