EDS filed a lawsuit against Xerox in 1999 over the scope of the original contract, but with new management at both companies, that lawsuit has been dropped, said Charles Nesley, president of information solutions for EDS in the US.
A second contract, announced on 28 November, makes Xerox the preferred provider of document products to EDS and its customers. In a third agreement, the two companies entered into a joint marketing alliance that involves promoting each other's products and services, and developing new technologies.
The contract extension covers two years with an option for three additional years. Under the terms of the deal, EDS will continue to run Xerox's computer and telecoms network. The deal will also broaden some of the services provided to Xerox.
Xerox will receive £35m to provide network printers as part of EDS's US Navy Marine Corps intranet contract. The Navy deal is part of the agreement to make Xerox the preferred document technology vendor for EDS clients.
The announcement comes at a time when Xerox is struggling to return to profitability. In an announcement last week, Xerox president and chief executive Anne Mulcahy said part of the turnaround would require Xerox to "ensure liquidity through transferring equipment financing to external partners".
Xerox has already sold £1.5bn in assets and cut another £700m in costs.