EDS begins Sky defence

Lawyers for Electronic Data Systems will hit back at charges by British Sky Broadcasting that the US IT outsourcing company deceived Sky when it put in an ill-fated bid to build a “world class” customer-care centre to look after its subscribers.

BSkyB alleges that EDS misrepresented its capabilities in order to secure the £48 million (E69m) deal in July 2000. But, in one of the largest legal fights played out in London's specialist technology and construction court, the US group's lawyers will claim that BSkyB didn't know what it wanted – but was determined to force down the cost in any event.

As if to underscore the broadcaster's lack of realism, they will point out that it took BSkyB six years to complete the project, and that the bill ultimately ran to more than £265 million. The reputations of the companies are at stake, as well as those of other members of the EDS consortium, such as Lucent and Chordiant Software.

Also involved is financial consultancy PwC, which made an unsuccessful rival bid for the project and then advised Sky on EDS's progress. The original deal between Sky and EDS contained a £30m liability cap for any breach of contract. But this has been overridden because Sky is claiming that the Texas-based group acted dishonestly. The broadcaster is asking for £709m in damages. That figure, it claims, reflects the additional costs which had to be incurred to complete the project, compared with the likely bill had PwC handled the work, and the lost business benefits.

Court papers show there were difficulties from the outset. EDS claims Sky took more than five months to make its selection of prime contractor – and that it then took another four months to conclude a contract. Even then, it says, there was only a “preliminary specification” for what Sky required – and, as more details began to emerge, the complexity of the system multiplied.

Sky acknowledges that the decision to appoint EDS was “not straightforward” and that top executives were split over whether to go with the US company or PwC.

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