15 September 2003 EDS, the troubled IT services giant, has unexpectedly pulled out of the bidding for a key part of one of the UK’s flagship IT projects — the modernisation of the National Health Service.
According to reports in the UK’s Observer newspaper, EDS withdrew from the bidding to build the $150 million patient-booking system because the financial penalties for failure are too high. Last month, Lockheed Martin, another bidder, withdrew its bid to manage the massive NHS patient records project for the same reason.
EDS has suffered serious financial problems since it dramatically missed its earnings forecasts early in 2003. The main reason is that it has become embroiled in too many large projects that have failed, or had contracts with large businesses that failed.
Since then, the new CEO Michael Jordan has insisted that EDS managers only bid for contracts where the risk can be tightly controlled. EDS is currently engaged in several outsourcing contracts where it will not make a profit.
The patient-booking system is only one of several components that make up the £2.3 billion NHS modernisation project. EDS is still bidding for two other local service provider projects. Fujitsu and SchlumbergerSema are still in the running to win the patient booking system contract.
Although EDS has not been responsible for some of the most serious IT project failures to have affected the public sector, recent problems at its flagship Inland Revenue contract have damaged its credibility.