SEC probes EDS US Navy deal

The US Securities and Exchange Commission has requested information regarding Electronic Data Systems' multibillion-dollar...

The US Securities and Exchange Commission has requested information regarding Electronic Data Systems' multibillion-dollar outsourcing contract with the US Navy, only two weeks after EDS declared the deal was under control.

The SEC has been investigating the IT service provider since 2002, when the company missed earning projections and took heavy losses on investment banking bets made on the value of its stock.

EDS said the inquiry is "ongoing" and that the SEC obtained testimony and information in late 2003 and 2004, including "information relating to developments regarding the company's Navy contract".

The company's massive contract to build an intranet for the Navy - recently valued at $8.8bn - has been dogged by delays and technical difficulties since it was awarded in 2000, prompting the company to take a $599m write-down in deferred costs for the fourth-quarter of last year.

Only last month EDS chairman and chief executive officer Michael Jordan said that although the contract was "a mess", the company had a solid plan to take it forward.

Representatives for the company were not immediately available to comment on the latest SEC development.

Scarlet Pruitt writes for IDG News Service

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