In a landmark decision of the English and Welsh High Court, Justice Vivian Ramsay has ruled that the EDS bid team did act dishonestly and fraudulently by misrepresenting its expertise and resources in order to win the contract to develop and implement a new CRM system for BSkyB.
BSkyB, the UK’s largest satellite broadcaster, alleged that it had to sack EDS for failure to deliver, and to develop the system in-house, increasing costs from an expected £48 million to £265 million, and delaying roll-out by several years.
BSkyB has claimed £709 million (about US$1.6 billion) in damages from EDS. EDS’s failure to deliver meant that the customer service delivered by BSkyB’s contact centres was poor and that customer churn levels were unacceptably high. Lost business benefits are the primary basis for the damages claim, which EDS had called “absurd and extravagant”.
The full judgement is likely to be released within the next day or two. Because EDS is judged to have acted fraudulently the limits established in the contract on liability between the two parties no longer stand.
The quantum of damages has yet to be determined, but BSkyB is expecting at least £200 million.
EDS, which is now owned by Hewlett-Packard, will be appealing.