Project software

IBM faces $ 159 million bill for botched government project

IBM faces a potential damages bill of US $ 120 million (AU $ 159 million) for its role in a failed project with the State of Indiana, after losing a court battle against the state government.

This week, the Indiana Supreme Court ruled that IBM broke its contract with the state to provide a basic systems overhaul [pdf].

In 2006, the state government awarded IBM a ten-year, $ 1.3 billion contract to overhaul its welfare eligibility system, with a mission to provide services and centers centralized calls for processing social assistance applications, an online portal for citizen access and a paperless Document Management System.

But the contract was terminated three years later after running into issues such as “inaccurate and incomplete data collection”, “planning issues”, “failure to follow proper procedures” and “processing times. demands and redetermination for various social assistance programs, ”according to the court ruling.

The two parties took legal action against each other for breach of contract the following year.

IBM initially won its claim against the state in a district court, but an appeals court overturned that decision.

The case then went to the Indiana Supreme Court, which this week upheld the appeals court’s decision.

He said IBM had failed to execute the project satisfactorily, “consistently missed” certain deadlines and “failed to help the state achieve its political goals.”

The Supreme Court, however, awarded IBM $ 50 million in damages for equipment and disposal costs, but left the $ 170 million claim for damages to a lower court to adjudicate. of the state against society.


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