IBM failed to inform Co-op that critical software for its tech upgrade was not UK-ready and may not even have checked for itself, Co-op alleges

IBM deliberately kept Co-op in the dark about the unsuitability of Innovation Group’s software for its tech upgrade, leading to a failed project and a £130m lawsuit, the insurer alleges.

Co-op’s claim first came to light in December 2017.

Since then, a legal battle has raged over an unpaid invoice and “chronic and serious” delays.

Co-op has alleged that IBM committed “intentional breaches” to sabotage the £55m project, while IBM has argued that the insurer wriggled out of the contract by refusing to pay up for an outstanding invoice.

The latest controversy

The latest amendments to Co-op’s claim against IBM reveal that Innovation Group’s ‘Insurer Suite’ software, which caused delays to the project, was not even built for the UK market, which it says led to the chronic delays.

IBM had promised Co-op an “out of the box” solution, the documents allege.

However, the product was not UK ready and completely incapable of meeting Co-op’s “functional and regulatory requirements”, the insurer argues.

Co-op says it would never have entered into the agreement had it known about the vast amount of re-working that would be required.

IBM did not bother to do its research into the product, and “deliberately refrained from informing the claimant about the false premise” when it discovered the problems, Co-op alleges.

This, despite the fact it was contractually obliged to do so.

Co-op in the dark 

In a meeting in October or November 2015, Innovation Group chief executive Jacqui Boast informed IBM that the software was built for the US market and would need to be “substantially re-written and/or redeveloped” for the project, Co-op argues.

This was over a year after IBM had won the tender to supply Co-op with its new IT infrastructure.

Even when it did know about the problems, according to Co-op, the tech giant failed to inform the insurer.

Because Innovation Group was its sub-contractor, IBM should take the blame as it had an obligation to warn its client, Co-op’s amended claim states.

“Accordingly, the defendant was from that date reckless as to the consequences of its breaches, not caring whether they occurred or not,” the insurer slams IBM.

IBM’s failure to report the false premise would have “seriously adverse consequences” for Co-op and meant it was not able to take appropriate action, such as terminating the work because of IBM’s breaches or repudiation.

Co-op does not comment on ongoing legal action, while IBM has vowed to “rigorously defend” against any claim.