26 August 2005 The UK’s Department of Work and Pensions (DWP) has rationalised its contract with outsourcing partner EDS, generating extra revenues for the IT services company that has overseen some of the most controversial public sector projects ever.

The DWP and EDS have negotiated a single contract worth £2.6 billion pounds over the next five years. Subject to performance targets, EDS could earn an additional £180 million. All told, the revised contract is worth an extra £800 million to EDS.

“The Department is committed to modernizing all aspects of its work to achieve efficiency savings reaching £1 billion a year by 2007/8,” said Sir Richard Mottram, the DWP Permanent Secretary. “We have agreed with EDS’ new ways of working using wherever possible industry standard processes and best practice. Compared with present practices, we expect a better, more reliable service and substantial savings.”

But the announcement is likely to prove controversial. EDS has overseen the implementation of the IT system upgrade at the Child Support Agency – part of the DWP. This £456m computer system has caused havoc with the CSA’s efforts to extract maintenance payments from absent parents, going £29m over budget in the process.

The DWP has also experienced embarrassing problems with its own desktop systems. In November 2004, a routine software upgrade inadvertently disabled 80,000 departmental PCs, preventing 60,000 payments from being processed.

“We are pleased that we have realigned our relationship with the DWP,” said Doug Hoover, EDS vice president and managing director, UK, Ireland, Middle East and Africa. “This renewed partnership, consistent with EDS’ Agile Enterprise commitment, paves the way for improved services and substantial long-term savings for the Department.”