Oracle to Pay $199.5 Million for Overbilling US Government

October 07 00:00 2011

New York, October 7 ( – The world’s second- biggest software producer, Oracle Corp (NASDAQ: ORCL) and the Justice Department announced a settlement today to end the lawsuit filed against Oracle by its former employee Paul Frascella and later joined by the Justice Department. It has agreed to pay $199.5 million to settle allegations that it had induced the General Services Administration to buy $1.08 billion in software from 1998 to 2006 by falsely promising the same discounts that it had been offering to its favored commercial customers.

The case was filed by Frascella in 2007 and he will get $40 million. The payout by Oracle is the largest ever obtained by the GSA under the False Claims Act. Under this act, citizens can sue on behalf of the government and share in any recovery.

Tony West, assistant attorney general of the Justice Department’s civil division, said that “Companies that engage in unlawful or fraudulent practices to secure government business undermine the integrity of the procurement process and create an unfair advantage.”

The US government had joined Frascella’s case and filed its own complaint last year, claiming that Oracle had only given discounts between 25 and 40 percent to the government whereas it had given companies discounts of as much as 92 percent.

GSA Inspector General Brian Miller said that it has become “more important now than ever before to make sure that taxpayer dollars are not wasted on higher prices.”