Southwark Council sues IBM for £700,000

Local authority demanding damages over "defective" computer system

IBM faces a legal battle with Southwark Council

Southwark Council has launched a £700,000 legal battle against IBM in a row over a new computer system.

The council said it has lost confidence in IBM’s credibility and integrity, and does not believe it will ever be able to have a workable business relationship in future. Now the council is demanding damages of £717,061 from IBM after branding the new system defective.

In 2005, Southwark wanted to install a new computer system allowing different departments to share information through a central repository of key data, called a master data management system, according to a High Court writ.

The council considered a rival system before going ahead with a contract with IBM, running to 19 pages, in which it agreed to pay £259,112 for the IBM Websphere software licence. The council also agreed to pay £99,124 for skilled staff to implement the system, and £67,000 for the final piece of the system, Orchard’s ArcIndex, as well as consultancy services and support and maintenance, it is alleged.

But a preliminary review of the system in July 2007 found problems, including a serious deficiency with a vital system component, Orchard ArcIndex, the writ says.

There were also problems with the user interface, messaging integration, matching strategy, and a lack of reporting capabilities, the writ claims.

The council brands the system unfit for purpose and of unsatisfactory quality, and accuses IBM of failing to use reasonable skill and care when designing and testing the system. IBM also negligently claimed during negotiations that the system would meet the council’s requirements, but these claims were false, and the system could not deliver its requirements, the writ claims.

IBM failed to research solutions after a workshop to resolve problems, the writ says. The council argues that although it tried to mitigate its loss by trying to find a solution with IBM that would make the system work, IBM tried to absolve itself from any responsibility for the software even though the contract for ArcIndex was an essential part of the system, it is alleged.

The writ was issued by Deborah Collins of the council’s legal department.

Computing has requested a comment from IBM.