Oracle pays $200m to make $1bn US government overcharging case go away

ICT giant Oracle has agreed to pay more than $199.5m to settle allegations it overcharged the US Federal government for nine years.

The deal takes off the table a lawsuit claiming Oracle induced the General Services Administration (GSA), a part of the US government, to buy $1.08bn in software from 1998 to 2006 by "falsely" promising the same discounts offered to favored commercial customers.

Oracle was being accused of preference in its commercial negotiations with the private sector - discounting by only 25-40% for government contracts compared to as much as 92% for commercial clients.

Uncle Sam's Justice Department piggybacked on a whistleblower lawsuit, with the final payout claimed to be the largest ever obtained by the US government under the False Claims Act, which lets citizens sue on behalf of the government and share in any recovery.

That whistleblower, a former Oracle employee, who started work there in 1999 as a contract specialist in its sales division and who made the allegations while still employed there in 2007, gets a cool $40m of the payout.

"Companies that engage in unlawful or fraudulent practices to secure government business undermine the integrity of the procurement process and create an unfair advantage," Tony West, assistant attorney general of the Justice Department's civil division, said in a prepared statement on the deal.

"It's more important now than ever before to make sure that taxpayer dollars are not wasted on higher prices," GSA Inspector General Brian Miller added. "We will not let contractors victimize the taxpayers by hiding their best prices."

Oracle strongly rejected any claims of fraud and says it settled to "avoid the distraction and high cost of litigating this case by settling."