This story was updated at 9:50 a.m. April 20.

The General Services Administration has canceled Oracle’s IT schedule contract for professional services only.

GSA announced its decision via Twitter on Thursday.

GSA told agencies that they will not be able to exercise options on existing task orders or place new orders after May 17. Existing task orders may continue through the life of the contract, it said. Blanket purchase agreements will also end.

“Based on the GSA’s review of Oracle America, Inc.’s IT Schedule 70 contract GS-35F-0009T which offers only professional services, it was determined that it was not in the best interest of the government to continue the contract,” said Mary Davie, assistant commissioner of the Federal Acquisition Service’s Office of Information Technology Services, which runs the schedules. “The cancellation directly impacts Oracle America, Inc.’s professional services offerings under the IT Schedule 70 Program. Ordering activities will be able to obtain Oracle America, Inc. software and software maintenance products through Resellers currently holding active IT Schedule 70 contracts.”

In fiscal 2011, GSA reports that Oracle did more than $387 million in sales through the IT schedule.

Oracle received more than $203 million in direct federal contracts during the same period, according to USASpending.gov. The Defense Department accounted for about half of the company’s 1,033 contracts that came through full and open competition.

A request to Oracle for comment on GSA’s decision was not returned.

“This is not as big of a body blow as you might think,” said Larry Allen, president of Allen Federal Business Partners. “Oracle has other contracts. It takes away an important avenue, but not the only one. Historically, some IT contractors who have had their schedule contracts canceled have done just fine.”

Oracle’s relationship with the GSA has been up and down. Oracle was the first large vendor to receive a SmartBuy enterprise license agreement when the program started in 2005.

But the Justice Department accused the software giant of violating the False Claims Act and Oracle ended up paying a $200 million fine in October. This was the second time Oracle paid a fine for violating the False Claims Act. The first time was because of a company they acquired had a problem on GSA schedules.

Oracle can still sell its products directly to the government, through other contract vehicles or through authorized resellers.

“This sends a message that GSA is getting serious about contracts compliance,” Allen said. “If you are not serious about it, it’s not just you will pay a big fine, but it could jeopardize your ability to keep or get a schedule contract.”

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