US Sues Oracle Over Alleged Overcharging 164
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."
Re:Wait a minute (Score:1, Interesting)
This is why most companies don't like dealing with the government - too many restrictions. Oracle wanted to give a great deal to attract a new customer(s), most probably at a loss (as is common practice), but they didn't want to share that same deal with the government since it would end-up costing them millions in losses.
In the future Oracle might decide government sales aren't worth it, and refuse future GSA deals.
Re:Wait a minute (Score:5, Interesting)
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?
Re:Wait a minute (Score:4, Interesting)
I'd love to see a similar law passed for consumer transactions.
I can't see why this isn't the law for medical care. If a procedure costs $50 to do, and you charge $75 for insurance company X or $400 for an uninsured person, then you should go to jail.
Re:Wait a minute (Score:4, Interesting)
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 [fedmarket.com], 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.
Re:Right... (Score:4, Interesting)
When you factor in wide-scale devastation from failed 5-year plans and "great leaps forward" and all that crap, you come with something in the neighborhood of 100 million dead from their own Communist regimes. When over 30 million Chinese starve due to poor planning by Mao's government, that's still 30 million Chinese that died because of their government, even if they weren't shot.
Also, when you count up ever execution, every criminal or innocent person shot-on-entry by door-storming SWAT teams or even just regular cops in the line of duty, etc, etc., then I'm pretty sure we're way past the GP's claim being nonsense. Just saying.