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EDS group signs massive U.K. defense pact

A consortium led by the IT services giant lands a $4 billion deal with the U.K. defense ministry, the company's largest contract since 2002.

A consortium led by Electronic Data Systems has signed a $4 billion deal to begin a revamp of the U.K. Ministry of Defence's communications network.

The Atlas Consortium said Tuesday that the agreement for the project, known as the Defence Information Infrastructure (Future) plan, could be expanded once the first stage has been completed. The budget for all three stages is 4 billion pounds ($7.6 billion), which means the add-on work could total another $3 billion.

The group, which beat rivals for the defense contract earlier in March, also includes Fujitsu Services, General Dynamics, EADS Defense and Security Systems and LogicaCMG. EDS' slice of the deal is the largest project booked by the IT services and outsourcing specialist since a 2002 Bank of America contract, the company said.

Under the terms of the deal, Atlas will consolidate the Ministry of Defence's existing information networks into a single infrastructure, which the ministry has identified as an integral component of its future military strategy.

The new network is expected to facilitate communication between military headquarters, battlefield support and front-line operations. It will link roughly 150,000 desktop computers and 340,000 individuals in some 2,000 locations, the consortium said.

EDS has drawn criticism in the past over its work for the Inland Revenue, the U.K. tax authority, and other contracts. It adjusted its earnings, related to its ability to deliver on a $6 billion contract it signed with the U.S. Navy in 2000.

Tony Hallett of contributed to this report.