Technology giant Oracle is crying foul after losing a $4.7 million Fairfax County software contract to its chief competitor, asking the county to delay the contract and questioning rival SAP’s dramatically cheaper pitch.
The county is looking to overhaul the outmoded technology that supports the day-to-day operations of the sprawling county government. After soliciting and reviewing bids, including Oracle’s, officials entered negotiations with German tech giant SAP to buy the needed software.
The unusual gulf between the two companies’ offers raised questions about an otherwise routine technology upgrade. SAP’s bid for the contract was $4.7 million for this year, almost 50 percent lower than Oracle’s bid. The cost of the contract over the next decade is expected to be $13.8 million.
“We are truly astonished that there could be as much as a 49 percent difference in cost,” Oracle State and Local Government Manager Ben Henning wrote in a letter earlier this month to county officials.
Henning argued the county’s findings on the SAP contract “may be based upon misinterpreted information” and asked for a meeting to review it, a request the county denied.
Implicit in his argument was the suggestion that SAP’s contract would end up costing far more in the long run.
Other local governments that bought SAP’s products ended up paying millions of dollars more than expected to install and maintain the software, according to newspaper accounts. But there is one important distinction: At this point, Fairfax County is paying SAP only to license the software, not to implement it.
Cathy Muse, director of the Fairfax County Department of Purchasing and Supply Management, said she was “fully confident in the price submitted by SAP.” Because the county was only buying the software, there was no opportunity to substantially change the pricing, she said.
“I have no concerns in that regard,” Muse said.
She said the county would seek bids to implement the SAP contract in August.
The existing systems that help run government and school operations are “well beyond their useful lifecycle” and “technologically obsolete,” according to county documents.
SAP did not return calls for comment.
