Nats releases internal e-mails in preparation for EDS battle

National Air Traffic Services (Nats) has revealed details of internal e-mails and discussions that took place before it cancelled...

National Air Traffic Services (Nats) has revealed details of internal e-mails and discussions that took place before it cancelled a £50m PFI contract with services supplier EDS for a new Oceanic air traffic control system in Scotland.

The disclosures formed part of the formal legal "discovery" process in advance of a High Court battle with EDS which is due to start this week. EDS has sued Nats, claiming it lost more than £40m as a result of the early termination of the Oceanic contract.

Court documents make it clear that the e-mails raise the question of whether Nats cancelled the contract for political reasons - perhaps because it was a PFI deal that was perceived to be an impediment to its part privatisation. Nats denied this, saying the deal was cancelled because EDS missed a vital deadline in May 2000. This in turn was denied by EDS.

Further details of the case can be found at

Nats versus EDS: the road to court
  • 19 and 22 November 1999 Nats' director of programmes Peter Finch and finance director Nigel Fotherby exchanged e-mails concerning the "likely costs of renegotiating the [EDS] contract and of buying out or terminating it".

  • 8 December 1999 Nats told the House of Commons Transport Committee EDS had built what looked like a "first-class, world-beating system".

  • 3 February 2000 In papers for a Nats board meeting, Brian Hayes, Nats' head of contracts and purchasing, referred to the benefit of the "current situation" with EDS, which was the opportunity to terminate a 14-year PFI agreement. Nats was being presented with a termination opportunity that it ought to exploit resolutely, according to court documents.

  • February 2000 In a letter to the Treasury, Finch said the relationship with EDS was felt to be "beyond repair".

  • 22 February 2000 In an e-mail, Finch said, "Essentially we were playing a game of brinkmanship with EDS to see whether they would offer us a deal we couldn't refuse before we terminated the contract."

  • 5 March 2000 In a presentation, Hayes disclosed that the PFI deal with EDS represented a risk to the partial sale of Nats.

  • July 2000 Nats terminated the EDS contract. It cited the supplier's failure to meet the terms of a vital deadline in May 2000. This is denied by EDS.

  • December 2000 EDS sues Nats for approximately £42m.

  • January 2001 Nats counterclaims for approximately £8m.

  • February 2002 The case comes to court. The trial is expected to last until April, making it the longest-running High Court hearing in the IT industry's history.

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