UK engineering giant BAE Systems has cancelled a planned HR process outsourcing contract with IT services provider Logica, following its acquisition by CGI.

In February, BAE Systems awarded the six-year contract to Logica. Outsourced HR services were to be supported on Logica’s Oracle-based Dynamic HR platform.

However, BAE has now confirmed that the deal will no longer go ahead.

“Following the acquisition of Logica by CGI Group Inc. on 20 August, BAE Systems has exercised its contractual right to terminate the contract for HR outsourcing services," the company said in a statement.
 
"We are now reviewing our HR business process outsourcing activity and have agreed a 12 month extension to the current HR Services contract with Xchanging HR Services (XHRS)," it added.

"We have also advised XHRS that we will be terminating the contract on 31st December 2013 (the end of the extension) and that responsibility for delivery of the in-scope HR services will thereafter transfer to BAE Systems Shared Services.”

The story was first reported by UK IT industry analysts TechMarketView.

Before its acquisition by CGI, Logica was in financial trouble. It has consistently missed profit targets, and had launched a cost-cutting drive that included 1,300 job cuts.

It was revealed in August that once the acquisition is complete, Logica CEO Andy Green will step down, to be replaced by the president of CGI’s UK division. The company has delisted from the London Stock Exchange, leaving the London market bereft of major IT providers.

In other BAE news, the company today called off its planned merger with EADS after failing to reach agreement with "government stakeholders" over the terms of the deal.