Perot Systems, Blue Cross consider contract revision

Perot Systems and Blue Cross and Blue Shield of Rhode Island are working to restructure the software portion of a 10-year information technology and outsourcing services contract.

Blue Cross awarded the $570 million contract to Perot Systems in 2003.

“We are working with the client to redefine part of this contract,” said Peter Altabef, Perot Systems’ president and chief executive officer, speaking Aug. 1 during the company’s quarterly earnings call. “This restructuring is anticipated to benefit future cash flow and profitability. However, we would have to take charge and redeploy redundant resources before realizing the financial benefits.”

The Blue Cross contract encompasses IT services, claims processing and software implementation, which is the subject of discussion. Perot Systems' software was to serve as the customer claims processing platform.

But Blue Cross suspended work on the system June 19, according to the Providence Journal. In a June 30 filing with the Securities and Exchange Commission, Perot Systems said the services provider and Blue Cross “expect a change to their relationship.”

Although Perot Systems expects to benefit financially from a modified contract, Blue Cross stands to gain flexibility, according to Perot Systems. Russell Freeman, the company’s chief financial officer, said the objective is to give Blue Cross the ability to continue with the Perot Systems’ software deployment or select another software solution.

“Right now, we are focused on trying to get our contract restructured to give them that flexibility,” Freeman said.

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