Philippine govt agency sues IBM

Government social security arm alleges system built by IBM and subsidiary Questronix crashed due to defective software; sues for breach of contract.
Written by Joel D. Pinaroc, Contributor

PHILIPPINES--The government's social security agency, Government Service Insurance System (GSIS), has filed a lawsuit against IBM Philippines for alleged breach of contract.

The lawsuit alleged that IBM and its subsidiary Questronix both failed to deliver, as part of the contractual agreement, when the database system it built for the GSIS crashed Mar. 30. According to the government agency, the crash was due to defective software. The system runs on IBM's DB2 version 9.1 database platform.

The GSIS is seeking 100 million pesos (US$2.1 million) in damages.

Questronix in 2006 won a contract worth a reported 80 million pesos (US$1.7 million) to implement the GSIS's system for integrated loans, membership, acquired assets, and accounts management. However, the system crashed in March, significantly affecting the GSIS' operations, the agency claimed.

After the system failure, the GSIS said "weeks passed, but no one was able to explain the cause of the crash, much less, provide a solution". The government agency, which has some 1.5 million employees as members, added that it lost billions of pesos due to the crash.

IBM, however, denied the allegations and said it plans to file a libel suit against the agency. In a statement Wednesday, the IT giant said: "The GSIS has engaged in a series of unwarranted public attacks on IBM.

"We are disappointed with the approach taken by the GSIS, which is ultimately not helpful in resolving this matter or in the best interest of its members," Big Blue said.

The U.S. vendor added that the GSIS did not engage IBM in the selection, customization and implementation of the system.

IBM was the OEM (original equipment manufacturer) for one of the technology vendors engaged by the GSIS, and that the government agency does not have any maintenance or support contract with IBM, it said. IBM also denied it did not address the alleged system crash.

"Nonetheless, in view of our long-standing relationship with the GSIS and out of goodwill, IBM has been working with the GSIS' solution providers to resolve the GSIS' system issue," IBM added.

However, Big Blue has since initiated a libel suit against the Philippine government agency over the "unwarranted" public attacks, seeking 200 million pesos (US$4.2 million) in damages.

"We cannot stand by and allow our company's reputation to be tarnished by blatantly inaccurate and misleading accusations," IBM said in a statement. "Our preference is to work constructively with our clients and our business partners to address any and all issues they may have, in a spirit of mutual cooperation and partnership. Unfortunately, the deliberately libelous actions by the GSIS leave IBM with no other course of action."

Joel D. Pinaroc is a freelance IT writer based in the Philippines.

Editorial standards