Oregon governor wants to sue Oracle over healthcare site debacle

This is not the press any vendor wants. On Thursday, Oregon governor John Kitzhaber asked the state attorney general to take legal action against Oracle(s orcl), which he blames for the embarrassing roll-out (or non-rollout) of the state’s health exchange site.

This is just the latest spat in a long-festering saga. The site launched October 1, but pretty much fell on its face, becoming the butt of jokes on late-night TV well beyond Oregon. Oracle has blamed the state for not using its consultants to build the site — the state acted as its own general contractor. Kitzhaber also asked the U.S. Department of Health and Services to penalize the company, according to OregonLive.

Oregon hired First Data(s fdc) to figure how things went so bad. That company found Oracle’s performance “lacking” in a February report which went on to say:  “[Oracle’s] inability to adhere to industry standards and professional software and project management tenets warrant further review”

The state, which has paid $130 million for work on the site, is withholding another $25.6 million.

Responding to a request for comment, an Oracle spokeswoman said via email that:

Contrary to the story the State is promoting, Oracle has never led the Oregon Health Exchange project. OHA and Cover Oregon were in charge and badly mismanaged the project by consistently failing to deliver requirements in a timely manner and failing to staff the project with skilled personnel. The Governor admitted as much in his statement, and these facts are supported by extensive documentation. We understand the political nature of the announcement just made and that the Governor wants to shift blame from where it belongs. We are proud of the work that we have done to enable over 420,000 Oregonians to enroll in health care. We look forward to an investigation that we are confident will completely exonerate Oracle.

One thing is clear in all this: The episode is bad news for the state, for Oracle and possibly for healthcare reform in general.

This story was updated at 7:26 a.m. PST with Oracle comment.