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Oracle Accused in Complaint of Overcharging U.S. Government in Contract

The U.S. filed a complaint against Oracle Corp., the world’s second-largest software maker, saying the company overcharged the government on a contract involving hundreds of millions of dollars in sales.

Oracle failed to disclose discounts that it gave its most favored commercial customers, according to a complaint filed today by the Justice Department in federal court in Alexandria, Virginia. The government must get the company’s best prices, according to the complaint.

“We take seriously allegations that a government contractor has dealt dishonestly with the United States,” said Tony West, assistant attorney general for the Justice Department’s civil division, in a statement. “When contractors misrepresent their business practices to the government, taxpayers suffer.”

The Justice Department said in a statement that the software contract was in effect from 1998 to 2006 “and involved hundreds of millions of dollars in sales.”

A former Oracle employee, Paul Frascella, filed the case in May 2007 under the False Claims Act, which lets private citizens sue on behalf of the government and share in any recovery. The government joined Frascella’s case on April 2, when it was unsealed.

The government filed its own version of the complaint today after previously intervening in the case.

Deborah Hellinger, a spokeswoman for Redwood City, California-based Oracle, didn’t return a phone call and e-mail seeking comment.

Microsoft Corp., based in Redmond, Washington, is the world’s largest software maker.

To contact the reporter on this story: Justin Blum in Washington at jblum4@bloomberg.net

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