May 17, 2005 4:19 PM PDT

Sears ends $1.6 billion deal with Computer Sciences

A $1.6 billion technology services contract between Computer Sciences Corp. and Sears, Roebuck has come undone.

In a public filing on Friday, Sears' parent company said the retail giant ended the massive contract May 11 "for cause," citing CSC's failure to perform "certain of its obligations in accordance with the terms of the agreement."

In its own filing Monday, CSC said it "is convinced the termination for 'cause' is invalid, contrived to avoid or reduce termination fees of tens of millions of dollars, and a breach of the agreement for which Sears is liable for damages." CSC also said it "believes it has demonstrated achievement of required services obligations in all material respects."

The feuding companies entered into the 10-year contract last June. The pact called for CSC to provide support for the retail giant's desktop and server computers, as well as for its voice and data networks. CSC also was to provide services for systems that support Sears' Web sites.

The demise of the Sears-CSC contract is further evidence that so-called "megadeals" may be going the way of the dinosaur. In another instance of a large-scale IT services pact dissolving, JPMorgan Chase last September said it would cancel a multiyear, $5 billion outsourcing contract with IBM.

According to the Sears filing, CSC "is obligated to continue providing (IT infrastructure support) services for an extended period following termination of the agreement."

The Sears filing also indicated that the matter has landed in court. "In pending litigation in federal court, CSC previously sought an injunction prohibiting Sears from terminating the agreement for cause," the filing states. The court denied that request "without ruling on the merits of Sears' assertion," the filing says.

CSC on Tuesday declined to speak about the Sears contract. A CSC spokeswoman said it was company policy to not comment on ongoing litigation.

3 comments

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Perhaps its K-Mart buying Sears is todo for this?
Perhaps retail giant, K-Mart has something to do with this seeing
that they have boughten Sears, has anyone looked into what K-
Mart currrently uses for their IT?
Posted by dlmtechnology (20 comments )
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Actually it is probably CSC's incompetence...
I worked there on the help desk and can believe the Sears
position.
Posted by CitizenX (522 comments )
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Just how are the IBM and CSC deals related!
This article seems to suggest that there are similarities between the technology services contract between Computer Sciences Corp. and Sears, Roebuck; and, one - a multiyear, $5 billion outsourcing contract between JPMorgan Chase and IBM that apparently became undone last September and perhaps should not be compared as such.

Within the context in which this article is written and from all appearances the matter between IBM and JPMorgan Chase was never litigated in the courts and it does appear that the cessation of this contract was done in the most gentlemanly manner that is characteristic of IBM; lest we forget the Microsoft-IBM relationship when it all became public during the long drawn out anti-trust case against Microsoft. It is the reported merger between BankOne and JPMorgan Chase that has apparently created a duplication of the services that were being offered by IBM that may have caused the decision for the cessation of this contract between JPMorgan Chase and IBM (not a failure to perform), much to a level of deficiency in terms of intellectual property and technology strength on the part of JPMorgan Chase-BankOne it is sincerely believed by this contributor.
Posted by (187 comments )
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