The State of California has officially cancelled its highly controversial $95m software contract with database giant Oracle.
Signed a year ago, the contract became the subject of a politically charged two-month hearing by the state's Joint Legislative Audit Committee, after a state audit estimated that the contract would cost California $41m, rather than save it $100m, over six to 10 years.
During the course of the hearing, four high-ranking officials resigned over allegations of misconduct.
State officials confirmed that California will pay about $3.6m to get out of the contract.
But Oracle and its business partner Northrop Grumman will have to repay $56.5m to Koch Financial, the company that financed the deal, with Oracle picking up 70 per cent of the bill.
At the same time, state officials retained the right to prosecute Oracle and Northrop Grumman for fraud if ongoing state investigations show that the companies broke any laws in selling California 270,000 licences to use Oracle software.
Both Oracle and Northrop Grumman issued statements insisting that they want to maintain their relationships with the State of California.
"We are pleased with Oracle and Northrop Grumman's assistance in unwinding this contract," said Clothilde Hewlett, interim director at California's Department of General Services.
"Their efforts to return the state to the conditions that existed prior to the licence agreement made it possible to avoid any additional financial burden to the state."
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