Oracle is compensating the US government with US$98.5 million (£53.1m) payment for allegations that PeopleSoft, the software company it acquired last year, overcharged government customers for years.

The US Department of Justice (DOJ) accused PeopleSoft of failing to disclose accurately the discounts it offered large customers. PeopleSoft didn't offer government agencies its multiple product discount or additional non-standard discounts that it gave other customers, the DOJ said. As a result, government agencies paid more for PeopleSoft products and services between17 March 1997 and 20 September 2005, than their corporate counterparts.

The PeopleSoft contracts were made as part of the General Service Administration's (GSA) Multiple Award Schedule (MAS) programme under which vendors agree to disclose their commercial pricing policies in exchange for the chance to sell to hundreds of government customers under one contract. Overall, the GSA MAS program had sales of over $30 billion (£16.2bn) last year.

The overcharging came to light when a PeopleSoft employee, James Hicks, filed a case in the US District Court for the District of Maryland. As a whistle-blower who sued on behalf of the government, Hicks is entitled to a portion of the award. He'll receive more than $17m (£9.2m) of the Oracle payment.

Oracle said it was not aware of the suit at the time it acquired PeopleSoft. The settlement follows an investigation by the Civil Division of the DOJ, the U.S. Attorney's Office for the District of Maryland and the GSA's Office of Inspector General.

It's the largest payment ever to the US in a civil settlement under the False Claims Act involving the GSA's MAS programme.