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EDS stands to lose a 10-year deal worth £4bn-£5bn to manage the Inland Revenue’s computer systems in punishment for the fiasco surrounding the introduction of tax credits last year. Hundreds of thousands of people went without payments, resulting in short-term hardship for many families on low incomes.

So far so bad. Then the public purse took a hammering with the Inland Revenue overpaying tax credits to the tune of £2bn. In a report last month, The Public Accounts Committee placed most of the blame for the cock-ups on EDS software.

The board of the Inland Revenue has now recommended that the contract to manage the country’s tax and national insurance IT systems should be awarded instead to Cap Gemini supported by Fujitsu, the FT reports.

In response, EDS has taken advertising space in London’s Evening Standard and The House ( a magazine for MPs) in an attempt to lobby the Treasury to ignore the Inland Revenue recommendation. This ad is “unprecedented for a civil contract”, according to the FT.

In its ad, EDS warns against taking "unnecessary risks", claiming it has "the experience, knowledge and understanding of working with government on large-scale national programmes". It estimates that the transfer of the contract to Cap Gemini will cost £60m. Some 2,500 Inland Revenue staff based in Telford will transfer to Cap Gemini if it wins the day.

EDS’s junior partner in the Inland Revenue contract is Accenture. ®

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