IBM sues HP for not giving it enough work to do

IBM is heading for a High Court showdown after seeking payment of more than £6m from HP - without doing any work.

IBM is heading for a High Court showdown after seeking payment of more than £6m from HP - without doing any work.

IBM argues it is owed the money under a contract with HP Enterprise Services Defence and Security UK, formerly EDS Defence, for a huge IT contract with the Ministry of Defence.

IBM is suing HP for payment of £6,575,302, and says it is entitled to the money because HP has not provided enough work for IBM to do.

Big Blue acted as subcontractor to HP on the £7bn Defence Information Infrastructure programme, and HP agreed to provide work worth up to £32,850,000, according to a High Court writ.

Under the contract, if HP did not provide work worth £32.85m, then IBM was entitled to charge 30% of the difference between the value of the consulting services ordered and £32.85m, the writ says.

HP ordered work worth £10,932,327 up to November 30 2009, and as a result IBM invoiced for an additional £6,575,302 plus VAT.

But in breach of the agreement, HP has wrongfully refused to pay the invoice, and claimed that IBM unreasonably prevented HP from "extinguishing its liability" under the agreement, according to the writ.

The dispute was over a draft form prepared by IBM at HP's request in which HP tried to place an order for a number of man days of work at a value of £20,674,522, it is claimed.

IBM argues that HP wanted it to act as a body shop, or recruitment agency, so that it could claim that orders up to the committed sum of £32.85m had been placed by the end of last November, to avoid paying 30% of the outstanding balance, the writ claims.

Although the services sought were not consulting services, IBM says it agreed to deal with the request, with a non-refundable payment of 30% of the charges, the balance to be paid monthly in arrears, and total payment by 25 March 2021.

This, claims IBM, was reasonable in the light of HP's previous conduct, which included cancelling partly finished jobs, failure to honour promises, and withdrawing of tasking forms during negotiations.

IBM says it was entitled to insist on an advance payment, and is suing HP for payment of £6,575,302 plus VAT as well as interest.

The writ was issued by CMS Cameron McKenna.

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