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Justice sues Oracle, alleging it defrauded federal government

The Justice Department has filed a lawsuit against Silicon Valley database software giant Oracle, alleging that the company defrauded the federal government on a contract involving hundreds of millions of dollars.

In a news release Thursday, Justice said Oracle misrepresented how much it was charging commercial customers and gave the General Services Administration inferior deals between 1998 and 2006 compared with those offered for private-sector sales contracts. Spokeswomen at Oracle didn't immediately respond to requests for comment by e-mail and phone.

"We take seriously allegations that a government contractor has dealt dishonestly with the United States," said Tony West, assistant attorney general for the civil division of Justice. "When contractors misrepresent their business practices to the government, taxpayers suffer."

The alleged sales fraud was brought to light by a whistleblower named Paul Frascella, a senior director of contract services at Oracle. Under the False Claims Act, Frascella could get a portion of any damages recovered in the suit. Justice didn't specify how much it was seeking in damages.

By Cecilia Kang  |  July 29, 2010; 4:49 PM ET
Categories:  DOJ  
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"Inferior deals" compared to private sector customers? I don't know if that is a basis for a lawsuit. Sounds like GSA doesn't have anyone with enough on the ball to negotiate. Another reason to privatize some of the GSA's operations -- then Oracle can deal with the private sector again.

Posted by: Bitter_Bill | July 29, 2010 5:04 PM | Report abuse

"Privatise ?" The basis of the lawsuit, if the article is correct, is that Oracle lied when asked about pricing information.
If we had privatised the purchasing organization negotiating this transaction then we, the Citizens of the U.S., would be out the millions, PLUS the privatising margin to negoitate the contract.
There aren't bogey men everywhere in the government and simply handing off the responsibilty to manage our government to private, for profit organizations means we add another layer of cost (profits) to an organization whose sole purpose is to make money, not get the best deal.

Posted by: mperata | July 30, 2010 11:55 AM | Report abuse

Good for the DoJ. Oracle needs a kick in the pants in more than one area. This is only one aspect of their problems.

Posted by: Nymous | July 30, 2010 7:22 PM | Report abuse

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