DOJ's ERP choice could harm its case against Oracle

Computerworld - The U.S. Department of Justice's announcement this week that it chose American Management Systems Inc. (AMS) as its supplier for a pricey software system is likely to complicate its antitrust case against Oracle Corp., according to industry experts.
The DOJ's lawsuit to block Oracle Corp. from acquiring rival PeopleSoft Inc. hinges on its argument that the high-end market for human resources and financial management software has only three vendors able to meet the needs of the largest organizations: PeopleSoft, Oracle and SAP AG. However, the department said Tuesday that it will spend as much as $24 million with AMS to replace a patchwork of accounting systems with a modern, departmentwide financial system based on AMS's Momentum software (see story).
"I think this is a classic case of the people in procurement proving their leadership completely off the wall," said Joshua Greenbaum, principal at Enterprise Applications Consulting in Berkeley, Calif. "There's absolutely no doubt that there's tremendous competition in the marketplace."
A DOJ spokeswoman declined to comment on the implications of the department's software selection.
The DOJ's procurement process for software to run its Unified Financial Management System, now under development, predates its case against Oracle. The department decided in 2001 to build a new financial system and soon after began to solicit proposals from the list of vendors with software certified by a government coordination group called the Joint Financial Management Improvement Program. Five vendors are currently certified by the program: Oracle, PeopleSoft Inc., SAP AG, AMS and Savantage Solutions Inc.
The financial-system overhaul project is lengthy and complex, and the DOJ expects full implementation to take several years. It was initially scheduled to announce its vendor selection in May 2003, one month before Oracle began its PeopleSoft takeover campaign.

After reviewing the proposed deal, the DOJ filed suit in February to block a PeopleSoft/Oracle combination, which it argued would seriously harm innovation and pricing competition in the ERP market.
"It's entirely possible that Justice can still make its case, but I would submit that this recent purchase of the AMS ERP software could very well be a complication for the government. It's something the DOJ is obviously going to have to explain," said Donald Barnes, a Washington antitrust specialist at Porter Wright Morris & Arthur LLP.
"If I were the lawyers at Oracle, I would be all over it," said Barnes, who isn't involved in the case.
An Oracle spokeswoman declined to comment on the issue.
Lobbying groups seized on the news of the DOJ's purchase as evidence that