Oracle may have to pay $1 billion in damages if the US Department of Justice can prove that the company overcharged the US government on software contracts.
The lawsuit, filed by the Department of Justice (DoJ) on 29 July, is related to a $1.02 billion software contract between the General Services Administration (GSA) and Oracle.
The contract was negotiated on the understanding that Oracle would offer the government the same or better prices than it offers to its commercial customers.
Oracle had conveniently forgotten to tell the government about the 92 per cent discount it had offered to its commercials clients when negotiating the 25-30 per cent discount with the GSA.
The incident was brought to the notice of the DoJ by former Oracle employee Paul Frascella, who filed a whistleblower complaint against Oracle in 2007.
The whistleblower doctrine allows anyone to file a complaint on behalf of the US government against a company. The whisltleblower is entitled to a specified percentage of damages if charges are proven.