28 January 2010 | Paul Snell
BSkyB expects damages of nearly £200 million following its lengthy court battle with EDS over whether the IT services firm was completely truthful in its attempt to win a contract.
The satellite television operator had originally sued for £709 million in damages, claiming EDS had made a “deliberate, cynical and dishonest” sales pitch to win a £48 million deal to provide a new customer relationship management system – a contract that was terminated after two years.
Sky began its legal action against EDS (now known as HP Enterprise Services following a takeover by computing firm HP) in August 2004.
In his judgment Mr Justice Ramsey, who has taken 18 months to deliver his verdict, ruled in favour of the broadcaster, saying it would have chosen PricewaterhouseCoopers – a rival bidder for the contract – if EDS had not misrepresented its ability to deliver the project.
The judge said EDS had not carried out the “proper analysis” of time needed to complete implementation of the system they claimed to have, nor were there “reasonable grounds” – as they indicated – to believe they could deliver the system as promised. Mr Justice Ramsey said an EDS employee made the assertion “dishonestly” and “knew it to be false”.
But he ruled EDS had not lied about the level of resources necessary and how much it would cost to complete the project.
He also said EDS had “failed to exercise reasonable skill and care or conform to good industry practice”, with no effective programme management and a failure to provide the necessary technical and managerial resources. Because of this the judge awarded damages to Sky for breach of contract.
HP responded to the decision in a statement: “This is a legacy issue, dating back to the EDS business in 2000, which HP inherited when it acquired EDS in 2008. We are pleased the court dismissed the majority of the allegations made. While we accept that the contract was problematic, HP strongly maintains EDS did nothing to deceive BSkyB. HP will be seeking permission to appeal.”
The court will determine the level of costs and damages at a later date. Lawyers predict the case will lead to greater scrutiny of tender proposals and submissions by buyers and suppliers.
* A full report on the case will appear in an upcoming edition of SM.