This article reports on a 2007 lawsuit now being joined by the United
States Government Department of Justice against Oracle Corporation,
led by an ex-Oracle employee who alleges that Oracle denied discounts that it normally gave to
non-government customers.
Ex-Oracle employee Paul Frascella brought this lawsuit back in
2007 under the False Claims Act, which allows private citizens to
sue a company on behalf of the federal government. He's seeking
25% of all damages, which may reach up to $169 million dollars,
giving Frascella up to $42,000,000.
His lawsuit was kept “under seal” since 2007, and it has now been
made public after
US
Department of Justice has joined Frascella has decided to join
the lawsuit against Oracle, alleging that Oracle overcharged
American taxpayers.
“Taxpayers overpaid for each Oracle software
product by the amount of discounts and reductions from other
commercial pricing practices that should applied to each such
purchase."
InformationWeek goes even further, suggesting that Oracle is
required to reveal all of their deep discounts, suggesting that a
software vendor is required to disclose their confidential business
practices to government bureaucrats.
GSA
restrictions
According to the lawsuit, the
Government Service Office (GSA) allows a software vendor to list
their products in government catalogs after certifying that they
have given the United States their most favorable deep discounts,
equal to or greater than their largest commercial discounts.
The False Claims Act
The False Claims Act is
also known as the “Lincoln Law” is a whistleblower law that allows
individual to file lawsuits on behalf of the United States
Government.
The False Claims Act deal appears to deal with
clear criminal fraud activity, something that Frascella does not
allege in his lawsuit. Further, the False Claims Act does not
require Oracle, (or any other vendor) to give the United States a
discount on their goods and services. This lawsuit is also fishy
because if these allegations were true, criminal charges would have
been filed.
Critical Analysis
The
problem with this lawsuit is that Oracle has made very generous
deals with the United States Government, most notably in 2001 when
CEO Larry Ellison offered to give America a free National ID system
to help prevent terrorism, an offer worth tens of millions of
dollars.
Other State governments enjoy deep-discounts
on Oracle via all-you-can-eat licenses, and Oracle Academy
generously provides licenses to public schools.
The
DOJ is going to have a tough road to hoe by proving that Oracle has
been less than generous with the American taxpayer.
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