Oracle sued by whistlebower

DATABASE OUTFIT Oracle has been sued by a whistleblower and the US Justice Department for overcharging the US government by tens of millions of dollars.

According to Business Week, Oracle failed to disclose to the government price discounts that it gave to its most favoured commercial customers.

According to law, the government had to get the company's lowest prices and not end up paying more than other customers.

"Oracle knowingly and recklessly employed these techniques to offer commercial customers deeper discounts without offering those deeper discounts to the U.S. government," the complaint said.

A former Oracle employee, Paul Frascella, filed the case in May 2007 under the False Claims Act, which lets private citizens sue on behalf of the government and share in any recovery. After the case was made public, the government joined in.

Frascella, who joined Oracle in 1997 as a contract specialist, was involved in so-called Multiple Award Schedule pacts. Under these pacts the government is supposed to get discounts "equal to or greater than the discount given to that firm's most favored customer," and contractors are supposed to report such discounts, according to the complaint.

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," according to the complaint.

In October 2006, Oracle paid $98.5 million to settle a False Claims Act lawsuit over GSA Multiple Award Schedule pricing disclosures at Peoplesoft, which the outfit had bought.

In that case the complainant was whistleblower James Hicks, who was joined in 2006 by the Justice Department. As a whistleblower, Hicks got $17.3 million of the recovery. µ