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Procter & Gamble delays decision on EDS contract

Electronic Data Systems (EDS) is facing delays on a multibillion dollar outsourcing contract with household goods giant Procter & Gamble.

On 19 September both companies announced they were days away from signing the contract, one of the largest in the history of the IT services market.

EDS emerged as the likely winner of the contract when the initial front-runner, Affiliated Computer Services, walked away from the deal in mid September.

But now Procter & Gamble has decided to put its final decision on hold for several weeks.

"We did think that we were close to making the final decision [two weeks ago], but then we decided we needed to take a little bit more time and consider some additional parameters before going ahead with the decision," a Procter & Gamble representative said. "That's what we're doing now: taking some time to look at things again."

"We're still in discussions with EDS, but it will be a number of weeks before we make a final decision," she said.

Procter & Gamble refused to say whether the delay was due to EDS's recent financial difficulties or whether the company was negotiating with other service providers.

While it was in final negotiations with Procter & Gamble, EDS issued a profits warning that sent its share price tumbling and saw US regulators start a probe into the company.

EDS was not available for comment, but representatives said this week that they were confident that the company had acted properly.

Analysts have estimated the value of the Procter & Gamble contract at between $4bn (£2.55bn) and $10bn (£6.37bn) over eight to 10 years.

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