The US Department of Justice has begun legal action against Oracle alleging that the software firm defrauded the government out of tens of millions of dollars.
Legal briefs filed under the False Claims Act in the US District Court in the Eastern District of Virginia claim that Oracle failed to offer the government the same discounts for large orders that other customers were given.
"US taxpayers overpaid for each Oracle software product by the amount of discounts and reductions from other commercial pricing practices that should have applied to each such purchase," the complaint reads, according to a report on Bloomberg.
The action was initially brought by a former employee, Paul Frascella, who sued the company under the False Claims Act which allows whistleblowers to take action on behalf of the government, and receive a cut of any payout. The government has now joined his action and unsealed the case.
The complaint states that the US General Services Administration set up a " multiple award schedule" of contracts with suppliers, listing products and prices in a catalogue which makes it easier for government agencies to buy software. The prices are supposed to match commercial discounts.
However, it is alleged that Oracle got around this to offer deeper discounts for non-government customers. Tactics included selling to resellers at a major discount and letting them pass on the savings.
"Oracle knowingly and recklessly employed these techniques to offer commercial customers deeper discounts without offering those deeper discounts to the US government," according to the complaint.
The government is taking an increasingly hard line with software companies found to have acted fraudulently.
Earlier this year EMC paid over $87m in fines to settle a similar case, and in 2009 NetApp paid out $128m to settle legal action. In the latter case former employee Igor Kapuscinsk netted over $19m for his part in bringing the case.
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