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Tuesday, February 28, 2012

Ind. Courts - State-IBM trial over canceled welfare contract began yesterday

"State, IBM blame each other as trial involving Indiana's canceled welfare contract begins" is the headline to Carrie Ritchie's Indianapolis Star story today that begins:

Attorneys for the state and IBM offered two very different explanations Monday for what led to cancellation of a $1.37 billion welfare modernization contract.

During opening arguments in a Marion Superior Court trial, an attorney for IBM said the state couldn't afford to continue the 10-year contract, so it canceled in 2009 after only three years. The state then sued the company for breach of contract, IBM's attorney said, so it wouldn't have to pay about $100 million in termination costs.

An attorney for the state said the automated system IBM built was so fraught with problems that the state fired the company and then sued it for failing to deliver the services it promised. The state wanted IBM to return the $437 million it had already paid the company, but a judge capped the damages the state can seek at $125 million.

Both sides pointed to internal emails and documents to try to prove their arguments in competing lawsuits. Hundreds of millions of dollars are at stake in the civil trial, which could last up to six weeks.

From Niki Kelly of the Fort Wayne Journal Gazette, a story that begins with this take:
Days before Gov. Mitch Daniels canceled a 10-year welfare modernization contract with IBM Corp. in October 2009, state officials were negotiating with IBM to take over a new hybrid program.

When IBM sought additional money to lead Plan B, the state instead terminated IBM’s contract “for cause,” alleging a breach of contract.

“What a mess,” exclaimed Anne Murphy, secretary of the Indiana Family and Social Services Administration, in a September 2009 email about the talks regarding new dollars for IBM.

The revelation that state officials were still willing to work with the lead partner of an already-troubled effort came Monday as the state of Indiana and IBM faced off in court Monday in a case over hundreds of millions in taxpayer dollars. The trial – before Marion Superior Court Judge David Dreyer – is expected to last six weeks as the sides argue over whether IBM breached a $1.37 billion contract with the state.

Posted by Marcia Oddi on February 28, 2012 02:03 PM
Posted to Indiana Courts