Oracle barred from lucrative US Federal Government contracts

By Graeme Burton
23 Apr 2012 View Comments

Software giant Oracle has been removed from an approved list of public-sector vendors in the US following a legal dispute in which the company was accused of overcharging.

The General Services Administration (GSA) has cancelled Oracle's contract on the GSA IT Schedule 70 programme, through which the company secured $388m of business in 2011.

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The bar will come into effect from 17 May 2012, although Oracle will continue to collect maintenance fees from installations already in place.

The move follows a high-profile legal dispute in which Oracle was accused of over-charging public sector organisations in the US, a dispute that was settled in October 2011 when the company agreed to pay $199.5m in compensation.

That was the largest-ever settlement under the False Claims Act, although Oracle denies any wrong-doing.

The GSA refused to comment directly on the decision, but issued a statement in which it said that the contract with Oracle "was not in the best interests of the government".

In the run-up to 17 May – which falls just before Oracle's own financial year-end on 31 May – federal government purchasers will be able to drive a hard bargain from the company.

GSA's IT Schedule 70 is the largest source of IT procurement in the US federal government. It channelled $15.7bn of contracts to federal government organisations in 2011 alone, with Oracle earning $388m.

Oracle's own shareholders have already instigated legal action against the company, claiming that it mishandled the settlement of the suit.

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