BSkyB wins long-running court battle over failed IT upgrade project

BSkyB, the satellite broadcaster, won a landmark court ruling yesterday against an information technology supplier that it had accused of lying to win a £50 million tender.

BSkyB sued Electronic Data Systems (EDS) in 2004, claiming that the IT provider’s “woeful” performance had led to a planned upgrade of its customer service systems falling apart.

Mr Justice Ramsey, sitting in the Technology and Construction Court in London, accepted BSkyB’s claim that EDS — now part of Hewlett-Packard, the American computer group — had made false representations in order to secure the contract.

Lawyers said that the long-awaited ruling, handed down a year and a half after the trial had finished, would send shockwaves through the outsourcing and technology services sector and could make contractors wary of pitching for big IT projects.

Hewlett-Packard is now liable for at least £200 million in damages, lawyers said. It plans to appeal against the court ruling.

The dispute began after BSkyB, which is 39.2 per cent-owned by News Corporation, parent company of The Times, accused EDS of “woeful” performance in designing and implementing new systems at its customer services centres in Scotland.

The upgrade project began in 2000 and initially was budgeted to cost £48 million, but it became beset by delays and cost overruns. EDS was dumped and BSkyB eventually finished the project itself, at a cost of £265 million.

BSkyB claimed that were it not for false representations by EDS it would have chosen PricewaterhouseCoopers, a competing bidder, instead.

Although EDS signed a contract capping its liability if the project failed at £30 million, BSkyB argued that the limit to damages did not apply because of EDS’s deception.

Disputes between companies and services contractors arise frequently but seldom reach court. Cases involving allegations of deception are rare and extremely difficult to prove, lawyers said.

The battle between BSkyB and EDS is one of the biggest commercial cases of the past decade. The trial alone took more than nine months, incurring legal costs estimated at £70 million.

EDS was founded by Ross Perot, the American businessman and former presidential candidate, in Texas in 1962. It was taken over by Hewlett-Packard in 2008 and renamed HP Enterprise Services.

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