By Gautham Nagesh - 06/17/10 02:04 PM EDT
The Justice Department has joined a lawsuit against Oracle, alleging the software giant overcharged the government tens of millions of dollars for its products and services.
According to documents filed in the District Court for the Eastern District of Virginia, former Oracle employee Paul Frascella originally sued Oracle in May 2007 under the qui tam — or whistleblower — provision of the False Claims Act. The suit alleged that the company failed to disclose discounts given to its best private-sector customers, as required by law.
Companies on the General Services Administration's Multiple Awards Schedules are required to offer the government the lowest price offered to private-sector companies through a rule known as the price reduction clause. The Justice Department joined the suit on April 2, indicating it believes there is merit to the case.
Several other firms, including information storage firms EMC Corp. and NetApp, have paid large settlements in recent years to settle qui tam lawsuits; last month, EMC settled a case involving similar charges for $87.5 million.
Oracle declined to comment on the lawsuit.
Frascella started work as a contract specialist for Oracle in 1997, where he was involved in negotiating with GSA. He claims the company used a variety of methods to offer corporate customers larger discounts than the government, ultimately costing taxpayers tens of millions of dollars.