California to Cancel Oracle Deal

ShaunC writes "Back in mid-April, the state of California bought $95M worth of Oracle software, which turned out to include more licenses than the state has employees, at a taxpayer cost of $41M more than necessary. Now, CNet is reporting that the contract is being cancelled. Oracle apparently made a $25K donation to governor Gray Davis' campaign fund after the sale was made, several state officials have been suspended, and a criminal investigation into the deal is already underway."

Comments

What?

[delta407]

How does one, exactly, "undo" a contract for millions of dollars worth of software licenses? Seems like a very sticky legal situtation. Especially since "There are some parts that have already moved forward."

And how is CA doing this, when Oracle says "they must have been talking to themselves because we didn't know about it"?

Re:What?

[arkanes]

They just need to click the "I do not a agree" button on all the installers, thus entitling them to a refund as per the EULA.

Re:What?

[crucini]

How does one, exactly, "undo" a contract for millions of dollars worth of software licenses? Seems like a very sticky legal situtation.

SQL> ROLLBACK;
Rollback complete.

the donation is not a smoking gun

[jonbrewer]

"Oracle apparently made a $25K donation to governor Gray Davis' campaign fund after the sale was made, several state officials have been suspended, and a criminal investigation into the deal is already underway."

If anyone really thinks that a $25k donation would have anything to do with a $95,000,000.00 deal for software, they need to get reacquainted with reality. $25k is nothing unusual. It's a Red Herring, and doesn't belong in an informed discussion on the Oracle/California mess.

Re:the donation is not a smoking gun

[ShaunC]

$25K may be but a drop in the bucket, but it's money regardless. According to the article, the contribution was made just after the Oracle deal closed, and the official who accepted the contribution resigned. I'd say there's certainly a tie-in somewhere. If not, something stinks even worse.

I wrote the submission text. For the record, I'm a democrat. I have nothing against Gray Davis and I wasn't trying to make a subliminal political statement by mentioning the contribution. Payola is payola, no matter which party and no matter who the contributor.

Shaun

Re:the donation is not a smoking gun

[aengblom]

Let's Play The "Get into Oracle's Head Game"!!

(Announcer) Mr. Ellison! You've just tricked Gray Davis into paying YOU $50 million taxpayer dollars he didn't have to. What are you going to do?

(Ellison) I'm going to Disney World! But first, I'm making sure this idiot gets re-elected.

$25K IS a drop in the bucket and $50 million is worth more to Davis politically than a 25K campaign contribution.

Re:the donation is not a smoking gun

[garver]

But that's the beauty of lobbying the government! You make "donations" in the $1000s to influence purchases in the millions. Talk about a return on investment!

Its naive to think this doesn't or wouldn't happen. One, the temptation is just too big (spend a thousand, get a million). Two, who's going to prove it? Even if there are strings attached to the money, which would be illegal, its very easy to say publicly that there weren't. Three, read the papers lately? There is allegation after allegation of this stuff happening. From this mess, to Enron and the Bush administration, to Clinton and pardons, and to every congressional member and their pork projects.

Bottom line: Elected officials carry an enormous amount of power and responsibility when compared to how much they are paid legally. That's a recipe for bribery and for attracting those willing to be bribed.

This is what campaign finance reform is supposed to fix. But I don't support it; I don't think any amount of campaign finance reform will fix the situation. You need to motivate officials to be honest. I don't know how to do that, but I'm certain adding more rules won't. Until someone comes up with something better, I would rather keep my "freedom of speech".

Re:the donation is not a smoking gun

[jonbrewer]

" Inform us then, how much did Oracle donate the the Republican candidate in California? And to every candidate in every other state? $25K each?"

You might consider doing a little quick research on donations from Oracle to both republican and democratic candidates. I certainly won't convince you with anything I say, so find out for yourself.

It's common for corporations to donate to candidates from both parties.

Re:the donation is not a smoking gun

[pnatural]

I don't follow CA politics. In fact, I had to google "Gray Davis" to find his party affiliation.

My problem with most media -- specifically scandal reporting -- is that when the scandal involves a Dem, invariably that fact is left out.

Had Gray Davis been a Republican, or worse yet, a conservative, I'd bet you my last dollar that the headline would be something similar to "New Scandal in Republican Governors Office".

Call me a nut, dismiss my option: I don't care. But the next time you're watching CNN and they talk scandal, remember what I said here. Then listen to the talking head very, very closely and tell me I'm wrong.

Where's the money going now?

[foniksonik]

I live in CA and I'm curious about where that money will now go. Back to the treasury? It's already been budgeted... maybe we could invest in some Savings and Loans project?

Well, this should all be quite humorous.

Re:Who pays ?

