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Xerox, PeopleSoft service provider in software project dustup

The companies are at an impasse over millions in fees associated with a PeopleSoft upgrade

By Chris Kanaracus
December 6, 2012 04:00 PM ET

IDG News Service - Xerox is being sued by systems integrator CedarCrestone over payments related to an Oracle PeopleSoft upgrade at insurer CIGNA.

CedarCrestone is looking to recover about $1.8 million it says Xerox still owes it, according to the lawsuit, which was filed last month in U.S. District Court for the Northern District of Texas. But in a counterclaim filed last week, Xerox alleges that CedarCrestone performed shoddy work and never met its contractual obligations.

Originally, CedarCrestone signed a deal with IT outsourcing firm Affiliated Computer Services for the PeopleSoft work at CIGNA. Xerox later bought ACS. Under the pact, CedarCrestone was to upgrade CIGNA's PeopleSoft HCM (human capital management) system from version 8.9 to 9.1.

But as the project went on, Xerox started failing to make timely payments, according to CedarCrestone's suit.

"CedarCrestone performed, substantially performed and/or tendered performance of its obligations" until Xerox breached the companies' agreement, according to the suit.

It also "tried in good faith to work with [Xerox] to identify and resolve any problems," it adds. "[Xerox] responded in bad faith by stalling and making false and improper complaints and excuses."

Xerox's "true intentions and plans were to get CedarCrestone to continue providing services as long as possible but with no intention of ever paying for them," the suit adds.

Any defects or delays associated with CedarCrestone's work on the project were either too trifling to merit nonpayment or were excused by terms in the companies' contract, according to the suit. The contract "provides in pertinent part that CedarCrestone's nonperformance of any obligations ... shall be excused to the extent that they were due to the acts or omissions of ACS or CIGNA or third parties acting on their behalf."

But Xerox's response and counterclaim tell a much different story.

Xerox didn't fall behind on payments, nor did it violate any contractual obligations, according to its filing.

"CedarCrestone was to complete the upgrade on schedule, including meeting several critical deadlines throughout the contract period and an ultimate 'go live' date of January 3, 2012," it states.

Xerox agreed to pay CedarCrestone a fixed price of about $3.1 million for completing the job, it adds.

"However, CedarCrestone failed to meet its critical deadlines and, to this day, has never finished the software upgrade," the filing states.

Initially, CedarCrestone staffers said the project was going smoothly, but by July 2011, began reporting that portions of it were behind schedule, Xerox said.

"Around the same time, CIGNA started questioning the positive nature of CedarCrestone's weekly reports, and Xerox began pressing CedarCrestone for confirmation of their accuracy," the filing states.

One critical date in the project was supposed to be Sept. 19, 2011, according to Xerox. At that time, CedarCrestone was supposed to provide "product and coding" to Xerox in order to begin some testing.

Reprinted with permission from Story copyright 2014 International Data Group. All rights reserved.
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