Cornwall Council entitled to terminate high-profile £160m IT outsourcing contract

22/12/15

The Commercial Court (Knowles J) has given judgment in an expedited trial concerning Cornwall Council’s entitlement to terminate a substantial IT contract with British Telecom Cornwall (“BTC”). The Agreement was a 10-year contract for the provision of numerous ICT services, covering all areas of the Council’s remit, including health, transport and public safety. BTC’s evidence valued it at approximately £160m. The Agreement had been highly controversial and received widespread media coverage. 

In June 2015, the Council wrote to BTC, asserting that it had a right to terminate the Agreement on the basis of three Material Breaches of BTC’s obligations. Two of these were related to response times in fixing faults following user complaints, and the third to an obligation under the Agreement to create new jobs in Cornwall. BTC said that, after the creation of an Executive Forum in February 2015 intended to turn the Agreement around, a “KPI Backlog Agreement” had been reached which prevented the Council from terminating for the ICT faults. It also said that the Council had affirmed the Agreement, that much of the underlying data being used to justify termination was incorrect, and that the Council had agreed to vary or waive the new jobs requirements.

The trial was heard over two weeks in the Commercial Court on an expedited basis. BTC sought declarations that the Council was not entitled to terminate the Agreement and an injunction to prevent them from doing so. Given the urgency of the matter, Knowles J gave judgment one week after the hearing finished, dismissing BTC’s claim. He held that, inter alia, no KPI Backlog Agreement had in fact been made, that BTC had not shown that its previously reported figures did not meet the Agreement’s requirements, and that the Council had not affirmed the Agreement. 

The judgment is available here.