EDS is facing legal actions from sub-contractors after it co-ordinated supplies of equipment which went to a pony-tailed "colonel" in a flat in Belgium.
The victim of an elaborate procurement fraud, EDS acted as co-ordinator for a variety of other bidding suppliers. In providing test equipment, the companies thought they were increasing their chances of winning a secret NATO contract for a "secure interoperable communication origin identification and verification system" worth £50m to £75m.
In fact, the colonel, who wore his pony tail under an officer's cap and met clients in a black limousine flying NATO flags, was bogus.
His neighbours in Rekem, Belgium - 70 miles east of Nato's headquarters - were surprised by the number of boxes being delivered to his flat. Elsewhere, the colonel had accumulated five sea containers and eight lorry-loads of equipment. It is said to have been worth tens of millions of dollars.
EDS and other suppliers thought they were sending equipment to the "American Military Supply-Materials Testing Unit" in Rekem. They were told the equipment would be "tested to destruction" and was therefore not returnable.
It appears that the detection of the fraud was not helped by the secrecy which surrounds sensitive defence contracts and the use of non-disclosure agreements.
Suppliers said they felt bound by non-disclosure agreements that stopped them from communicating with NATO directly and learning the identities of other potential sub-contractors. One company is claiming damages "in excess of several million dollars".
Complaints filed in a Texas County Court in Austin allege that EDS reminded sub-contractors of their non-disclosure agreements and warned them not to approach the authorities.
EDS said in a statement, "While EDS believes it has good and meritorious defences to these claims, EDS is unable to comment further at this time because of the governmental investigations and pending litigation."
Although some equipment has been recovered, the colonel has disappeared.