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By Mel Duvall
HP will have to pick up a $460 million tab for a bitter dispute between EDS, the consulting firm it acquired in 2008, and a British pay TV operator.
A British High Court ruled six months ago that EDS was at fault for a botched customer relationship management (CRM) implementation at British Sky Broadcasting Group. According to the court, EDS had been deceitful in winning the contract by misrepresenting how long it would take to implement the system.
The Wall Street Journal reported this week that the parties had reached a settlement in the matter and that HP agreed to pay 318 million pounds ($460 million) for damages, costs and interest. HP acquired EDS for $13.9 billion and rebranded it as HP Enterprise Services last year.
The dispute dates back to 2000 when the British company, also known as BSkyB, contracted EDS to design, build and implement an advanced customer service system at contact centers in England and Scotland. BSkyB terminated the work in 2002, saying that EDS had failed to fulfill its contractual obligations.
BSkyB took direct control over the project and was able to complete the implementation by March 2006. In the meantime it took legal action against EDS in 2004 to recoup its costs. The trial began in October 2007 and the British High Court ruled in BSkyB’s favor in January 2010.
The dispute is one of a number of high-profile cases that system integrators and consultants are battling in the courts. Last month IBM and the state of Indiana swapped suits over a failed project to implement a new welfare eligibility system. IBM is attempting to gain fees and expenses it says it is owed after the contract was cancelled. The state, in turn, is attempting to sue IBM to recoup some of the money it says it spent on the project.
Earlier this month Deloitte Consulting was slapped with a $30 million suit by California’s Marin County over what the county alleges was a botched SAP installation. Deloitte has counter-sued, saying it is owed more than $444,000 in unpaid fees and an additional $111,000 in late charges.
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