EDS 'took risk' with ill-fated Sky project, court hears

Lawyers representing EDS argued Monday that a damages claim being made by BSkyB over a contract to deliver a CRM system was "artificial" and only made to allow Sky to "claim absurd and extravagant amounts of money."

They said the firm took significant contractual risks when it signed the ill-fated £48 million (US$98 million) contract with Sky to deliver a system for which the specifications had not yet been formulated.

The US IT services firm is answering charges brought by Sky that it acted "dishonestly" when it made its sales pitch for the deal that was signed in July 2000.

EDS's barrister, Mark Barnes QC, said the suggestion that EDS should have had all the resources available at the time of the bid for an 18-month project with undetermined deliverables was "absurd".

He said the extent and complexity of Sky's requirements "kept on emerging like handkerchiefs from a magician's sleeve."

The case, which is expected to run well into next year, is being played out in London's technology and construction court. The court heard opening remarks last week from Sky's legal team that said EDS had made a "dishonest" sales pitch for the contract that overstated the resources it had available in an attempt to secure the deal.

The original deal signed between EDS and Sky had a limited liability cap of £30 million for any breach of contract, but the provision did not cover claims of misrepresentation and Sky is now claiming for £709 million on that basis.

The contract, which also included EDS's subcontractors Arthur Andersen, Chordiant and Lucent, was terminated in 2002 after failed attempts to renegotiate the terms. EDS quit the project completely in January 2003, several months after handing over its systems integrator responsibilities to Sky.

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