Oracle to pay US almost $200M to resolve false claims lawsuit

General Services Administration says settlement is largest ever obtained

In what it says is the largest False Claims Act settlement it has ever collected, the US General Services Administration will get  $199.5 million plus interest from Oracle for "failing to meet their contractual obligations."

According to the US Department of Justice, "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."

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The settlement also 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, the DoJ stated.

The settlement pertains to a contract Oracle entered into in 1998 to sell software to government entities through GSA's Multiple Award Schedule (MAS) program.  MAS offers the government a streamlined process for procurement of commonly used commercial goods and services.  

The DoJ also noted that the settlement resolves a lawsuit filed on behalf of the US 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.

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