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EDS Stays On Hot Streak With Medi-Cal Deal

The computer-services firm inked a four-year, $407 million extension of a 15-year contract for IT and business services.
EDS on Thursday said it has renewed a contract to provide IT and business services to California's Department of Health Services. Under the deal, a four-year continuation of its original 15-year agreement with the state, EDS will continue to manage California's Medi-Cal Medicaid program--the largest in the nation. The extension is worth about $407 million, EDS says.

About 1,100 EDS staffers at Medi-Cal centers throughout California currently provide services ranging from invoice processing to claims handling. EDS has operated Medi-Cal, the largest Medicaid program in the nation, since 1988 and handles about 200 million claims in the state each year.

It's been a good week for EDS. On Tuesday, the company landed a multiyear contract to provide a range of IT services to the City of Anaheim, Calif. Terms of the deal weren't disclosed. On Wednesday, it said it had been given a two-year, $160 million extension of its IT services deal with the Australian Tax Office; that deal was set to expire next year.

EDS also reported progress this week on the deployment of the Navy/Marine Corps intranet project, which aims to put 360,000 users in those branches of the armed services onto a common IT platform. The U.S. Marine Corps base in Quantico, Va., has begun the transition to the system, according to EDS.

The rash of deals may indicate that EDS is benefiting from an uptick in the IT outsourcing market--one of the growth areas in the current high-tech market. Technology Business Research analyst Humberto Andrade says he expects revenue generated by IT outsourcing deals to increase 12% to 15% this year compared with last year. EDS is the world's second-largest computer-services firm, ranking behind IBM and ahead of Computer Sciences Corp.