EDS, Amex salvage outsourcing contract

IT services giant EDS is mending fences with American Express, renegotiating a jeopardized 10-year outsourcing contract with the global firm.

Under the revamped deal announced today, Plano, Texas-based EDS will turn the help desk, desktop management, and application development back to Amex's internal IT staff.

However, EDS will continue providing global management of Amex's midrange and mainframe computer systems from its four data centers, along with other services, EDS said.

"We certainly look forward to continuing our relationship with them," said EDS spokesman Reed Byrum said.

Byrum said the value of the new 10-year contract has not been settled. EDS signed its initial outsourcing agreement with Amex in 1994. Yet the companies were four years into work on that $350 million contract when some problems arose.

Amex this week sent EDS a letter of intent to terminate the contract, citing disappointment with the completed work.

"This [contract termination] is due to significant delays and failures in implementing a number of important projects, most notably the installation of the Global Banking System, which was to have served as the bank's core system," American Express project managers stated yesterday in a memo to employees working on the contract.

Byrum said the two firms have since come to a "very amicable" settlement.

EDS also has other contracts with Amex, including a deal signed last December to provide 2,000 ATM machines to the global banking and travel firm.