Oracle pays $46 million to settle Sun Microsystems kickback claims
Sun and other technology vendors allegedly paid consulting firms when they recommended agencies purchase their products.
Technology giant Oracle Corp. has agreed to pay $46 million to settle a federal lawsuit alleging that a company it purchased last year paid kickbacks to systems integrators in a scheme to help them win government work, the Justice Department announced on Monday.
The agreement settles allegations against Sun Microsystems under the False Claims Act and Anti-Kickback Act dating back more than a decade. Oracle merged with Sun in 2010.
Sun allegedly entered into agreements with several consulting firms, including Accenture PLC. The consulting firm would receive payments every time it convinced a government agency to purchase Sun's software, Justice said.
Similar false claims settlements have been reached with six other technology firms, including Cisco Systems, EMC Corp., Hewlett Packard and Westcon Group North America. Justice said the investigation of other federal technology vendors is continuing.
"Kickbacks, illegal inducements, misrepresentations during contract negotiations -- these undermine the integrity of the government procurement process and unnecessarily cost taxpayers money," said Tony West, assistant attorney general for Justice's civil division. "As this case demonstrates, we will take action against those who abuse the public contracting process."
The kickback claims were first alleged in a 2004 whistleblower lawsuit filed by Norman Rille and Neal Roberts, two former Accenture employees. The government joined the case in 2007.
The settlement also resolves claims that Sun provided incomplete and inaccurate information to General Services Administration procurement officers during contract negotiations relating to their 1997 and 1999 Schedules contracts.
Sun was required to fully disclose to GSA how it conducted business in the commercial marketplace so that the agency could negotiate a fair price for its government customers to purchase the company's information technology products and services.
The U.S. Postal Service later relied on the defective pricing information that Sun provided to GSA in negotiating its contract with Sun. GSA also used the bogus information in negotiating contracts with two resellers of Sun products. Agencies ultimately paid too much for Sun products, the agreement said.
Oracle officials did not respond to requests for comment.
The allegations that Sun provided defective information during the contract negotiations was first disclosed in an audit that the GSA Office of Inspector General conducted.
The watchdog has reviewed roughly 200 contracts during the past two years, identifying $1.1 billion in potential cost avoidances and another $33 million in questioned costs, GSA IG Brian Miller told the Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight during a hearing on Tuesday.
"Based in large part on our contract audit work, 23 False Claims Act cases have been settled during the past two years for a total of $400 million," Miller said.