Jury: AMS breached Mississippi contract
- By Jill Rosen
- Aug 25, 2000
A Mississippi jury handed down a $475 million judgment this week against
American Management Systems Inc., saying the company breached its contract
to build the state an integrated tax collection system. It's reportedly
the largest verdict ever against the industry.
The state sued AMS in April 1999, saying the company continually failed
to deliver on its $11.9 million contract to build a system that would integrate
Mississippi's 36 tax collection and reporting entities. The state said that
more than five years after the AMS deal was signed in 1993, not a single
tax collection software program was working. The state asked for $235 million
in actual damages plus another $750 million in punitive damages.
"They were to build 36 systems in 36 months," said Ed Buelow, chairman
of the Mississippi State Tax Commission. "After 64 months, they hadn't built
one. Well, I take that back — they built one but it didn't work.''
Jim Craig, an attorney representing the tax commission, said AMS' own
records repeatedly included concerns that the staff assigned to the project
"No less than three project management people complained the staff did
not have the technological savvy to work on as big a project as this," Craig
Officials at the Fairfax, Va.,-based AMS said Thursday they would appeal
the verdict awarded Wednesday by the Hinds County Circuit Court.
Mark Andrews, executive vice president at AMS and director of the government
and educational management systems division, called the judgment both disappointing
"It's disappointing, quite frankly, that this is how we ended a project
we were very committed, right to the end, to deliver," Andrews said. He
pointed out that a similar AMS tax system in Kansas won an award this week
from the National Association of State Information Resource Executives.
Buelow said that AMS used Mississippi to win the $55 million Kansas
deal, underbidding the next closest bidder by $20 million to get the Mississippi
"As soon as Kansas signed up, they walked off and left me holding the
bag,'' Buelow said. "I watched my 85 programming people drop to 10.''
Buelow said his technology staff would complete the yet-unfinished State
Tax Automated Revenue System.