United Assurance has accused IT giant Unisys of negligent
misrepresentation over a £14m contract, claiming in the High Court
that it was not told the system it bought could only handle one
tenth of the required workload.
It has also accused Unisys of keeping quiet about a test of the
system at Norwich Union. The test had a "disastrous result",
claimed United.
But Unisys hit back in the hearing, suggesting that United may have
timed an announcement about the cancellation of the contract to
increase its half- yearly losses, making it an attractive takeover
target.
The hearing could become one of the longest and most expensive IT
battles in the history of the specialist Technology and
Construction court - it is expected to last up to 42 days. The
frankness of internal e-mails revealed in evidence has provided an
unprecedented insight into the strong feelings of staff in the
run-up to the project's cancellation (see p4).
Unisys' internal tests highlighted problems with the scalability of
Unisure in a configuration that involved a Unix operating system,
Sequent hardware and Oracle database.
This flaw, said United, meant that Unisure would be unable to
handle the volume of policies required. "What was not told to us
completely falsified what was told to us, and made what was told to
us completely misleading," said Jeffrey Gruder, United's QC.
Unisure is a widely-used life and pensions product which was
described in the hearing as "a jewel in the crown" of Unisys in
Europe.
But the base version of Unisure "could not cope with high volumes
in the batch collection process," said Gruder.
Unisys said that there were no contractual guarantees on the
performance of its software. In a series of attacks, Unisys
criticised the competence of United's IT staff, the company's
failure to communicate its real requirements, and lack of
board-level commitment. It said that much of United's case was
based on "allegation by innuendo".
Nicholas Dennys QC, for Unisys, described United as "something of a
dinosaur". He said that Unisys had bent over backwards to perform
the contract, and to carry out further testing at its own expense
to accommodate "a thoroughly ungrateful client which had its own
agenda".
United terminated the contract on 13 August 1999, the same day as
it announced poor half-year results.
"I do not think one has to be overly cynical to think that the two
events may be linked," said Dennys.
He added that United's results - including a write-off of £56.1m of
which £14m was attributed to the Unisure project - left the City
unimpressed. The effect on the share price was that United became a
takeover target, "And they are taken over, by Royal London, at the
beginning of 2000. Now that is a high level introduction to the
proceedings," he said.
Unisys said one reason why it did not inform United about the poor
performance test results was because it felt it could solve the
scalability problems in time.
United claims Unisys 'jewel' was flawed
1. After writing off £14m on a systems integration contract,
United Assurance, which was created from the merger of Refuge and
United Friendly in 1996, sued Unisys
2. It sought the recovery of the all the money paid for
Unisys' "Unisure," a life and pensions product which was described
in court as "a jewel in the crown" of Unisys in Europe
3. The main contract with Unisys was signed in April 1998,
varied in December 1998 and terminated in August 1999
4. United says it was not aware until after signing the
contracts that internal tests at Unisys had found scalability
problems
5. Unisys says it was near to solving performance problems
when United cancelled the contract.
Tony Collins
tony.Collins@rbi.co.uk