IBM has revealed that it is in dispute with three public authorities that comprise its joint venture South West One. The partners in South West One are IBM, Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police Authority.
The annual report of South West One, which is 75% owned by IBM, says that a mediation was held on 4 and 5 July 2012 between IBM and Somerset County Council, which is the main public authority partner, on a confidential basis.
“No settlement has been reached and accordingly the board [of South West One] will be reviewing which of the remaining options in the contractual procedure should now be pursued,” says SW1€²s annual report.
South West One’s report doesn’t give any detail on the “contractual matters” in dispute.
Possible matters under discussion might have included a withholding of money (the councils are expected to pay IBM about £585m over 10 years, from 2007), contention over KPIs (IBM did not meet all of its key performance indicators and indeed met fewer of Somerset’s KPIs in 2011 than in 2010), changes to the contract which is being re-negotiated, a lack of remedial action over accounting problems in Somerset’s finance department following a major SAP implementation , a shortfall in expected savings, and the council’s extra costs of working around SAP-related problems .
It is known that a contract renegotiation has been underway for some time.