October 26, 2007, 12:50 PM — Lawyers representing EDS said in court this week that a £48 million (US$90
million) customer relationship management project for BSkyB was too poorly defined
for the IT provider to have committed fraud when pitching for the contract.
And they said those project requirements remained unclear until at least three
years into the contract, by which point Sky had taken over the project management.
But EDS also admitted in court that it had failed to deliver on several aspects
of the deal, and was partly to blame for the project being poorly specified
further down the line. However, its lawyers said that those failures were not
due to any intent not to perform.
Sky has alleged that EDS dishonestly exaggerated its abilities and resources
when bidding for the contract, resulting in late delivery of the project and
lost benefits that make up the £709 million in damages it is claiming.
Continuing EDS's opening statements against Sky's charge, barrister Mark Barnes
QC said: "Sky knew there was considerable uncertainty about the amount
of work involved, and hence the cost, and so employed EDS on a time and materials
He continued: "if detailed requirements for hardware, software and location
items were yet to be defined, it is obvious that no precise estimate could be
Barnes said that three years into the contract, during 2003, the project specifications
remained so unclear that Sky had to set up a special team in order to define
the exact requirements of the project.
"Sky pulled into this effort all sorts of business people whom the CRM
team had never seen before to explain what they really needed," he said.
And he move meant "there was at last an understanding of Sky's business
EDS said it was wrong for Sky to construe as contractual obligations statements
that EDS made during its sales pitch, owing to the standard Entire Agreement
Clause [LINK] in the contract which exempted such statements.
"This is a classic Entire Agreement Clause and it simply prevents representations
from becoming part of the contract," Barnes said.
Lawyers not involved in the case have noted that claims of fraudulent misrepresentation
circumvented such clauses, and also said that if a pitch were determined to
be wholly dishonest the clause would not apply.
But Barnes hit back at Sky's fraud charge.
"In claims of misrepresentation ... you can get a party thrashing through
the undergrowth, looking for some chance remark, long forgotten, difficult to
recall, in order to found a claim." He said that Sky had spent time looking
for such remarks, "and that may well be why it took them so long to come
up with the claim".