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US Sues Oracle Over Alleged Overcharging
CWmike writes "Oracle is being sued by the US government for allegedly overcharging it by millions of dollars, according to documents on file in US District Court for the Eastern District of Virginia. The US General Services Administration's Schedules are supposed to provide discounts that are as good as or better than that given to the vendor's most favored customers, the complaint states. However, Oracle employee Paul Frascella, who joins the government's action, learned that Oracle was finding ways around the GSA restrictions in order to give commercial customers even deeper discounts, according to the complaints. In one alleged practice Oracle was said to be 'selling to a reseller at a deep discount ... and having the reseller sell the product to the end user at a price below the written maximum allowable discounts,' the complaint states. Overall, Oracle's actions cost US taxpayers 'tens of millions of dollars,' it adds."
Glad to see the govt. fighting to get more for our tax dollars, not just sitting there getting bilked by dishonest vendors.
They are suing Oracle because Oracle gave someone else a better price?
They are suing Oracle because Oracle gave someone else a better price despite being contractually bound not to.
Don't like it? Don't agree to it.
In working for the government, we are routinely forced to use GSA for purchases. GSA is often far higher than the open market price. As a GSA contract is often good for over a year, prices that were good for a Core2 system last year are painful today. Modern systems aren't even available without circumventing GSA. GSA was intended for cutting grass and painting buildings, not IT purchases.
Yes. One of the stipulations of having a GSA schedule contract is that the government gets Most Favored Customer pricing. Them's the rules, and you break them at your peril.
Yes.
There's a law called the "Truth in Negotiations Act", "TINA" for short, which essentially states that when bidding on a government contract, if you can do the job for less than you bid it for you have broken the law. The bid discloses estimated profits, and the government goes along with varying rates of profit, but if your profit is bigger than you disclose, and it's because you put in a cost item that your company (not just the department doing the bidding, to prevent firewalling to induce uncertainty) knew it could do cheaper (not that it was doing it cheaper), then you are deemed to have ripped off the government knowingly.
I'd love to see a similar law passed for consumer transactions.
They demanded, and Oracle agreed. On paper.
I, as a customer, can be as demanding as I want.
I expect my government to be very demanding of the suppliers it uses.
The supplier is free to choose not to do business with a demanding customer.
Is it so hard to understand?
And the worms ate into his brain.
"This is why most companies don't like dealing with the government"
[citation needed]
Because if Oracle had contracts with a private corporation to give them the best deals, and that private corporation found out that Oracle wasn't holding up to their end of the bargain, they would never sue, right?
It's only because they were dealing with the big evil government that they had to actually stick to their contractual obligations.
And if the government was found to be overcharged without doing anything about it, citizens would never object, right?
The government has the reputation for never being efficient or controlling costs. Whenever the government tries to become more efficient and more cost effective, we need to encourage that! (Assuming it doesn't mean taking away our rights)
Don't you understand? Here is how it works:
Because the government is intrinsically evil, anything it does that a corporation doesn't like is communism. Therefore, their deal with Oracle couldn't possibly be legit, even if Oracle signed.
However, because the government is intrinsically wasteful, any example of it getting a poor deal is just further evidence of how evil and wasteful it is...
You can see how this, completely internally consistent, line of reasoning leads to governance that is both inefficient and grossly expensive. Pity most of the people who articulate it aren't joking...
WTF? The guiding principle in government contracts should be to get the lowest practical price, not the lowest theoretical price. Otherwise the result would be that many companies will not care to bid for the government.
The guiding principle is that the government get the best combination of price, schedule, and quality. There is no theory in the TINA pricing. The company is required to say "our costs will be X and our profit Y to deliver Z to you when you want it." The government "allows" only a certain amount of profit on a contract. If you make more, perhaps a component's cost goes down hugely in the market, you are required to go back to the gov't and allow them a rebate on their cost. If you make more because you fudged the numbers, you get barred from federal contracts and may also end up behind bars. It is for these exact reasons that many companies don't do business with the government. I should also mention (having some experience in the process) that the companies still manage to hide an awful lot of "excess profit" and I don't feel the need to cry for them.
My first job was in detailing cost estimates for a company that custom built heavy mechanical equipment. One rule there was that for any government job the cost would be higher. There's so much paperwork involved in government jobs that it's impossible to do it at the same price you charge private companies.
Don't have a GSA Schedule Contract, then. Trust me, those vendors who have them are happy to have one, but not all vendors/products work well with them. I think you're confusing contracting with the government in general with having a Most Favored Customer agreement with them. Not all (not most?) government contracts have such a clause.