Oracle Corp. and Oracle America Inc. have agreed to pay $199.5 million plus interest for failing to meet their contractual obligations to the General Services Administration (GSA), the Justice Department announced Thursday. This is the largest False Claims Act settlement that the GSA has ever obtained. Oracle, which is based in Redwood City, Calif., develops, manufactures, markets, distributes and services database and middleware software, applications software and hardware systems.
This settlement relates to a contract Oracle entered into in 1998 to sell software licenses and technical support to government entities through GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government and other GSA-authorized purchasers with a streamlined process for procurement of commonly used commercial goods and services. To be awarded a MAS contract, and thereby gain access to the broad government marketplace and the ease of administration that comes from selling to hundreds of government purchasers under one central contract, contractors must agree to disclose commercial pricing policies and practices, and to abide by the contract terms.
The settlement resolves allegations that, in contract negotiations and over the course of the contract’s administration, Oracle knowingly failed to meet its contractual obligations to provide GSA with current, accurate and complete information about its commercial sales practices, including discounts offered to other customers, and that Oracle knowingly made false statements to GSA about its sales practices and discounts. The settlement further resolves allegations that Oracle knowingly failed to comply with the price reduction clause of its GSA contract by not disclosing to GSA discounts Oracle gave to its commercial customers when they were higher than the discounts that Oracle had disclosed to GSA, and by failing to pass those discounts on to government customers. Because of these allegedly fraudulent dealings, the United States alleges that it accepted lower discounts and ultimately paid far more than it should have for Oracle products.
“Companies that in engage in unlawful or fraudulent practices to secure government business undermine the integrity of the procurement process and create an unfair advantage against the majority of companies that are playing by the rules,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Resolutions like this one – the largest GSA false claims settlement in history – demonstrate our commitment to ensure taxpayers are not overpaying for the products and services they receive.”
“To get access to hundreds of government purchasers, companies participating in the Multiple Award Schedule program must disclose their best prices,” said Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia. “Today’s agreement shows that we are committed to protecting taxpayer money by ensuring that these companies live up to their end of the bargain.”
“It’s more important now than ever before to make sure that taxpayer dollars are not wasted on higher prices,” said U.S. GSA Inspector General Brian Miller. “We will not let contractors victimize the taxpayers by hiding their best prices.”
The settlement resolves a lawsuit filed on behalf of the U.S. government by former Oracle employee, Paul Frascella, who will receive $40 million as his share of the recovery in the case. Under the whistleblower provisions of the False Claims Act, private citizens can bring lawsuits on behalf of the United States and share in any recovery obtained by the government.