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ORACLE AMERICA TO PAY UNITED STATES $46 MILLION TO RESOLVE FALSE CLAIMS ACT ALLEGATIONS AGAINST SUN MICROSYSTEMS

January 31, 2011

Washington- Oracle America Inc. has agreed to pay the United States $46 million to settle claims that Sun Microsystems Inc., a corporation that merged with Oracle in 2010, submitted false claims and caused others to submit false claims to the General Services Administration (GSA) and other federal agencies, the Justice Department announced today.

This settlement resolves allegations under the False Claims Act (FCA) and Anti-Kickback Act that Sun knowingly paid kickbacks to systems integrator companies in return for recommendations that federal agencies purchase Sun’s products. Sun executed agreements with consulting companies that provided for the payment of fees each time the companies influenced a government agency to purchase a Sun product. These kickback allegations are part of a larger, ongoing investigation of government technology vendors that has resulted in settlements to date with six other companies.

The settlement also resolves claims under the FCA that Sun’s 1997 and 1999 GSA Schedule contracts were defectively priced because Sun provided incomplete and inaccurate information to GSA contracting officers during contract negotiations, as well as claims that the incomplete and inaccurate information resulted in defective pricing of Sun’s contract with the U.S. Postal Service and GSA Schedule contracts held by two resellers of Sun products. At the time Sun entered into its contracts with GSA to sell information technology products and services to federal agencies, applicable regulations and contract provisions required Sun to fully and accurately disclose to GSA how it conducted business in the commercial marketplace so that GSA could use that information to negotiate a fair price for government customers using the GSA contracts to purchase Sun products and services. The defective pricing information that Sun disclosed to GSA was subsequently relied on by the Postal Service in negotiating a contract with Sun, as well as by GSA in negotiating contracts with two resellers of Sun products.

“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 the Civil Division of the Department of Justice. “As this case demonstrates, we will take action against those who abuse the public contracting process.”

“In this district, we are committed to aggressively pursuing any actions in which the government has been defrauded,” said Christopher R. Thyer, U.S. Attorney for the Eastern District of Arkansas. “Ultimately, it is the taxpayers’ money at issue and our office works to protect the citizens of the United States.”

The allegations that Sun improperly paid kickbacks were first made in a lawsuit that whistleblowers Norman Rille and Neal Roberts filed in the U.S. District Court for the Eastern District of Arkansas in 2004. Under the FCA’s qui tam provisions, private citizens may file actions on behalf of the United States alleging the submission of false claims and share in any recovery. The United States intervened in the kickback allegations alleged in the complaint, and also added new claims that Sun defectively priced its GSA schedule contracts. The government’s defective pricing allegations were based on an audit conducted by the GSA Office of Inspector General, which concluded that Sun provided inaccurate information during contract negotiations.

“Our auditors did not waver. They pursued the facts until they got to the truth,” said GSA Inspector General Brian D. Miller. “This case shows that with a lot of hard work and tenacity, justice will prevail.”

“The U.S. Postal Service Office of Inspector General is firmly committed to pursuing possible fraud in Postal Service contracting. This settlement is a testament to that commitment,” said Brian E. Cropper, Assistant Special Agent in Charge, Major Fraud Investigations Division of the U.S. Postal Service Office of Inspector General.

“The Treasury Department’s Inspector General for Tax Administration is dedicated to ensuring that contractors working for the Internal Revenue Service are thoroughly scrutinized, and any scheme that denies the American people the absolute best value for its tax dollars will not be tolerated,” said J. Russell George, the Treasury Inspector General for Tax Administration.

“The American taxpayer expects the Department of Defense and the Department of Defense (DoD) Office of the Inspector General to be champions of fiscal accountability and acquisition integrity. Those who participate in corrupt procurement practices erode that public confidence and deny full support to America's armed forces. The Defense Criminal Investigative Service will continue to investigate violations of law and support the Justice Department in its efforts to uncover fraud in the federal procurement process,” said Edward T. Bradley, Special Agent in Charge, Northeast Field Office of DoD’s Defense Criminal Investigative Service.

The Assistant Attorney General acknowledges the contributions of the Civil Division of the Justice Department; the U.S. Attorney’s Office for the Eastern District of Arkansas; GSA’s Office of Inspector General; the U.S. Postal Service’s Office of Inspector General; the Treasury Department’s Inspector General for Tax Administration; DoD’s Office of Inspector, Defense Criminal Investigative Service; and the Department of Energy Office of Inspector General.

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