General Dynamics launches legal battle with EDS

Defence contractor General Dynamics has begun legal proceedings in a row over a £4bn contract for the Ministry of Defence.

Defence contractor General Dynamics has begun legal proceedings in a row over a £4bn contract for the Ministry of Defence.

General Dynamics is demanding more than £1.7m from Hewlett Packard subsidiary EDS Defence in the dispute over a contract to provide services as part of the Defence Information Infrastructure (DII) project.

The DII project is a 10-year global procurement programme covering e-mail, web access, collaboration, office automation, data management, directory, interoperability, service management, security and application hosting services.

General Dynamics, which specialises in "future network enabled battlespace capabilities", entered into a contract with EDS in 2005. It says two disputes arose which were referred to adjudication.

The rows centred around a management charge and risk premium and EDS's entitlement to offset money it claimed was due from General Dynamics against money owed to the company.

EDS objected to the appointment of adjudicator William Gard, but he rejected the challenge and decided he did not have the jurisdiction to deal with both disputes.

Gard ruled that EDS should pay General Dynamics £818,658.87 for the management charge dispute, £851,961.16 for the risk premium dispute, and £3,547,309.94 for the setting off dispute.

EDS did not pay within the timeframe set by the adjudicator, but on 29 October paid £3,547,309.94 in partial settlement of the award.

But the balance remains outstanding, the High Court writ claims. Now General Dynamics is suing EDS for payment of £1,739,677.67 plus interest, and asking the court to enforce the adjudication and make it into a court order.

EDS declined to comment.

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