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By | John Oates 29th March 2011 10:49

Council loses £2.5m claim against Big Blue

Good money after bad

Southwark Council's claim for £2.5m in damages from IBM for supposedly faulty software has been dismissed.

The court found that IBM had delivered the system as requested in 2007. It was bought through a framework agreement between the Treasury and IBM.

The judge found that Southwark had chosen the software without even writing down any requirements it wanted IBM to follow, ComputerWorld reports.

Justice Akenhead wrote in his judgment: "An analogy is the potential car purchaser who might want an off-road vehicle but, having looked at the brochure for an on-road vehicle, says to the salesman 'that's what I want'. There will be no cause for action against the garage that the car is no good off the road.”

Akenhead said IBM had not said the software was suitable and had left the decision to the council.

He also questioned why Southwark had failed to produce any of six people involved in the early negotiations as witnesses.

The system was based on ArcIndex housing management software from Orchard and ran on IBM Websphere. It was chosen in preference to a system from SAP.

Southwark Council first claimed breach of contract, negligence and misrepresentation. It then narrowed its focus to claim the system failed to de-dupe data properly or restrict user access.

A Southwark Council spokesman said: "This case refers to the acquisition of software back in 2006 which, in our view, was not fit for purpose. 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.

"We will not appeal. We will now have an internal review to make sure we get the software we need so that we are able to cut running costs for the organisation and will look for suitable partners to help us deliver this."

The council initially claimed £717,000 from IBM, which rose to £2.5m after a failed mediation procedure.

IBM said it was pleased with the judgment. Big Blue had offered to settle the case and each side would pay its own costs - the judge said there was no good reason why Southwark had not taken this chance given how weak their case was.

The council must now pay IBM's costs - the exact figure is still being debated by both sides, but Southwark has promised that any payment would not hit front line services. ®

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