[Kamel Jockey]

but I bet the tax payer has to dig yet deeper to pay for bailing out of the contract

You are most definitly correct. Oracle will most definitly sue CA for breach of contract. This will most likely lead to a multi-million dollar settlement which CA's taxpayers will have to pay. In the end, Oracle will make out like a bandit because they would have made the settlement money for doing nearly nothing, since breaking the contract no longer obliges Oracle to provide any goods/services.

This kind of BS has happened before, it will happen again. A few years back, Pennsylvania entered into a $200 million+ contract with an emissions testing company to inspect peoples' cars. When the administration changed, the commonwealth terminated the contract and ended up paying $80 million or so in breach of contract costs.

Investigation

[truthsearch]

If the investigation leads to a finding that the contract was part of a bribe, the contract could be nullified due to being based on a criminal act. The taxpayers will most definitely pay for any multi-million dollar trials, but Oracle may not be able to sue for breach of contract if a court finds the contract was signed for a bribe.

Sales Tax - OUCH!

[phoenix26x]

$3 million in sales tax? Ouch! Wait a minute... a $95 million dollar deal, and only $3 million in sales tax? Since when did California's sales tax drop from 7.25% to ~3%?

To be on topic: this deal was fishy on many fronts:

• More Oracle licenses than state workers
• Not just a third party (Logicon), but a fourth party (Koch Financial Services) was involved
• The contract was signed last May, but the software is still not in use. You spent $95 million to sit on software licenses?
• Finally, the sales tax issue already mentioned

We can only hope that $95 million dollars worth of state officials are ousted.

Re:Who pays ?

[Ioldanach]

Oracle will most definitly sue CA for breach of contract.

And just how will they do that, when they made an offer to dissolve the contract if the State wished to do so?

This SHOULD be easy...

[preed-man]

"It's a complicated legal and financial undertaking," Maviglio said, adding that the talks to completely undo the contract could take several weeks. "There are some parts that have already moved forward. We're trying to unwind the whole thing."

You mean, they can't just issue a ROLLBACK?

What the hell were they paying Oracle for, then?!

Re:Oracle arrogance

[joss]

> All companies make contributions to political fundraisings. This is nothing new or unethical.

It's not very new, but I don't think it's ethical.

A company is legally obliged to maximize shareholder profit. This means that it is effectively illegal for a company to make a decision on ethical grounds. For the donation to be legal anything, they must have reasonable grounds to believe they are getting somthing in return.

The argument that money is speech is rather preposterous, but even if one buys it, it doesn't make corporate political donations OK. If companies had the same constraints, eg if they could be jailed or executed, then maybe they would deserve the same rights as individuals.

http://www.corporatewatch.org/pages/corporations .h tml

Re:Oracle arrogance

[totallygeek]

Name one publicly traded company that has not given money to political organizations. Name any company in the Fortune 500 that doesn't have a tie to a Washington lobbying interest. You are naive to think that companies don't spend money to political ventures.

GOP making hay, but it may not be Davis' fault

[gdyas]

Oracle apparently made a $25K donation to governor Gray Davis' campaign fund after the sale was made...

This is true, but misleading, because the money was received by the head of the Dep't of Information Technology, not Davis himself, nor his campaign fund directly. The contract appears to have been completely mishandled, and perhaps manipulated, by the governor's cabinet, the CA Dep't of Information Technology, and its head, Elias Cortez, who's already been suspended pending the current investigations. Cabinet secretaries involved have already resigned, embarassed at their lack of proper review of the contract. There appears to be some malfeasance on the part of software advisors to the state who made money on the deal, and $25K & $50K campaign checks that've been making the rounds to one & all. It's all available in the latest article on the deal. All in all a dirty deal, but I don't see where Davis, even though he was the Governor, could have had any precognition of the stupidity going on in the lower halls of the government before the deal was completed.

Despite GOP willingness to paint with as broad a brush as possible in an election year, Davis appears not to have known much about the deal until it hit the news, about when /. first reported it. Since then, it's been his own office working with the Assembly that've sought to find out what happened.

Think about it. The Governor does not personally handle or approve all software purchases, nor should he. There appears to be quite a bit of crooked behavior on the part of Oracle and the leaders of the CA Dep't of IT, as well as a lack of proper review by those overseeing the department, and Davis is looking into it with the Assembly. If anyone finds evidence that Davis was a part of the deal then sure, nail his ass to the wall, but don't make insinuations there's no evidence for. That just cheapens the discussion, and ignores the fact that it is Davis who began the investigations, Davis who sent in the CA Highway Patrol to stop document shredding at the Dep't of IT, and Davis who's asked for and received the resignations of 3 top cabinet officials for failing to do a proper review of the deal. I don't mind disagreeing on political issues, but corruption in the governor's chair is a serious charge that requires more than non-evidence.

Oh, and his opponent, Bill Simon, saying that the oracle deal takes food out of the mouths of children is rich. This guy wants to gut children's services, make abortion illegal, and stop state tracking of all racial data regarding education, health care, etc. I guess if you don't want to solve a problem, you start by ignoring it.