Lawyers representing EDS said in court this week that a £48m 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 the £709m 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 basis."
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 given.”
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 requirements.”
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”.
Sky’s damages claim had grown from £49m in July 2002, to £221m in December 2003, £480m in August 2004, and a "vastly overestimated" £709m now, Barnes said.
The claim is based on lost time and benefits, including disappointments in the rate of reduction in customer churn and in the rate of improvement in the handling of customer calls. He said that Sky was apportioning damages for delays and extra costs to EDS even for the period of time following March 2002, when Sky took over from EDS as project manager.
The case is now adjourned until Wednesday, when Sky will call its first witnesses.
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