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Justice Department Joins Fraud Lawsuit Against Oracle 100

Posted by Soulskill from the just-tell-them-it-was-for-national-security dept.
suraj.sun writes with news that the US Department of Justice has joined a lawsuit alleging Oracle of overcharging the federal government for its software products. Quoting: "In a nutshell, the lawsuit argues that Oracle's government customers — a wide array of agencies, including the State Department, the Energy Department, and the Justice Department itself — got deals 'far inferior' to those the enterprise software giant gave to its commercial clients. The allegations stem from a software deal between Oracle and the federal General Services Administration that the Justice Department says involved 'hundreds of millions of dollars in sales' and that ran from 1998 to 2006. Under the contract, Oracle was required to inform the GSA when commercial discounts improved and to offer those same discounts to government buyers. Oracle misrepresented its true commercial sales practices and thus defrauded the US, the lawsuit contends.
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Justice Department Joins Fraud Lawsuit Against Oracle More

Justice Department Joins Fraud Lawsuit Against Oracle

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    • Re:The first rule on playing against the house... (Score:4, Insightful)

      by Monkeedude1212 ( 1560403 ) on Friday July 30, 2010 @06:08PM (#33090220) Journal

      Problem is - who is the house?

      Most people would say the government, and then other people tote in and say the government is run by corporations.

      • Re: (Score:2)

        by jd ( 1658 )

        Perry the Platypus.

        • Re: (Score:2)

          by hondo77 ( 324058 )
          Then again, he is a platypus and platypuses don't do much.

      • Both are true! Oracle just needs to hire a couple of fancy-pants lobbyists, pay some $6000 "Influence Incentives", not(!) bribes, and they're all set. Bob's your uncle!

        Oracle was required to inform the GSA when commercial discounts improved and to offer those same discounts to government buyers

        WTF?! That's not good for Oracle's bottom line, they are not open source anymore, Uncle Sam! They are TRYING to turn a nice profit in this economic downturn for crapping out loud! I can understand how Larry would be offended by this statement at a time when he was trying to purchase the Golden State Warriors basketball team. How rude!

        • This is a standard clause in the GSA contract any vendor must sign to do business with the gov. GSA gets the same deal you give your best customer. If you violate this clause the GSA can go back to the time of the violation and demand a refund for any product or service you've sold since the violation.

      • I do believe he is referring to the house of congress.

      • Most people would say the government, and then other people tote in and say the government is run by corporations.

        Both of those are true. Like Sony's subdivisions doing things that conflict with each other.

        This is hardly new. Large corporations with very diverse holdings have suffered from this particular syndrome for a very long time. It's one of the idiotic inefficiencies that come along with unfettered capitalistic greed. The people who are making obscene profits off of it are hardly goin

  • Glad I don't use Oracle! (Score:3, Funny)

    by Anonymous Coward on Friday July 30, 2010 @06:07PM (#33090214)
    It's crap like this that really makes me glad I stick with more reputable vendors like Sun.

    • You do realize, Oracle bought Sun right? Though, I know where you're coming from. I wonder if Oracle will have to reimburse the govt back the difference of overcharge. Though... it's a shame that if it does go down that route, it wouldn't have happened before they bought Sun, because then with less money an acquistion would be less likely and Solaris and Java might still be owned by Sun.

      • *woosh* right over his head.

        Hope that did not clip your do.

      • You do realize, Oracle bought Sun right?

        You do realize he was being ironic, right?

      • exactly, why wasn't the FTC involved to hold up the purchase of SUN until Oracle had settled with the government. Essentially Oracle "got away with it" because they got to use the extra money to buy out competition that might have scored one of those cushy government contracts because Oracle was too expensive and didn't keep their contracts.

    • Maybe if Oracle had purchased a product that it could use to store their pricing tables and client commitments they could have avoided this mess. Is DBase still in business??

    • I here you, I'm sticking with DEC gear for the same reason

  • ....that the feds are going to take over?

  • Oracle was dumb... (Score:1, Funny)

    by Anonymous Coward

    Of all the people to try and rip off.. The government isn't the best to do it to.

    Or in /. terms.. In soviet russia... The government still rips YOU off.

    It's never the other way around.. :D

    • Re: (Score:2)

      by Yaur ( 1069446 )
      Pretty much everyone who does business with the government at that level rips them off.
  • Comment removed based on user account deletion
    • Let's not get carried away just yet. Ripping off the government is the standard practice in all industries (you know the saying "good enough for government work") because the customer who is spending other people's money is never as careful as when they are spending their own. This is just a tip of the iceberg.

      • because the customer who is spending other people's money is never as careful as when they are spending their own

        Explain how a govt. purchaser's job or accountability is any different than one at a private company.

        • Unions contracts that practically make it impossible to fire someone for job performance who isn't a political appointee or working in a politically appointed office and quotas that don't look for qualified people that are instead more worried about filling the spot with the X percentage required by law.

          And yes, this boils down to bad management. Both in the past and present.

