Witnesses to testify in Oracle hearing
Published: 21 May 2002 10:35 BST
A California state official who stepped down because of his role in a controversial $95m contract with Oracle is scheduled to testify on Tuesday before a legislative committee convened to investigate the contract that critics charge dramatically overcharges the state.
Legislators began an investigation after a state auditor released a report last month stating that public officials failed to exercise due diligence in signing the six-year contract with the software giant. The state paid at least $6m more than it needed to for the database software, according to the auditor's report. Oracle argues the contract could save California as much as $163m.
Barry Keene, who resigned as director of the Department of General Services after the controversy over the contract erupted, is scheduled on Tuesday to testify before the committee, which has already heard several days of testimony in recent weeks. Janice King, a state employee who reported to Keene at the time the state signed the contract, testified last week that Keene was an "advocate" of the contract and insisted she move it forward despite her warnings that she was unsure of its merits.
According to previous testimony, Keene, a former state senator, and Elias Cortez, the former director of the Department of Information Technology, dismissed numerous complaints from state officials closest to the deal that they did not have the time nor the resources to fully evaluate the contract before a 31 May 2001 deadline mandated by Oracle. California Govenor Gray Davis suspended Cortez on 2 May.
The eagerness to sign the deal, which took only about three weeks, and the lack of scrutiny by Cortez, Keene and their staff has mystified state lawmakers investigating the matter.
"They hurried this thing along like nobody cared what kind of deal we got," said Lynn Daucher, a state assembly member and a member of the legislative committee conducting the hearings. "I still have trouble understanding what the rush was. I don't buy that the deal would go away 31 May. There's got to be something else going on, because it doesn't make sense."
Critics say high-pressure sales tactics used by Oracle and Logicon, Oracle's partner in negotiating the deal with the state, appear to have rendered state officials defenceless. During hearings last Tuesday, the committee presented an email exchange between Oracle and Logicon dated several days before the contract was to expire. In the emails, which Logicon turned over to the state, employees of the two companies discussed how much information to give Kim Heartley-Humphrey, the deputy director of acquisitions at the California Department of Information Technology. The department was created in 1995 to co-ordinate major technology purchases for the state. At one point, a Logicon employee wrote in an email that he planned to give her "the least amount of data possible. At this point giving too much information can only be a bad thing."
The committee also anticipates testimony on Tuesday from Susan Kennedy, the highest-ranking member of the governor's office reported to be aware of the Oracle contract. Davis said he was not aware of the contract at the time the state officials signed it.
Cortez is expected to testify on Thursday, and Arun Baheti, the governor's former director of e-government, is scheduled to testify on Wednesday. Baheti resigned last month after revealing he accepted a $25,000 contribution from an Oracle lobbyist just weeks after the state signed the controversial contract last May. Davis returned the contribution to Oracle on 9 May.
The committee has called on executives from Oracle and Logicon to testify next month.
Meanwhile, some state officials are lamenting the state's rush to cancel the contract, which sold the state more Oracle licenses than it had employees to use them. After all parties agreed to end the contract, talks continue between state and company officials regarding details concerning money that has already changed hands and sales tax issues. According to a Logicon attorney, Koch has already paid $52.7m to Logicon, which passed $35.5m on to Oracle. Logicon also paid $3m in sales tax.
But one state agency was hoping to use the new contract to shave $50,000 off an $8.4m Internet project, according the Kevin Terpstra, a spokesman for the state's Department of Information Technology. Under the terms of the contract, any state agency can purchase Oracle database licenses at a 50 percent discount. Terpstra refused to name the agency.
"A lot of people don't really know if the Oracle contract is a good thing or a bad thing," Terpstra said.
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