Oracle takes Philadelphia for $18 million

Perhaps Oracle is simply too big to tell when it has shot itself in the foot. Or maybe the firm thinks it has more than one leg to stand on in the case of their recent seriously troubled “Project Ocean” project. Project Ocean was begun three years ago in the hopes of replacing the city of Philadelphia’s outdated water department billing, collections and operations processes with updated Oracle software.

The problem? The original contract, which called for US $7 million worth of work to be completed in twelve months became a US $18 million behemoth three years old and counting before unceremoniously brought to a halt with few tangible results except for headline-level scandal and damage to Oracle’s reputation. Reportedly, in 2003, the Mayor’s Office of Information Services in Philadelphia was pushing to take over the water billing system itself, a producer of $300 million in annual revenue and through the Oracle project saw a way to do so.

The municipal water commissioner at that time opposed the proposal, stating that had never taken one a municipal water billing system. The project was halted in August 2005, when allegations of overpayment to Oracle employees, contractors and independent hires. Several were suspended from the project, with one project manager almost getting away with over US $170,000 in salary, a figure that represents US $150 per hour for over 82 hours of work per week for three and a half months.

By March 2006, city officials said the investigation had been completed and that Project Ocean back on track. However, one councilman brought public attention to what he figured to be a US $20 million sinkhole, complaining about the program’s viability in a budget hearing and subsequently taking his concerns to Philadelphia media outlets. The city financial controller’s office began a review of Project Ocean in February of this year and recently said that review of the Oracle/Project Ocean debacle is about half complete.

The same office was in charge of the initial investment revealing financial improprieties on the parts of contractors. The official word from Oracle vice president of consulting Stephen Holdridge on Project Ocean reads, “Oracle believes it has fulfilled its contractual obligations with the city, and we have attempted to work with the city to move this program forward.” Another Oracle statement stated that “The Project Ocean implementation is still in progress, and Oracle believes that the work performed to date conforms to the current agreement.

Oracle has also continued to confirm its commitment to deliver on all its obligations to complete the project.” For now, it seems Oracle needs to do a little damage control. With no tangible results to show, a handful of scandal to besmirch company image, and a feel-bad story that’s making international trade press headlines, this is one major blow to Oracle. Perhaps these guys have just gotten too big for their britches.