US retail giant Sears has terminated a 10-year $1.6bn (£864m) IT outsourcing agreement with CSC after claiming the IT supplier “had failed to perform its obligations”.
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The contract is less than one year old and CSC has rejected Sears' claim. The pair are now squaring up to each other for a lengthy court case.
CSC had been hired to provide IT infrastructure support services for Sears' desktops, servers, voice and data networks, and websites.
CSC claimed the contract termination was “contrived to avoid or reduce termination fees of tens of millions of dollars”.
The outsourcer said Sears had an option to terminate the contract for reasons of convenience or as a result of mergers or acquisitions, and that the termination would vary according to circumstances.
Sears recently completed a merger with Kmart to form a powerful new retail operation. The two IT infrastructures will now have to be combined. The Sears chief information officer who signed the CSC deal is no longer with the company.
CSC claimed it had made investments in software, property, plant and equipment to service the contract, and that it would "vigorously pursue recovery for its assets and commitments”.
Sears said it didn’t expect to incur any penalties as a result of the termination.
CSC is providing Sears with IT services while the retailer makes other arrangements.