I blogged last month that a British judge had ruled that Centrica (the parent company of British Gas) had a right to test its breach of contract claim in court against management consulting company Accenture in regard to the development of the ill-fated Project Jupiter, a so-called "best of breed" customer-billing system.
British Gas had officially contracted with Accenture on 28 January 2002 to implement the billing system, which is about the only thing the two sides agree upon.
As I noted here, fundamentally the two parties disagree over the quality of the work performed on Project Jupiter and whether it met contract specifications. Accenture says it did, Centrica says it didn't.
Last month, Accenture said it would appeal the judge's preliminary ruling, believing that Centrica's claim against it are "baseless and without merit."
Well last week, the judge published a second preliminary ruling in the lawsuit that Accenture says it will also be appealing.
In this case, Mr. Justice Field of the UK High Court ruled again for Centrica on nine of the ten contractual points in dispute.
- Will be allowed to aggregate individual breaches of warranty into a single fundamental breach of warranty for the purposes of its claim. Accenture had argued that none of the individual breaches was serious enough to cause a fundamental breach.
- Did not have to prove that a fundamental breach of warranty had caused a severe adverse effect at the time it notified Accenture of the breach. Centrica had only to prove that the breach would have caused a severe adverse effect if left unremedied.
- Can claim damages for the costs of fixing the problems, and also for the direct losses caused by any fundamental defect, and damages for the problems before Accenture was told of any defect.
- Can claim other losses, such as compensation to customers.
- Can claim for hardware. Centrica says it bought millions of pounds of extra hardware to remedy the slowness of the system.
Tony Collins, executive editor at ComputerWeekly, wrote an interesting follow-on article to the one above concerning the implications for other IT suppliers that may be a result of this court case. One of the most important is that Centrica is going to be allowed to aggregate individual breaches of warranty into a single fundamental breach of warranty for the purposes of its claim.
As we all have personally experienced, small IT problems, which in isolation don't look too bad can together make a system unusable. IT suppliers have long argued that these problems were ordinary "teething problems" and were never bad enough to mean that they didn't meet their contractual obligations. The judge appears to be saying that indeed they do.
The case is scheduled to go to trial in 2011. Given the judge's two preliminary rulings, I can't see how Accenture will want this to go to trial - it has too much to lose especially if the rulings are allowed to stand after appeal. For if Accenture loses, then I guarantee that it will encourage other unhappy customers in the future to file suit against it (as well as other IT suppliers).
In fact, even now, I can see IT suppliers in the UK ordering their lawyers to review their contracts to see how much they are at risk of being sued, and currently unhappy IT customers' ordering their lawyers to see whether they can use Centrica's arguments against their IT suppliers.
It is rather cheeky for me to say so, but now that Accenture has dropped Tiger Woods as its main corporate spokesperson, it probably frees up more than enough money for the company to reach an out-of-court settlement with Centrica, which I still predict will be the outcome. As a now defunct Accenture ad featuring Tiger used to say, 10% is what you did to get yourself in trouble, 90% is what you do next to get yourself out.
Swing away, Accenture!
Robert N. Charette is a Contributing Editor to IEEE Spectrum and an acknowledged international authority on information technology and systems risk management. A self-described “risk ecologist,” he is interested in the intersections of business, political, technological, and societal risks. Charette is an award-winning author of multiple books and numerous articles on the subjects of risk management, project and program management, innovation, and entrepreneurship. A Life Senior Member of the IEEE, Charette was a recipient of the IEEE Computer Society’s Golden Core Award in 2008.