As discussed in my blog post in June, the Department of Justice intervened in a False Claims Act case filed by a whistleblower against Oracle which alleged that the company had failed to accurately disclose its commercial pricing practices to the government in association with its GSA Schedule contract. DOJ has now filed its complaint (.pdf) in this case.
The complaint largely tracks the allegations in the complaint filed by the whistleblower, who is a former Oracle employee. For example, DOJ’s complaint alleges that Oracle provided false, incomplete, and inaccurate information to the government during its negotiation of the Schedule contract. Not only does this allegation assert that Oracle’s actual discounting practices to its commercial customers were not fully or accurately reflected in its disclosures to the government, but also DOJ asserts that Oracle’s actual commercial pricing practices did not distinguish between different classes of commercial customers, even though the company’s disclosures to the government had included one set of discounts for “national accounts” customers and a different set for “commercial end users.”
The complaint also alleges that the company actively took steps to ensure that its commercial sales to its basis of award customers did not trigger the Price Reductions Clause by means such as increasing the order size to exceed the contract’s maximum order threshold, arranging for the sale through a reseller rather than directly from Oracle, or changing the terms of the software license sold to the commercial customer so that it differed from the terms of the licenses on the GSA Schedule contract. It will be interesting to watch the development of this allegation in particular, because, typically, Schedule contractors can legitimately distinguish certain of its commercial sales to its basis of award customers from those sales that trigger the Price Reductions Clause.