        • a) Any kind of a large purchase order like this in a private company will have to be approved by senior management, in this case the head of IT who is at most one or two layers away from the board. So, very close to the people whose money he is spending and who hired him for that position. In addition, he is likely to be a large shareholder himself. By contrast a government agency has a fixed budget approved by a congressional committee and there is no sense of ownership or a reason to be extremely careful

    • Re: (Score:1, Interesting)

      by garcia ( 6573 )

      If our tax dollars are to be spent, they should be spent wisely. The idea that you can sell goods and services to the government at inflated prices needs to stop. Part of the problem is the government itself not doing their homework until after the fact. The other part is that everyone knows you can screw the government over. So naturally, crap like this happens.

      I am a tax watchdog for the county I live in. I study government tax dollar expenditures for tons of different things ranging from website upgrades

      • Re:Gov looking to save money? (Score:5, Informative)

        by edmudama ( 155475 ) on Friday July 30, 2010 @06:44PM (#33090606)

        This isn't about the government paying more than a private entity.

        This is about the government having a contract with oracle guaranteeing a price match with other parties for the duration of the contract, which oracle tried to get around by using obscure pricing practices with new private entity business. Oracle agreed to match the prices, and then lied about what they were charging. That's fraud.

        • Re: (Score:2)

          by garcia ( 6573 )

          As you can see I quoted the parent not the summary or the article itself and was responding to him so while I appreciate your duplication of effort from what I already knew about the topic, I am not sure how it applies to what I wrote.

          • I am not sure how it applies to what I wrote

            He must have made the common mistake of clicking the reply button instead of the apply button. It happens a lot around here ;-)

        • This is about the government having a contract with oracle guaranteeing a price match with other parties for the duration of the contract, which oracle tried to get around by using obscure pricing practices with new private entity business. Oracle agreed to match the prices, and then lied about what they were charging. That's fraud.

          Defense contractors get around it by having separate arms. GE is a classic example. They sell all kinds of stuff to government. Like big fucking guns. And they don't pay taxes; indeed, they are sitting on massive cash reserves, which are stored internationally. This is not about money, because the federal government does not give one tenth of one fuck about how much of your money they spend: the people running it only pay taxes on a small percentage of their income, and their reported income is only a small

        • I would so love to see Larry thrown into federal prison for fraud against the fed. OH wow that would make my day. Pay back for being an asshole to so many people over the years and thinking he's above everything and everyone else. That's the kind of guy I love to hate.

      • Re: (Score:2)

        by hondo77 ( 324058 )

        ... but what I don't believe is that corporations are required to make their bidding lower to the government...

        Isn't the whole point of the suit that Oracle was required by their contract "to make their bidding lower to the government"?

      • Let's stop this happy fucking horseshit world we have suddenly found ourselves in where it's someone else's fault that the government got overcharged. Either hire competent people to oversee the bidding on expenditures such as these and allow those people the freedom to make tough choices to save money or suffer the consequences. Stop meddling in private business because you are inept when it comes to dealing in the real world.

        Government wants to pretend its like the private world in so many ways, especiall

      • I think that government entities should be working hard to do that but what I don't believe is that corporations are required to make their bidding lower to the government because they aren't as capable as private entities to ensure their contracts are reasonable.

        You obviously don't understand the reason for GSA contracts. It is not only to save money (though that is good for the government), it is also to streamline the purchasing process.

        Once a company agrees to be bound by the terms of the GSA contrac

      • Do I think that private companies should be able to take advantage of anyone who is stupid enough not to do their homework? Yup. That's how businesses make money... Let's stop this happy fucking horseshit world we have suddenly found ourselves in where it's someone else's fault that the government got overcharged.

        So your argument is the seller should be allowed to defraud the buyer by violating the contract unless the buyer is canny enough to... what... notice they're being defrauded and sue? That's ex

      • Government wants to pretend its like the private world in so many ways, especially at reelection time, but then it goes off and does something like this. And they wonder why they get taken advantage of. Ugh.

        I am SOOOO goddamned sick of this attitude that government is somehow incompetent by its very nature. Governments are comprised of PEOPLE. Companies are comprised of PEOPLE. Both are equally competent at fucking up finances!

        Private companies do it all the time - take a look at BP, Enron, and every othe

  • Guess they won't be so takeover happy for a while

  • It may be a bit ambiguous.... (Score:3, Funny)

    by mark-t ( 151149 ) <markt.nerdflat@com> on Friday July 30, 2010 @06:22PM (#33090358) Journal

    ... what "most favored customers" actually means.

    Looking at things from a purely capitalistic perspective...

    If they are charging less for a particular customer, then they are making less money on the sale, so the client probably *ISN'T* their most favorite customer - in fact, their favorite customers would probably be the ones that they could most easily *OVER*charge money to, rather than those they charge the least to.

    The contract _should_ have said an equal or lower price than *ANY* of their customers. If it actually used the word "favored" then I think Oracle might be in the clear... legally, if not ethically.

