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ScanSource Sues Avanade, Alleging "Bait-and-Switch"

Stocks in this article: ACNMSFTSCSC

"The Microsoft quality assessment, which focused primarily on software development, documented hundreds of 'Issues' with the Avanade-developed code.  Many of these problems were characterized as 'Must Fix Issues.'  Microsoft further criticized the manner by which Avanade altered the core Microsoft AX code, noting that 'even single methods have multiple developers' and that '[v]ery commonly, base classes, forms and tables have been modified,' increasing the costs of future upgrades" and maintainability of the system. 

"Among other criticisms of the Project, the Accenture quality assessment noted that the Project could not be completed without additional fees of $22.5 to $29 million, and resource commitments totaling 11,504 workdays."

"Following receipt of the QA Reports, ScanSource delivered a Notice of Default to Avanade on May 17, 2012.  Despite providing an extended cure period, Avanade has failed to correct its breaches of the Implementation Agreement. When it became evident to ScanSource that Avanade had no intention of curing its defaults, on September 28, 2012, ScanSource provided Avanade with a Notice of Termination removing Avanade from the Project."

"The Notice of Termination followed repeated failures by Avanade to meet multiple scheduled and rescheduled go-live dates, and the realization that the Project -- still without a projected go-live date, and now estimated to cost at least three times Avanade's original estimate -- could not continue with Avanade as integrator."

ScanSource has contracted with a new global implementation partner to mitigate the damages and harm caused from Avanade's misconduct.  ScanSource plans on completing its new Microsoft Dynamics global ERP project.  Excluding any potential recovery from this lawsuit, ScanSource believes that the total spend for the ERP project could range from $58 million to $72 million and extend past fiscal year 2013, as stated in its prior 10-Q filing for the period ending September 30, 2012.

ScanSource is being represented by Mark P. Ressler of Kasowitz, Benson, Torres & Friedman LLP.

About ScanSource, Inc.ScanSource, Inc. (NASDAQ: SCSC) is the leading international distributor of specialty technology products, operating from dedicated business units in North America, Latin America and Europe. ScanSource POS & Barcoding delivers AIDC (automatic identification and data capture) and POS (point-of-sale) solutions; Catalyst Telecom and ScanSource Communications provide voice, video, data and converged communications equipment; ScanSource Security offers physical security solutions; and ScanSource Services Group delivers value-added support programs and services. Founded in 1992, the company ranks #760 on the Fortune 1000. For more information, call the toll-free sales telephone number at 800.944.2432 or visit www.scansourceinc.com.

SOURCE ScanSource, Inc.

Copyright 2011 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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