Oracles California dispute highlights cynical licensing

12 June 2002 The reputation of database giant Oracle has been hit by the release of new emails relating to its increasingly acrimonious dispute with the state of California.

California legislators are investigating a $95 million (€100.2m) contract between California, Oracle and Logicon, an Oracle reseller.

The two companies are accused of trying to rush the contract through before state officials could properly verify the cost savings and of knowingly selling more licences to the state than it needed.

At the same time, the state of California has also been accused of a lack of due diligence, having awarded Oracle the contract without soliciting other bids. The contract was rescinded in early May after a public outcry.

The legislative audit committee has obtained a number of documents sent between Oracle and Logicon, including print outs of emails between the two companies.

In one email exchange between Oracle sales associate Greg Loos and Logicon employee Rajan Mittu, Loos writes about the increase in Oracle licences between the old and new contracts:

“I would keep the net new licenses more ambiguous if it were up to me,” he writes. “Focus on the total aggregate users, because the ‘license credits’ will skew the results… can you use the license credits in your summary? That might help your justification — and its harder for them to audit.”

In another email, Mittu writes to Loos saying that some of the costs that state agencies reported “could create problems for us”, and asks Loos if he can remove some data. “Again, the goal is to show that the state is spending all this money and getting very little,” writes Mittu.

Oracle said that California could save money by consolidating its sales to various state agencies, but a state audit has concluded that the contract involved more seat licences than were needed. In fact, the audit found that the contract would have cost the state $41 million (€43.2m) more than before, as opposed to saving it at least $100 million (€105.5m) over six to 10 years, as Oracle claimed.

However, testifying last week to the legislative audit committee, former state auditor Kurt Sjoburg, hired by Oracle to study the contract, has said that Oracle’s estimates were right.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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