Oracle defends deals with California and other states

The Associated Press
Friday May 31, 2002

SACRAMENTO – Oracle Corp. is defending its software deals with California and other states after being accused of misleading customers about the costly contracts, a newspaper reported. 

Officials from Toronto to Atlanta are scrambling to get out of their agreements with the Redwood Shores-based software company, the San Jose Mercury News reported Thursday. 

The state of Georgia forced Oracle to renegotiate a major software deal after state officials concluded they would not save as much money as Oracle promised. 

In Toronto, city officials are trying to shed a $13 million deal that they say burdened them with thousands of database licenses they don’t need. 

In Ohio, state officials pulled the plug on an Oracle deal after they decided the company had inflated the state’s need for software. 

Oracle, which currently is working with state officials to void California’s deal, refused to comment for the newspaper’s story. A call to the company Thursday was not immediately returned. Oracle, however, has pointed 

“Oracle has a long tradition of aggressive sales and pricing tactics,” said Betsy Burton, an analyst for Gartner, a Connecticut-based market research group that has been critical of Oracle. “But the fact is that today they are losing business to Microsoft and IBM because of their tactics.” 

Assemblyman Dean Florez, the Bakersfield Democrat leading the legislative inquiry, said Wednesday he plans to hear testimony next week from other states that have had run-ins with Oracle. 

The state of California for decades has relied on Oracle database software to track data from criminal justice records to payrolls. But the company’s efforts last year to sell the state on consolidating its software purchases have come under increasing scrutiny. 

Last month, the state auditor concluded that the $95 million to $123 million contract, initially promoted as a way for California to save more than $100 million, could cost taxpayers millions of dollars for unneeded software. 

Oracle vehemently has denied it did anything improper, and points to its own analysis of the contract that shows it could save California taxpayers more than $100 million over the next decade.