The NHS has pulled out of a 10-year, £90m deal with Electronic Data Systems. EDS will seek compensation for the termination of the contract.
"I can confirm that the contractual relationship between the National Health Service and EDS, for a centrally managed e-mail and directory service, is to end," a spokesman for the NHS said.
EDS said the NHS National Programme for IT terminated the contract on 1 March. The company said it was committed to the programme and had been implementing the service in line with its contractual obligations.
Any disagreement could have been resolved through procedures outlined in the contract and EDS is disappointed by the decision to terminate the contract without seeking mediation, it said.
EDS will do all it can to minimise any impact on the 62,000 NHS staff already using the system. It also pointed out that the NHS awarded a contract for a near-identical directory service to BT last year, one year after EDS' own contract had been signed with the NHS. EDS "thought it was odd" at the time, said Catherine Greenwood, UK regional director of EDS Global Marketing and Communications, but added that she was unable to comment further.
A spokesman from BT said he was unable to comment on the matter.
EDS began rolling out the NHS e-mail system in December 2002. It was to provide the IT infrastructure for the system, plus related 24-hour telephone and online support to all NHS staff.
The system was expected to be the one of the largest corporate directory and e-mail service systems in the world, with 1.2 million NHS staff being given personal mailboxes, online calendars and access to a national directory.
The NHS previously had 7,000 different e-mail services.
Richard Granger, director general of IT for the NHS, announced in January that Oracle had won the contract to provide the database infrastructure for the NHS overall IT project.
The Oracle software will be used for the NHS Care Records Service, providing electronic health records for 50 million patients.
Gillian Law writes for IDG News Service