Computer Sciences tied up in service spat

Auto-insurance company 21st Century is seeking more than $100 million from the IT services provider, saying it "abysmally failed" to deliver software systems as promised.

Ed Frauenheim Former Staff Writer, News
Ed Frauenheim covers employment trends, specializing in outsourcing, training and pay issues.
Ed Frauenheim
2 min read
Information technology services provider Computer Sciences is embroiled in a $100 million arbitration dispute over a service deal with auto-insurance company 21st Century Insurance.

According to 21st Century spokeswoman Fiona Hutton, Computer Sciences "abysmally failed" to deliver software systems as promised. On Monday, Woodland Hills, Calif.-based 21st Century filed an arbitration proceeding, saying Computer Sciences did not complete its obligation to provide the insurance company with software and other programs. 21st Century said it wrote off $37 million of its investment in Computer Sciences software and is seeking more than $100 million in the arbitration.

El Segundo, Calif.-based Computer Sciences on Tuesday refuted the claim, saying it met its contractual obligations regarding software for 21st Century's personal automobile insurance business in California, but that 21st Century did not complete work it allocated to itself.

In a statement, Computer Sciences said that 21st Century employees helped create software systems provided by Computer Sciences and that "critical decisions concerning the direction of the development effort, the project priorities, and the allocation of resources were made by 21st Century."

Computer Sciences said it provided 21st Century with integrated systems including database management, workflow, marketing and insurance processing software. 21st Century is using those systems to process its personal automobile insurance business for customers in Nevada, Oregon and Washington, Computer Sciences said.

The technology services provider added that "with 21st Century's cooperation, the implementation of the systems that 21st Century is using in other states can be successfully completed in California."

Hutton said 21st Century "vigorously disagrees" with Computer Sciences' interpretation of its obligations and the fulfillment of those services. She said 21st Century's primary market is California, but computer system problems extend to other states. "We've got performance issues across the board," she said.

Computer Sciences said it will defend itself in the arbitration proceeding and that any damages should be modest, nonmaterial sums. The American Arbitration Association will conduct the arbitration.