Oracle Officials May Testify at Hearings

California considers issuing subpoenas to force Oracle executives to testify at hearings regarding Oracle's $95 million software contract with the state.

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Officials with Oracle Corp. and its reseller, Logicon, may have to testify in California state hearings regarding Oracles disputed $95 million software contract with the state.

The state Joint Legislative Audit Committee (JLAC) is investigating whether the contract signed a year ago is a good deal for California. The state is suing Oracle to rescind the licensing agreement.

On Tuesday, state Assemblyman Dean Florez, JLAC chairman requested subpoenas to compel Oracle and Logicon officials to testify at the hearings. The committee, in a May 16 letter to Oracle, asked that five sales people close to the deal testify. But Kenneth Glueck, vice president of government affairs at Oracle, suggested he be the only witness to testify because he was the top negotiator on the deal. Glueck said Oracle, of Redwood Shores, Calif., would present the witnesses as requested, but with a caveat.

"We are willing and prepared to have the witnesses named in your May 16, 2002, letter meet, without the need for subpoena, with you and your staff for interviews prior to the June 4th hearing," Glueck wrote.

The JLAC was scheduled to vote on Florezs subpoena request later Tuesday.

The California state auditor has said the licensing agreement will not be cost effective for the state, and that it was hastily signed without independent verification of the numbers, according to a statement issued by the JLAC.

At issue is whether the Oracle contract will cost taxpayers $41 million, as the state auditor suggests, or save the state more than $100 million, as Oracle claims.

In his letter to the JLAC, Glueck pointed out a mistake in the auditors report, which he said affects the "overall determination of ultimate value." The issue, relating to license migration, changes the analysis from a net loss to a net gain, according to Oracle.

Glueck also contends that it will likely cost the state more after rescinding the license agreement than to maintain it.

The investigation involving Oracle began after a JLAC report released in April proved Logicon told state negotiators that they would save as much as $163 million by using Oracles software. As a result, the state authorized a six-year, 270,000-seat license agreement for Oracles 8i database software.

The audit committees report, coupled with a survey by the California Department of IT that says relatively few state workers need or want the software from Oracle, brought the contract into question.

Consequently, a number of state employees have resigned and two top officials earlier this month returned campaign finance checks to Oracle. Gov. Gray Davis returned $25,000 and state Attorney General Bill Lockyer returned a check for $50,000.

Likewise, the FBI is working with the U.S. Attorney Generals Office to determine whether a federal investigation should be made into the sales practices at Oracle.

All told, the JLAC will spend nearly seven weeks in hearings over the Oracle debacle. The next hearing is scheduled for June in Sacramento.