Oracle Makes Good
The software giant and California State Attorney General Bill Lockyer announced the rescission of the year-old, $95 million contract between the state, Oracle and Logicon, now Northrup Grumman Information Technology.
The Enterprise License Agreement (ELA) was to cover a six-year period, and ostensibly would have saved the state $111 million over 10 years, according to an analysis by former California state auditor Kurt Sjoberg. The analysis is posted on Oracle's Web site. The contract included the database license, technical support and a volume purchase agreement.
But state officials contended that Oracle and Logicon oversold the system, touting substantial cost savings without being able to back up those claims. The officials said the state requested more details from the vendor about how the multimillion-dollar deal would save the state money, but allege the vendor withheld the information.
Both Oracle and Northrup Grumman issued statements saying the companies are glad to put the issue to rest.
Oracle is "pleased to have resolved this matter to the satisfaction of the state of California," said Vice President of Worldwide Communications Jim Finn in a statement.
While Northrup Grumman still believes the pact would have provided value to California citizens, "our principal concern remains customer satisfaction," said Steve Carrier, Northrup Grumman's vice president of business development and strategic planning.
Some observers said the debacle was nothing more than politics as usual. "California used an excuse to get out of a deal it negotiated poorly," said Mike Schiff, analyst at Current Analysis. "Oracle was astute enough to realize it was a no-win situation and is bowing out."
One database integrator, who requested anonymity, agreed. "I don't think Oracle was out to screw the client, but the company has a history of presales,selling 10,000 licenses, only 5,000 of which would be needed in the next year. If California is unhappy about the contract, they should look in the mirror."