EDS sues Ariba over contract dispute

Computer services provider Electronic Data Systems Corp. slapped a lawsuit on Ariba Inc., seeking to end its US$20 million sales and marketing contract that was allegedly breached by the procurement software maker.

EDS and Ariba struck a deal in 2000, forming a group of business-to-business net markets for consortia-based purchasing. The agreement called for EDS to manage the net markets, which would run on Ariba's B2B eCommerce platform. EDS targeted more than $160 billion in managed spending under the contract annually. Bethlehem Steel Corp., Entergy Services Inc., Fort James Corp., Kellogg Co., Prudential Insurance Company of America and Tyco Healthcare Group were some of the initial participants in the customer alliance.

According to papers filed last month in the Delaware Court of Chancery, EDS claims Ariba allegedly used the alliance to identify potential customers and sell licenses to them directly. EDS terminated the agreement last November, claiming breach of contract.

Louise Runkle, an Ariba spokeswoman, says the lawsuit is "without merit" and the company will "defend itself vigorously." EDS declined to comment.