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About POGO's Federal Contractor Misconduct Database (FCMD)
The government awards contracts to companies with histories of misconduct such as contract fraud and environmental, ethics, and labor violations. In the absence of a centralized federal database listing instances of misconduct, the Project On Government Oversight (POGO) is providing such data. We believe that it will lead to improved contracting decisions and public access to information about how the government spends hundreds of billions of taxpayer money each year on goods and services. Report an instance of misconduct »
Ranking: 125
Electronic Data Systems
Electronic Data Systems (EDS) is a global technology services company. EDS delivers information technology and business process outsourcing services to clients in the manufacturing, financial services, healthcare, communications, energy, transportation, and consumer and retail industries and to governments around the world. In May 2008, Hewlett-Packard Company and EDS announced a definitive merger agreement under which HP will purchase EDS for $13.9 billion.
Federal Contract $: $ 0.0m
Total Number of Instances: 9
Total Misconduct dollar amount: $ 297.4m
Instances of Misconduct
1. Compensation Issues Regarding the Development of an IT System
“Her Majesty’s Revenue & Customs (HMRC) and EDS…negotiated a settlement of HMRC’s claim for compensation for issues experienced with the IT system developed by EDS, to support the 2003 launch and subsequent operation of Tax Credits, during their partnership with HMRC. HMRC and EDS have successfully concluded an aggregate settlement of £71.25m [$121.8 million], including an up front payment and payments of additional amounts over time. The specific terms of the settlement agreement are confidential.”... more»
2. Feder v. Electronic Data Systems (Violations of the Securities Exchange Act)
The plaintiffs alleged that EDS violated the Securities Exchange Act by using improper accounting methods to hide financial problems and by making material misrepresentations in its financial statements and public announcements. The case settled in March 2006. A settlement fund in the amount of $137,500,000 in cash was established.... more»
3. Failure to Conform to Current Good Manufacturing Practices
During a 2004 inspection it was found that a device produced by EDS was not being manufactured in conformance with Current Good Manufacturing Practice. Some Quality System (QS) violations included: failure “to ensure that the procedures for implementing corrective and preventive actions were complete,” that “software used by your firm as part of the quality system has not been fully validated for its intended use according to an established protocol,” and failure “to address design input requirements that are incomplete.” The Food and Drug Administration requested that EDS immediately take prompt action to correct these violations.... more»
4. Compensation for Unused Vacation Time (2009)
The Massachusetts Supreme Judicial Court ruled that former Electronic Data Systems employee Francis Tessicini must be paid for unused vacation time pursuant to state wage and hour laws. The court sided with Attorney General Martha Coakley, who cited EDS for failing to pay over $1,900 in unused vacation time to Tessicini, whose position was eliminated by the company in 2005. EDS was also assessed a civil penalty of $3,490.... more»
5. Compensation for Unused Vacation Time (2003)
The Massachusetts Supreme Judicial Court ruled that former Electronic Data Systems employee Robert Hutchins must be paid for unused vacation time. The court sided with the Attorney General, who had cited EDS for violating Massachusetts wage and hour laws by not paying Hutchins what he was owed for unused vacation time when he was terminated in 1999.... more»
6. Accounting Irregularities
Electronic Data Systems agreed to pay $490,902 in disgorgement and prejudgment interest to settle a Securities and Exchange Commission investigation into alleged accounting irregularities that occurred from 2001 to 2003. According to the SEC, EDS failed to disclose, or selectively disclosed, the cost of certain derivatives contracts, failed to adequately disclose an extraordinary transaction with a major customer that increased its reported cash flow by $200 million, and maintained inaccurate books and records. The latter charge partly involved the conduct of the Indian office of former EDS subsidiary A.T. Kearney, Inc., whose president was alleged to have paid bribes to senior employees of Indian state-owned companies between 2001 and 2003 to retain their business. EDS neither admitted nor denied wrongdoing. See related Electronic Data Systems misconduct instance, “SEC v. Srinivasan (A.T. Kearney India Bribes).”... more»
7. SEC v. Srinivasan (A.T. Kearney India Bribes)
The Securities and Exchange Commission settled a civil action against Chandramowli Srinivasan, the former president of A.T. Kearney India, which was an EDS subsidiary during the time period in question. The SEC accused Srinivasan of making $720,000 in bribe payments between early 2001 and September 2003 to senior employees of Indian state-owned companies to retain their business. The SEC charged that those payments also caused EDS to maintain inaccurate books and records. Srinivasan neither admitted nor denied wrongdoing and agreed to pay a $70,000 fine. EDS sold A.T. Kearney in January 2006. See related Electronic Data Systems misconduct instance, “Accounting Irregularities.”... more»
8. Stockholder Derivative Lawsuits Settlement
A stockholder derivative lawsuit filed in Texas federal court claimed that, from 2000 to 2002, various officers and directors of Electronic Data Systems Corp. improperly inflated the company’s revenues by more than $300 million through a contract with the U.S. Navy. In October 2007, EDS settled this and other pending shareholder lawsuits by authorizing its insurers to deposit $6 million in an escrow account and agreeing to implement various corporate governance changes.... more»
9. ERISA Litigation
Electronic Data Systems reached a tentative settlement in an Employee Retirement Income Security Act (ERISA) class action filed by more than 85,000 employees. The employees, members of EDS’s 401(k) plan, accused the defendants of breaching their fiduciary duties by investing plan assets in EDS stock when it was imprudent to do so. The plaintiffs also alleged the defendants violated federal securities law by selling unregistered shares of EDS stock to the plan. Under the proposed settlement, the defendants denied liability but agreed to pay $12.5 million in cash and provide additional injunctive relief worth no less than $19 million.... more»
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