Southwark Council fails in £2.5m claim that IBM missold software

IBM has been cleared in court of a £2.5 million claim that it mis-sold an IT system to Southwark Council.


IBM has been cleared in court of a £2.5 million claim that it mis-sold an IT system to Southwark Council.

In a judgement issued last week at the Technology and Construction Court, judge Mr Justice Akenhead said Southwark had received the master data management system it sought in 2007.

It intended to procure a system to give a “joined-up” view of property and citizens in the area, drawing on five source systems. The procurement was through a framework agreement between HM Treasury and IBM, that was open to local authorities.

The judge ruled that Southwark was aware of the capabilities of the system chosen, which was based on the ArcIndex housing management software from supplier Orchard and on IBM Websphere. Southwark has decided not to appeal.

In 2007, the council had signed three software and services contracts with IBM, having rejected initial plans for SAP software. In the subsequent lawsuit, it said the software implemented by IBM had failed to de-duplicate its data as efficiently as promised.

Southwark had initiated the claim two years later, citing the alleged deficiencies in the system, and accusing IBM of misrepresentation, breach of contract and negligence. Instead, Southwark now faces a bill for IBM legal costs.

Under the contracts, Southwark said IBM was to provide £286,500 worth of systems, plus additional consultancy and support services at separate costs totalling over £100,000. It had chosen a setup according to limitations on what it could afford.

“In my judgement, Southwark got by way of Arcindex exactly what its then team knew that they were getting and what it decided that it wanted and needed within its budgetary constraints,” the judge wrote.

“It follows from my findings that I am satisfied on a balance of probabilities that Arcindex as supplied by Orchard to Southwark was of satisfactory quality and suitable not only generally but also for the specific purposes which Southwark’s personnel had identified to IBM and Orchard as their requirements.”

A spokesperson at Southwark Council said: "We're disappointed with the judgement but we took this action because we believed we had been mis sold a product. Our duty is to have IT systems that work and that save the council and the council tax payer money."

IBM said in a statement: "We are pleased with the judgment in this case, which found that claims asserted have no merit and that IBM met all its obligations to Southwark."

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