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Deloitte hit with $30M lawsuit over ERP project

Jaikumar Vijayan | June 3, 2010
California's Marin County says ERP system was substantially worse than legacy system it was meant to replace

The problems became so bad that the county fired Deloitte in late 2007 and instituted a "Get Well" project to stabilize the system. Deloitte treated Marin County as little more than a "trial-and-error public sector training ground" for its inexperienced consultants, the lawsuit claimed.

Much of the system had to be re-designed, re-tested and re-implemented over the past few years at substantial taxpayer cost, the complaint alleged.

Deloitte did not have the ability or intention to provide the skilled resources needed for the project, but it claimed otherwise, just to secure the county's "lucrative" contract, the complaint noted while asking the court's to order Deloitte to pay back the $30 million the county has spent so far on the project.

In its administrative complaint, Deloitte noted that Marin County officials had not informed it of any deficiencies nor of any breach of contract, and neither had it withheld any payments even though the agreement between the two parties clearly allowed for action.

If the county had any issues with Deloitte, it never made them known until after a specific change order was placed in June 2007, shortly before the company was fired. "We fulfilled each and every one of our obligations under the contract, as evidenced three years ago when all of our work was approved by the County officials responsible for the project," the company noted.

Numerous lawsuits have been filed over the past several years in connection with failed ERP implementations. The only difference with Marin County's lawsuit is that it targets the systems integrator rather than the ERP vendor. Almost all other cases have involved customers suing ERP vendors directly for botched implementations.

Just two months ago for instance, a lawsuit between SAP and one of its customers Waste Management was quietly settled for an undisclosed amount.

Waste Management had earlier sued SAP for fraud after incurring what it said were significant damages from a $100 million ERP project that it said had turned out to be a complete disaster. Similarly, last August, Public Health Foundation Enterprises, sued Lawson Software over a failed ERP implementation.


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