The Department of Justice on Thursday said it has sued Oracle for defrauding the government out of "hundreds of millions of dollars in sales."
The complaint alleges Oracle defrauded the government under a General Services Administration (GSA) software contract from 1998 to 2006.
According to a DOJ statement:
Under the contract, GSA used Oracle’s disclosures about its commercial sales practices to negotiate the minimum discounts for government agencies who bought Oracle software. The contract required Oracle to update GSA when commercial discounts improved and extend the same improved discounts to government customers. The suit contends that Oracle misrepresented its true commercial sales practices, ultimately leading to government customers receiving deals far inferior to those Oracle gave commercial customers.
The lawsuit was originally filed by Paul Frascella, senior director of contract services at Oracle. Frascella was a whistleblower under The False Claims Act.
From the complaint (download PDF):
Defendants' false and fraudulent statements and conduct took several interconnected forms. First, Defendants provided false, incomplete, and inaccurate information to the Government regarding their commercial pricing practices during the negotiation of a Multiple Award Schedule (MAS) contract with GSA in 1997 and 1998. Second, during the performance of the contract Defendants breached their contractual obligations to 1) report to GSA that they had offered higher discounts to commercial customers than had been disclosed to GSA during the contract negotiations, and 2) provide these higher discounts to Government purchasers. Third, Defendants manipulated their commercial sales in order to avoid a contractual obligation to reduce the prices offered to Government agencies consistent with reduced prices given to commercial customers. Finally, in order to obtain modifications to the contract, Defendants reiterated and confirmed false statements that they had made during the contract negotiations and breached their affirmative duty to inform the Government of higher discounts that they were offering to commercial customers.