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August 24, 2005

EDS reorganizes UK government contracts

IT services giant EDS Corp has reorganized its outsourcing contracts with the UK government's Department of Work and Pensions. The new deal will be worth a total of GBP2.6bn ($4.68bn) over the next five years.

By CBR Staff Writer

While the government department is highlighting the fact that it will spend over GBP180m ($324m) a year less on EDS services than it had over the last three years, EDS is trumpeting the fact that it had only been expecting to earn sales of about GBP360m ($647m) a year. While the services provided will be the same, according to an EDS spokesperson, some of the numerous contracts were short-term rolling contracts, and the company could not be confident that they would continue.

The realignment simplifies the different contracts the DWP inherited when it was created from two separate government departments, and the department claims that the changes will bring a host of improvements including increased system availability.

The DWP’s desire for such an improvement stems from a huge IT systems failure at the department in November last year that left tens of thousands of staff unable to access their personal computers. Staff had to perform duties such as sending messages by fax, and hand-writing checks so people could receive their social security benefits, and caused a backlog of unprocessed claims.

Another of EDS’s contracts with the DWP, for the Child Support Agency, also fell into problems last year resulting in the resignation of CSA CEO Doug Smith who told the House of Commons Work and Pensions Select Committee that although the EDS IT project had not been a failure, he was seriously disappointed with the IT systems, which he said had proved problematic and unstable.

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