U.K. health agency faces legal action over canceled EDS contract

The National Health Service pulled out of the 10-year, $166M deal with EDS last week

Britain's National Health Service (NHS) announced today that it has pulled out of a 10-year, $166 million deal with Electronic Data Systems Corp. EDS said it will seek compensation for the termination of the contract.

"I can confirm that the contractual relationship between the National Health Service and EDS for a centrally managed e-mail and directory service is to end," a spokesman for the NHS said.

The NHS National Programme for IT terminated the contract on March 1, the company said.

EDS said it was committed to the program and had been implementing the service in line with its contractual obligations. It also said that any disagreement could have been resolved through procedures outlined in the contract and said it is disappointed by the decision to terminate the contract without seeking mediation.

The company said it will do all it can to minimize any impact on the 62,000 NHS staffers already using the system. It also pointed out that the NHS awarded a contract for a nearly identical directory service to British Telecommunications PLC last year, one year after EDS's own contract had been signed with the NHS. EDS "thought it was odd" at the time, Catherine Greenwood, U.K. regional director of EDS Global Marketing and Communications, said today. Greenwood said she was unable to comment further.

A spokesman for BT said he couldn't discuss the matter.

Plano, Texas-based EDS began rolling out the e-mail system for NHS in December 2002. The vendor was to provide the IT infrastructure for the system, plus related 24-hour telephone and online support to all NHS staff.

The EDS system was expected to be the one of the largest corporate directory and e-mail service systems in the world, with 1.2 million NHS staffers in England getting personal mailboxes, online calendars and access to a national directory.

The NHS, a government-run organization that provides free health care to all U.K. residents and is Europe's largest employer, previously had 7,000 different e-mail services.

Richard Granger, director general of IT for the NHS, announced in January that Oracle Corp. had won the contract to provide the database infrastructure for the NHS's overall IT project (see story). The Oracle software will be used for the NHS Care Records Service, providing electronic health records for 50 million patients in England.

Copyright © 2004 IDG Communications, Inc.

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