According to a Justice Department press
release issued on Tuesday, federal agencies overpaid for
PeopleSoft products from March 1997 through September 2005
because of faulty disclosures by the software vendor, which
was acquired by Oracle in January 2005.
The settlement was the largest ever related to the General
Services Administration's Multiple Award Schedule program,
the Justice Department said. The MAS program requires
vendors to provide their commercial pricing information to
the government in exchange for the ability to strike deals
with hundreds of federal agencies under a single contract.
The Justice Department said PeopleSoft's disclosures "were
not current, accurate and complete."
"The program works well when vendors follow the disclosure
rules and provide GSA with the information it needs to
negotiate good prices for government purchasers," Deputy
Attorney General Paul McNulty said in a statement. "This
agreement demonstrates the department's determination to
hold vendors accountable for abusing GSA's trust and
damaging its programs."
This case originated as part of a whistleblower action
brought under the Federal Claims Act. Former PeopleSoft
employee James A. Hicks, who filed suit in the U.S. District
Court for the District of Maryland, will receive $17.7
million of the settlement, as provided for under the
statute. Under the Federal Claims Act, whistleblowers can
sue on the government's behalf and can garner some of the
proceeds of any settlement or judgment.
Oracle said it was not aware of the suit at the time it
bought PeopleSoft and said it "cooperated fully with the
government" in its investigation of the PeopleSoft contract
and the company's conduct. "Oracle is pleased to have fully
resolved this legacy PeopleSoft suit and all claims under
the PeopleSoft contract," Oracle spokesperson Bob Wynne said
in a statement.