More EDS issues over botched IT project in UK

More EDS issues over botched IT project in UK

Summary: According to a recent report from Parliament, Her Majesty's Revenue and Customs (HMRC) in the UK continues to pursue EDS for compensation over a major failed IT implementation. The settlement totals £71.


According to a recent report from Parliament, Her Majesty's Revenue and Customs (HMRC) in the UK continues to pursue EDS for compensation over a major failed IT implementation. The settlement totals £71.25 million and includes a direct cash payment along with £26.5 million in credits from EDS against future work performed by the company for the UK government. Not surprisingly, EDS hasn't received much follow-on work, so a substantial portion of the compensation hasn't been paid. The government is prepared to sue EDS over the remaining amount.

This is one of those Twilight Zone IT tales that comes out of nowhere from inside the bowels of the UK government. Granted, EDS has proven itself to be anything but a model corporate citizen, and without doubt managing such a behemoth is a difficult and challenging task in the best of circumstances. Nonetheless, such hare-brained schemes remind one of the fox guarding the hen house. Ah, the power of large corporate legal departments with sufficient resources to successfully fight the government.

When negotiating the settlement, EDS put forth self-serving projections related to future government procurement plans (paragraph 21):

EDS informed the Department that it expects to receive a large amount of new business from the Government as a result of its participation in various procurement competitions both for new agreements and under existing agreements.

Did EDS have more accurate knowledge of future government procurement plans than the government itself? I wonder who actually negotiated this settlement on behalf of the government.

The secrecy provisions around this settlement are also interesting. See this exchange during House of Commons testimony (Sir David Varney was Chairman of HMRC at the time):

Q507 Mr Todd: Do you want to set out what you can on this matter, bearing in mind that some of it appears to now be in the public domain?

Sir David Varney: Yes. I find myself in an extraordinarily and exquisitely difficult position. I gave evidence in private to the Public Accounts Committee in some considerable detail. They also intimated to me that they were thinking of publishing that evidence and our legal advisers wrote to them to raise two legal concerns, one of which was the exposure of the details of EDS's contract book. The second was about the nature of the settlement with EDS, which is that we get £71,250,000 over a period of time. We have got about £47 million of that so far. If we do not get all that money—

Q507 Mr Todd: Sorry, is that £47 million in cash?

Sir David Varney: Cash or cash equivalent.

508 Mr Todd: Cash or delivery of works?

Sir David Varney: No, not works, but can I just say the net effect on our resource account is as if it was cash, but it is not cash.

509 Mr Todd: So you are talking about software, or kit, or whatever?

Sir David Varney: Whatever. Can I just not go there....

Although details have leaked, EDS apparently considered the settlement less sensitive than specific terms and conditions of the original contract. I suspect that's why the settlement details ultimately came out but the contract details did not.

This story is far from over, and you can be sure we'll follow it in the future.

Topics: Government US, Enterprise Software, Government, Legal, Software

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  • More EDS issues over botched IT project in UK

    This is not the first catastrophe we've had in UK. The list of late and failed Government projects is very long indeed. There's also the small(!) matter of cost overruns, equipment failures and incompatibility between systems. By that I mean various geographical areas rolled out at different times so lack of communications, training etc.

    I've had first hand of experience of this, working on contract with a number of NHS (National Health Service) Trusts. Some ran NT, some a mix of VMS and Unix while others had weird ones I'd never seen before! Each Trust can go for the best deal it can get. This boiled down to no cross Trust billing, no electronic transfer payments or for that matter patient records, except for hard copy, when treated in another trusts area. This is sometimes common if in an accident there is no available information on the victim or requiring specialist treatment the hard copy was usually sent with the patient or ahead of them.

    This also applies to defense contracts as well for hardware and software. The first military users to use a real programmable machine in this country was the Royal Army Pay Corps! I can't remember what it was, maybe IBM maybe Univac and it was in the late 50's or early 60's. If anyone knows about this I'd like to know. I wonder if they had same problems as we seem to have today?

    Thanks for reading this rant, regards, James Kelly.
  • EDS is absolute crap!

    This situation in the UK with EDS is in no way a new or unique situation. If you look under the covers into many of EDS's deals with large organizations and governments, you will see they have managed to remain the teflon Don's of the software services business and usually leave smiling when the customer is left with their pants down. Another point is many large corporations and Governments approach agreements with the EDS's of the world with a certain naivete, and these agreements become sculpted in the favor of the service company.

    My experience comes from working as a consultant for MCI/Worldcom for a period of 8 years in the area of IT architecture. For the last 2 years of my employ, MCI had entered into similar agreements with EDS, and I feel the results were horrific.

    I have heard countless stories about how organizations in similar circumstances bury these failures for fear of embarrassment and negative publicity. This story is out, but I'm sure it will be a log and winding road to fully expose its breadth and depth.
    • This is not news to anyone who ever dealt with the EDS morons

      Believe me, the one thing EDS has never seemed to be able
      to deliver is a project on time and in budget. They typically
      lowball the bid just to get their foot in the door, and only
      then do they seem to actually try to determine if they can
      deliver what they promised. Most of the time, the answer
      is something like, "If you want this to actually work, it's
      gonna cost you more.......much, much more." By then, the
      idiots who contracted them are totally in face-saving
      mode, and spend the rest of their time trying to hide the
      budgetary hit, while looking to get transferred or promoted
      to something that does not involve being directly
      responsible for the screwups from EDS.

      Believe me, EDS knows a mark when they see one, and
      they also know that government agencies are the biggest
      marks out there. They'll promise to deliver a "turnkey"
      operation that the client can now run themselves, but this
      never, ever happens in reality. What does happen is that
      they now propose running the whole show, since it would
      be too time consuming and costly to train the client staff
      on what only EDS knows anything about. Once they're in
      with that B.S., they're golden.

      The US Navy and Marine Corps Intranet project that they
      are responsible for is one of the biggest project disasters
      in US government history, but they're still on board,
      apparently for the duration. As long as governments and
      bloated bureaucratic corporations are populated with the
      percentages of moron management that they have,
      companies like EDS will always do well. It seems that
      morons enjoy buying from other morons, so as to
      perpetuate the moron population ad infinitum. Seems to
      work just fine for them, but the taxpayer takes it up the
      bung in the end, and don't even get a kiss.