IT services provider EDS Corp has agreed to pay Her Majesty’s Revenue and Customs 71.25m pounds ($122m) to settle the UK government’s compensation claim regarding problems with service delivery over two years ago.
The Plano, Texas-based company was in charge of implementing and operating a tax credit system, but when the systems were introduced in April 2003, thousands of UK households failed to receive money they were due. MPs in the House of Commons accused EDS of being solely to blame for the failure of the system.
The settlement amount might not be much in terms of EDS’s market cap of $12.5bn, but EDS has already paid heavily. Within months of the failure, it was replaced by Capgemini, which won a 10-year, $5.5bn contract with the department.
EDS said the settlement, which will be paid with an upfront payment and additional installments over time, would not impact the financial guidance it had already given for the fourth quarter of 2005 and its full-year 2006.