PeopleSoft overcharging costs Oracle $111 million

Oracle Corp. will pay the U.S. government a whopping $111.7 million (US$98.5 million) to settle allegations that PeopleSoft, the enterprise software company Oracle acquired last year, overcharged government customers for years.

The U.S. Department of Justice (DOJ) accused PeopleSoft of failing to disclose accurately the discounts it offered large customers. PeopleSoft didn’t offer government agencies its multiple product discount or additional nonstandard discounts that it gave other customers, the DOJ said. As a result, government agencies paid more for PeopleSoft products and services between March 17, 1997, and Sept. 20, 2005, than their corporate counterparts, the DOJ said.

The PeopleSoft contracts were made as part of the General Service Administration’s (GSA) Multiple Award Schedule (MAS) program under which vendors agree to disclose their commercial pricing policies in exchange for the chance to sell to hundreds of government customers under one contract. Overall, the GSA MAS program had sales of over $30 billion last year.

The overcharging came to light when a PeopleSoft employee, James Hicks, filed a case in the U.S. District Court for the District of Maryland. As a whistle-blower who sued on behalf of the government, Hicks is entitled to a portion of the award. He’ll receive more than $17 million of the Oracle payment.

Oracle said it was not aware of the suit at the time it acquired PeopleSoft. The suit was solely focused on PeopleSoft, and Oracle cooperated with the government in the investigation, Oracle said.

The settlement follows an investigation by the Civil Division of the DOJ, the U.S. Attorney’s Office for the District of Maryland and the GSA’s Office of Inspector General.

It’s the largest payment ever to the U.S. in a civil settlement under the False Claims Act involving the GSA’s MAS program.

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