Davis has repeatedly denied there was any link between the contribution and the signing of the contract with Oracle. But spokesman Roger Salazar said Thursday the governor decided that returning the money was "the most comfortable thing to do."
Oracle made the contribution last June through a Davis aide a few days after the Redwood Shores-based company signed a $95 million, no-bid contract with the state. The agreement was initially touted as a way for the state to save at least $16 million on database software through volume purchases.
But the state auditor says the deal could end up costing up to $41 million more than if the state had kept its original software supply arrangements, a conclusion Oracle disputes.
A legislative committee and state Attorney General Bill Lockyer have launched investigations of the contract. Davis' director of finance, Tim Gage, and Oracle's representatives have begun discussing how to rescind the contract.
The governor's Republican opponent, Bill Simon, has repeatedly attacked the contract and the contribution.
"It casts a dark shadow -- one might say a gray shadow -- over this administration and raises serious questions about how campaign funds relate to public policy," said Bob Taylor, a spokesman for Simon.
Davis' announcement came a day after Lockyer returned $50,000 in campaign donations to Oracle, saying he didn't want the money to undermine the credibility of his investigation.
Oracle has said there was "nothing out of the ordinary" about the Davis donation, and that about 30 other technology companies had pledged similar donations.
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