Uncategorized IBM claims state owes $125M for failed privatization contract

IBM claims state owes $125M for failed privatization contract


The Fort Wayne Journal Gazette reported on Sunday that IBM Corp. is seeking $125 M from Indiana in the ongoing “disengagement” process after the failed FSSA privatization contact was cancelled. Gov. Daniels ended the contract last fall after more than two years of poor performance and complaints from Hoosiers.

IBM claims Indiana owes it more than $125 million for ending a controversial welfare contract, including $9.3 million for telephones, computer equipment and furniture.

The invoices reflect “disengagement services” – nearly half a million dollars in December and more than $680,000 in January, the most recent invoice available. The largest invoice, dated Oct. 23, bills Indiana more than $43 million for an annual “deferred fee,” part of the original cost of the contract, which was spread out over 10 years.

The documents also show the state fined IBM $115,000 for underperformance during five months last year. That’s about 1 percent of the $11.5 million in fixed fees the company was receiving each month to administer welfare benefits in 59 of the state’s 92 counties.

In less than three years, IBM had been paid about a quarter of the contract’s original $1.16 billion. The Daniels administration has said the state still saved money on the IBM system and will save money with a new, revised plan, based on projections of what each would cost. But the administration has said it can’t provide a cost-per-client comparison between the old system and the IBM-led system because there are too many variables.

So the question remains — when will Hoosiers see a full accounting of the IBM contract and how much it cost the state?