Oracle coughs up $98m to settle PeopleSoft suit

Oracle has agreed to pay the US government $98.5m to settle charges that PeopleSoft provided false pricing information to obtain a federal contract.

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 (MAS) programme, the Justice Department said.

The MAS programme requires vendors to provide their commercial pricing information to the US 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".

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 US District Court for the District of Maryland, will receive $17.7m of the settlement, as provided for under the statute.

Under the Federal Claims Act, whistleblowers can sue on the US 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 "co-operated fully with the government" in its investigation of the PeopleSoft contract and the company's conduct. An Oracle spokesman said in a statement: "Oracle is pleased to have fully resolved this legacy PeopleSoft suit and all claims under the PeopleSoft contract."

Ina Fried writes for CNET News.com