GSA's Oracle cancellation still a mystery

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.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Tue, Aug 28, 2012

IMHO – The decision makers being discussed are Purple Book Employees which are only transient employees of the current head of the Executive Branch and should not be considered a part of the career Government work force that is eagerly awaiting their guidance. Regardless of what is being said, every Department and Agency has been developing, and will continue to refine, their respective contingency Plans for responding to the forthcoming program and personnel cuts. Falls right into the hands of those that have worked so hard to contract out the Administrative Branch of Government.

Tue, Apr 24, 2012

I would say they were going to pull the same trick on GSA that they pulled on us a few years ago - wait until the last day possible to inform GSA of a substantial increase in the cost of services being provided with a take it or leave it position. I will never again have anything to do with them.

Tue, Apr 24, 2012 Vern San Diego

Yeah! And who sees to it that the BIG Government Bucket doesn't go for hookers and known bankrupt companies and more regualtions and vote buying schemes instead of to the real customer, the people who EARN all that stolen, confiscated wealth? It did my heart good when Sears told the government where they could put their contracts. I'm no real Oracle fan but I appreciate any entity that can tell Big Brother to BUZZ OFF!! It's funny, we keep hearing how the government needs to regulate businesses or they will run roughshod over everyone. But each and every business is "regulated" by customers and stockholders. If they don't perform---PROPERLY and EFFICIENTLY---they go out of business. Who or what exactly regulates the Government? What are the consequences when THEY act inappropriately and inefficiently? The next election? Chyeah! Right! Not when they just buy more votes from the WIFM Lemmings. It's way beyond high time the"giant" Government got "chopped"!!

Tue, Apr 24, 2012

The big giant just got chopped. All businesses need to support the needs of the customer no matter how big or small. The fact that someone thinks Oracle is too big to show detail accounting is wrong. All companies need to understand that the big Government bucket is closing up the holes and they need to get used to it.

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