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      "most favored" != "favorite"
      The generally accepted meaning of someone being "most favored" is that they are receiving the most favorable terms available.

      • Re: (Score:2)

        by mark-t ( 151149 )
        Charging more money can easily be Oracle's most favorable terms, from their own perspective, of course.
    • favored tends to mean largest, ie most recurring revenue and/or enough buying power to cause big problems if they leave.

      • Re: (Score:2)

        by mark-t ( 151149 )
        And the places that they charge less to they may not be doing so because they particularly value the relationship they have with them, but may be because they have less purchasing power in the first place, and to charge them what they would otherwise charge would be to lose out on the sales altogether. Some money is better than none.

    • Re:It may be a bit ambiguous.... (Score:4, Insightful)

      by rolfwind ( 528248 ) on Friday July 30, 2010 @06:44PM (#33090610)

      The legal system, just like any profession, has it's own definitions and most-favored customer is one of them. If they didn't have accepted definitions, most contracts suits would go nowhere because the meaning of anything could be debated (ie depends on the meaning of the word "is" is)

      http://www.businessdictionary.com/tips/22/the-most-favored-customer-clause.html [businessdictionary.com]

    • Re: (Score:2)

      by sjames ( 1099 )

      They may make less per sale, but as long as they make some per sale it can be made up in volume. Lets say govt will buy a million 'units' in a year. Would you like to sell them 100 units for full profit or 1 million units at half the profit each?

      • they're the government.... they also enforce your "right" to charge them per copy in the first place!!!

        There is nothing stopping government agencies from installing as many copies as they want... what are you going to do? Sue them?

        GSA contracts are a sweet deal. They make your product "industry standard" by default, more importantly, the government makes OTHER agencies use your software too. That's a pretty sweet deal, even if you have to lower your price from time-to-time

    • You forgot money = price * volume.

  • > US Department of Justice has joined a lawsuit alleging Oracle of overcharging the
    > federal government for its software products.

    I don't understand. Under what basis can they bring a lawsuit? It is not illegal to treat the federal government the same as all your other customers!

    • Re: (Score:3, Informative)

      by BradleyUffner ( 103496 )

      I don't understand. Under what basis can they bring a lawsuit? It is not illegal to treat the federal government the same as all your other customers!

      Oracle had a contract to sell software to the government.
      The contract said Oracle had to report to the government the discount prices they charged other companies.
      Oracle agreed to, and signed this contract.
      Oracle lied to the government when it reported these prices.
      Oracle broke their contract.

    • Most governments have preferential pricing contracts with various suppliers, usually meaning they get deeper discounts. Without knowing the specifics here, I'm thinking that Oracle is accused of breaking the contract be deliberately deceiving the Feds about the discounts they were offering corporate customers.

    • True, but the government often sets purchasing rules where they get the same deal as the best customer.

      That is, if some of the customers get 10% off, some get 15% off, and some get 20% off, then the government gets the 20% off deal.

      It isn't retroactive, mind you. If the best deal the corporation had was 15% off when the government bought X amount of gear, and then goes to 20% off six weeks later, the government doesn't get the extra 5% back. But they would get that on any new purchases made while that app

  • What comes next is looking for .gov buyers that knowingly bought Oracle's stuff at much more higher than market price... I mean, we in the IT industry KNOW how this deals are made and boy, its not that different from any other .gov market: bullying the competition, corrupting the buyer, thats standard practice in .gov IT, it seems, until now.

  • It took the government almost a decade to figure out they were getting screwed? Well, at least their promptness is improving.

    • Always suspected something was up with them.

      I used to work for the government and had to buy a copy of Oracle 8i for a web application.

      The web application had one sign up form and 130 people used it total. It took 2 weeks to build it.

      They sold us a web license, under the premise that every user on the web site would be a unique user within Oracle. That was something like $50k. The agency I worked for was required to buy the largest installation of Oracle possible, which was a multiserver edition. That was o

  • ...making the open source landscape inferior by doing a piss poor job of merely maintaining java code and its community.

  • For the doubting Europeans over in the poll discussion: here's evidence that not all Americans speak English.

  • ...and not providing large enough kickbacks.
  • Really? Is this new? Comcast does this to consumers all the time, but I can't go out and fine anyone. And can you really get a fair day in court against the fed? I don't think so. Shame on Oracle for taking advantage of the blind bureaucracy, and shame on the federal government for expecting special treatment.

    • Re: (Score:1)

      by spikeb ( 966663 )
      they expected the treatment of their contract. that is not special. so shame on you for misrepresenting the facts.

    • Comcast does not offer their consumers a contract promising to offer them the same discounts they offer other consumers. Oracle did sign such a contract here.

  • Don't steal, the government hates competition...

  • In the business world, the vendor is not required to inform you of what deals they may have closed with other clients and whether those customers got a better deal than you did. Why should the government expect that firms act against their own self interest merely because they government tells them that they should? If government agencies feel that they haven't gotten a good enough deal then maybe the people in charge of negotiating in those agencies need to be a bit more assertive and demand a better price

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