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Comments: 100 + -   Justice Department Joins Fraud Lawsuit Against Oracle on Friday July 30, @06:03PM

Posted by Soulskill on Friday July 30, @06:03PM
from the just-tell-them-it-was-for-national-security dept.
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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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Submission: Justice Department Sues Oracle, Alleging Fraud by suraj.sun (1348507)
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Justice Department Joins Fraud Lawsuit Against Oracle 50 Comments More /

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    • 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.

        • Then again, he is a platypus and platypuses don't do much.

            • cell phone, cable

              What?

              • some sort of a sales tax on cell phone or cable?

                I'm just stabbing wildly - here in the UK there's a specific tax on insurance premiums (for instance)
                (Favourite conversation from a friend who works in the industry: "This 'insurance tax', do I have to pay it?", "yes, it's a tax")

      • 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.

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

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

  • Well, it's about damn time!

    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.

    So now that the tax revenue is less, the government is just *now* trying to save money. I'm pleased, and pissed at the s

    • 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.

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

        by edmudama (155475) on Friday July 30, @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 ;-)

            • Re: (Score:2)

              by garcia (6573)

              Oh forgive me for doing things the way I have been on Slashdot for 13+ years. Old habits are hard to break. By bad.

        • 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

      • ... 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"?

      • 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

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

      by rolfwind (528248) on Friday July 30, @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?

    • 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

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

    • Indeed. Everyone overcharges the Gov; why? Because the Gov doesn't give a shit what they do WITH OUR MONEY. Why are the suddenly zeroing in on Oracle? If the gov. were serious about keeping track of OUR MONEY they would audit all their contracts.

    • Re: (Score:3, Informative)

      by Aladrin (926209)

      Actually, if you finish reading the summary, they signed a good deal after all. The contract said that Oracle must inform them of the other deals, and Oracle lied to them. Oracle breached the contract. -That- is why they are being sued.

      • I was playing Baldur's Gate last night and just learned the Oracle spell on my Chaotic Evil Mage.

        As far as I can tell, it does absolutely nothing. Not a god-damned thing.

        I feel like suing too. I'd shoot the Orc Mage I got it from, right in the head with a crossbow, but I already did.

    • The question was, were the government employees that signed the deals getting hookers and blow from Oracle Marketing to influence their decisions? Having worked for Oracle Market, and seeing as how they had no ethical qualms with billing customers for work that was never done, I wouldn't put the practice of outright bribing decision makers above them. On the other hand, I have no actual evidence that bribery occurred.

    • So you signed bad deals, so now you sue.

      I think you misunderstand.

      The government signed extremely good deals (that is, deals that include a clause that says that you will notify us when you make new discounts available to any of your customers, and you will allow us to have those discounts.

      The government is now suing, alleging that Oracle has broken those deals.

    • How are they supposed to practice due diligence, when Oracle is lying in the data they provide?

    • 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

    • Why wouldn't such a contract be enforceable? Whether a private entity could get Oracle to sign such an agreement is an entirely different question, the point is they signed the contract here and then tried to weasel their way around it.

    • 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.

    • Re: (Score:2)

      by Yaur (1069446)
      Pretty much everyone who does business with the government at that level rips them off.
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