When parties can’t agree on aspects of a contract, experts say call it a day.
There is still no official explanation for GSA"s abrupt termination of Oracle's Schedule 70 services contract, other than GSA's original statement that it just "was not in the best interest of the government." However, it did come months after Oracle agreed to pay a $200 million fine for its failure to comply with the terms and conditions of its Schedule contract.
Meanwhile, a consensus of experts has emerged to say that the cancellation is not a major obstacle, neither for the company nor for agencies that used the contract to buy Oracle services.
"Since GSA isn’t suggesting suspension or debarment, and because GSA is openly referring to Oracle’s other reseller and partner channels to sell its offerings, actions leading to the cancellation are probably not egregious,” said Ray Bjorklund, vice president and chief knowledge officer at Deltek’s GovWin.
Mary Davie, assistant commissioner of the Federal Acquisition Service Office’s of Integrated Technology Services, noted April 20 that agencies could still buy software and software maintenance from Oracle’s resellers that have IT Schedule 70 contracts.
Oracle has yet to comment on GSA's action.
The cancellation takes effect May 17.
Oracle’s Schedule contract was to run from Oct. 1, 2006, to March 28, 2012. The Schedule was last updated September 30, 2011, Bjorklund said.
“One could infer that GSA and Oracle couldn’t reach agreement on the terms and conditions needed to renew or extend the contract,” he said.
A lot of procurement changes have happened since 2006 that may have arisen between the two. There may have been differences in opinion about Oracle’s interest in its proprietary data rights, payment terms or rules that affect overseas work, Bjorklund said.
In addition, experts said the decision could stem from Oracle's inability to comply with existing contractual stipulations because the company has changed the way it conducts business since the contract was last modified.
Mark Amtower, partner of Amtower and Company, said major corporations often struggle with GSA's demands on sales records. Companies the size of Oracle may not be able to provide all of their sales information.
“When a worldwide company like Oracle is required to provide pricing data for every product sold, it is akin to Sisyphus pushing the rock up the hill,” he said.
GSA Schedule contracts operate under the Price Reduction Clause, which requires the government to get at least the same sale price as any other client.
“Now, in addition to the fine, Oracle will have to find other ways to sell to federal customers,” Larry Allen, president of Allen Federal Business Partners, wrote in his weekly 'The Week Ahead' newsletter.