In May 2001, officials of the State of California signed a
contract with Oracle which the world’s number two software company
said would save the state between $16 and $163 million over six to
ten years. Instead, an official investigation concluded that the
contract would cost the state $41 million because much of the
technology was unnecessary.
Four State officials have resigned or been suspended over the
deal. It was concluded without any other companies being invited to
tender for the work and apparently without any scrutiny of Oracle’s
savings analysis. It was also revealed that Oracle had paid $75,000
in campaign donations to State Governor Gray Davis and State
Attorney General Bill Lockyer.
The campaign donations have been returned and the State has
indicated that the contract is being cancelled – which may require
the State to pay to Oracle a fee for early termination. The State
has said that all future contracts of $100,000 or more will be
subject to competitive bidding.
Last Wednesday, Logicon, the agency that brokered the deal
between State officials and Oracle was cut from the panel of the
State’s Department of Information Technology. The firm stood to
make a $28 million commission on the deal.
