According to an article in the Computer Weekly, legal ruling could push up prices of IT contracts in the future.
The Technology and Construction Court found in favour of BSkyB following a five-year battle with EDS over a failed customer relationship management system. The case is the most expensive legal dispute in the history of the IT industry, costing both sides an estimated £40m each.
Commenting in Computer Weekly, Rob McCallough, a Partner at Pinsent Masons, says, “It is rare for an IT supplier to be accused of fraudulent misrepresentation. It is even rarer for a supplier to be found guilty of it. It is a landmark decision which could give rise to suppliers reviewing sales techniques, contractual arrangements, and what is presented to customers in terms of their capabilities, services and products.”
He went on to say:
“The consequences for suppliers of getting projects wrong are too great for them to take chances. They will have to be more careful in assessments of risk, more careful in what they bid for, and will face increased bidding costs because of extra preparatory work”
Coukld this possibly mean that suppliers could face increased insurance premiums – assuming that they and their employees can get cover for liability for IT project failures – pushing up bid prices?
EDS has been ordered to pay interim damages of £200 million to BSkyB – several times more than the cost of the original system.
EDS was taken over by HP and they are seeking permission to appeal against the judgment.
Will this impact on us all in the future? I guess time will tell but knowledge of this case is important for contractors and companies alike.