Oracle will pay government $199.5 million for failing to meet contract

By Gautham Nagesh - 10/06/11 04:11 PM ET

The Department of Justice announced Thursday that Oracle has agreed to pay the General Services Administration $199.5 million to settle allegations the firm failed to honor the price-reduction clause of its contract with the government.

The announcement is the largest of a series of False Claims Act settlements in recent years in which a federal technology contractor has been forced to pay penalties for failing to disclose their commercial pricing practices to GSA, violating a regulation mandating that the government get vendors' lowest price.

“To get access to hundreds of government purchasers, companies participating in the Multiple Award Schedule program must disclose their best prices,” said Neil MacBride, U.S. attorney for the Northern 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.”

The settlement resolves a lawsuit filed by former Oracle employee Paul Frascella, who will get $40 million as a result of the case. Under the whistleblower provision of the False Claims Act, members of the public can bring lawsuits on behalf of the U.S. and share in any recovery obtained by the government.

The Department of Justice has recovered almost $8 billion in False Claims Act cases since January 2009.

Update: Oracle senior director Deborah Hellinger sent the following statement in response:

"Oracle has settled a qui tam case with the General Services Administration relating to a contract that dates back 13 years ago to 1998. Oracle vigorously denies that it did not scrupulously adhere to the pricing requirements of that contract. The company has always had strong controls in place to insure that the government agencies who purchased from the GSA schedule received fair pricing. Oracle never committed any fraud whatsoever. Given that the events surrounding this case took place so long ago, not surprisingly many of the witnesses are no longer available or do not clearly recall these events. Oracle has therefore decided to avoid the distraction and high cost of litigating this case by settling. We remain committed to the highest principles of integrity in our relationships with Government customers."

This post was updated at 6:17 p.m.