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According to the Times, Michael Fallon, Conservative MP and a member of the Treasury Select Committee, said the Government had been made to look “very hypocritical” by details of a legal settlement with EDS which will enable the Revenue to claw back about £30 million of legal compensation owed to it only if EDS wins new public sector contracts.
The Revenue announced last November that it had reached a £71 million out-of-court settlement with EDS, following the high-profile debacle with the tax credits system, which EDS had supplied.
But details of the settlement, in which EDS is understood not to have formally accepted any blame, have now shown that only some of that payout was guaranteed, with the rest to be paid back in the form of a percentage of the work of future government contracts won by EDS both from Revenue and other departments.
The latest reports are likely to anger rival firms, who may fear that the financial motivation for Revenue to pick EDS for future work will create an uneven playing field in contract bids.
A spokesman for the Revenue told the Times that its settlement with EDS would not influence future procurement processes: “Any application for government work from EDS would be considered purely on the basis of the quality of the bid and in line with EU procurement rules. We would not consider any extraneous factors in awarding work.”
Mr Fallon said that the relationship between EDS and the Revenue looked “far too cosy” and “unhealthy” and seemed to undermine the fair process for awarding government work.
FUll article: Revenue's deal with US giant under fire - Times, April 2006.
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