EDS Back On Course?EDS Back On Course?

When an EDS-led consortium won a $4 billion contract to modernize the United King- dom's defense information systems last week, it raised the specter of EDS's $6.9 billion contract with the U.S. Navy, which has brought more problems than profit to EDS.

But EDS, which after delays and cost overruns now seems to have the Navy project on track, says the U.K. project won't face the same woes. For one, the U.K. Ministry of Defense's IT infrastructure is more up to date. It has 500 legacy applications to be moved into a Web environment; the Navy had 8,000, an EDS spokesman says. Plus, EDS "has gained a lot of unique insights in how to manage a project of this scope" from the Navy work, the spokesman says. Cindy Shaw, an analyst at Moors & Cabot, agrees, saying that by winning the U.K. deal, EDS has "turned the corner."

Under the 10-year deal, EDS, along with subcontractors Fujitsu Services, General Dynamics, and several smaller partners, ultimately will manage and host thousands of software applications for use by more than 300,000 U.K. military personnel at more than 2,000 locations. The team--which calls itself the Atlas Consortium--also will build an Intranet to connect the applications across a secure IP-based network.