IT supplier Computer Sciences Corporation (CSC) could lose a
$£1.1bn (£770m) contract after the spectacular collapse of energy
giant Enron.
In 1999 CSC signed an 11-year outsourcing contract worth $1.1bn
with Enron subsidiary Enron Energy Services. The business process
outsourcing deal saw CSC take over responsibility for billing and
collection for retail gas and electricity customers - the heart of
Enron's business.
As part of the deal, about 300 IT staff transferred to CSC from the
Texan energy supplier. But their future is now uncertain after
Enron was declared bankrupt - one of the largest bankruptcies in
corporate history.
CSC continues to provide the outsourced service to Enron and
receive payment. However, it has no guarantee that the contract
will continue and is at the mercy of US bankruptcy laws.
"It is unclear at present how this will play out but we are
providing services and they are paying for us," said a CSC
spokesman.
Worryingly for CSC, bankruptcy law usually trumps any clauses
written into contracts between a company and a supplier. CSC will
have to wait in line with other Enron creditors.
If Enron is taken over, it is possible that the buyer will decide
to retain the outsourcing deal with CSC, as the billing function
run by CSC will remain a crucial part of the business.
But outsourcing experts said that any buyer would be in a strong
position to negotiate a favourable deal with CSC, which may not
compensate the supplier for its investment to date.
As well as back-office functions, the CSC deal includes applying
e-business technology to Enron's retail electricity and gas
markets.