Hewlett-Packard Sued For $49M By Michigan For Not Completing Project After 10 Years
The state of Michigan is suing Hewlett-Packard for $49 million for not completing the project of replacing an aging computer system even after 10 years of work.
In a press release, Secretary of State Ruth Johnson said, “I inherited a stalled project when I came into office in 2011 and, despite our aggressive approach to hold HP accountable and ensure they delivered, they failed.” The contract to replace the Secretary of State’s mainframe computer was awarded to HP in 2005. The task was to substitute the 1960s technology of the mainframe with modern technology. While HP had until 2010 to finish the project – they had been paid $27.5 million by the state by 2011 – they had “not delivered a single function to the state,” Johnson said in the press release.
According to the contract, HP would provide support for the Michigan Department of Technology, Management and Budget (DTMB) even if it was terminated, as reported by The Register. When HP was sacked in August, none of the employees reported for work ever since. “Our DTMB partners and I are gravely disappointed that this action to sue is necessary, but HP simply failed the state of Michigan,” Johnson said. “Our focus now will be on looking for options that allow us to continue to provide the best possible service at the lowest possible cost to our customers.”
Research from McKinsey suggests that IT projects of over $15 million flow 45 percent over budget and are 7 percent behind schedule. This is the reason why cloud computing is becoming a more lucrative option for enterprise companies.
Earlier this year, Oregon sued Oracle for providing a failed Obamacare website. In 2013, IBM was sued by Bridgestone for $600 million; but IBM defended its stance, saying that it was the mismanagement of the project that created problems. Oracle had something similar to say when it was sued by Oregon.
An HP spokesperson said, “It’s unfortunate that the state of Michigan chose to terminate the contract, but HP looks forward to a favorable resolution in court.”