HP faces £200m bill for EDS 'misrepresentations'

HP's EDS subsidiary was found guilty of making false representations

HP is facing a bill in excess of £200m after the High Court in London ruled on the ongoing case between BSkyB and HP's EDS subsidiary.

The court found that EDS has made false representations to BSkyB over its abilities in order to win a £48m contract to build a customer relationship management system for BSkyB's operations in 2000.

The contract soon became entangled in cost overruns and delays, and BSkyB sacked EDS and used its own staff to finish the job, at an eventual cost of £265m.

"EDS was not found to have been systematically negligent, and the ruling centred on the conduct of one particular employee," said Patrick O'Brien, a senior analyst at Ovum.

"It is not hard to imagine that there are a number of sales people at other firms who will say and do anything to get a signature on a major contract."

The ruling means that IT vendors will need to take special care with recruitment policies and make proper background checks, according to O'Brien.

"We doubt that many vendors restrict sales personnel in terms of what they promise in negotiations. Instead they have concentrated on making contracts watertight. This attitude will need to be reassessed in light of BSkyB's court victory," he said.

The High Court has ordered HP to pay £200m for the mistake, and to make an interim payment by 17 February.

"This is a legacy issue dating back to the EDS business in 2000, which HP inherited when it acquired EDS in 2008," said HP in a statement.

"As the world's largest technology company, HP has built a solid reputation based on strong governance and adherence to the highest ethical standards."