NewsPublic Affairs / August 7, 2017

Judge: IBM Owes Indiana $78M After Failed Welfare Privatization

Article origination IPBS-RJC
IBM sign at the company's corporate headquarters in Armonk, New York. - Simon Grieg/Flickr

IBM sign at the company's corporate headquarters in Armonk, New York.

Simon Grieg/Flickr

IBM owes Indiana more than $78 million after it failed to deliver on its contract to privatize the state’s welfare system a decade ago. A county judge determined the final dollar amounts in a decision published Monday.

It comes after the Indiana Supreme Court ruled last year IBM had breached its $1.3 billion contract with then-Gov. Mitch Daniels’ administration.

The high court asked the Marion County Superior Court to mete out damages, but that’s taken some time. Lawyers had Judge David Dreyer removed from the case last year after he tried to rule against the Supreme Court’s decision.

Now, Judge Heather Welch says IBM should pay the state $128 million in damages, and that the state still owes IBM nearly $50 million in various fees.

The Daniels administration originally hired IBM to take over digital welfare services for the state Family and Social Services Administration. The contract was terminated in 2009 after numerous problems and has been tied up in court ever since.

IBM will appeal the decision.

A spokesman said in a statement, “IBM worked diligently and invested significant resources in its partnership with FSSA to help turn around a welfare system described at the time by Indiana’s governor as one of the worst in the nation. IBM will appeal this decision which is contradicted by the facts and the law.”

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