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State sues IBM

$170M claims contract at issue

HARRISBURG — Gov. Tom Wolf’s administration is suing IBM, saying the company failed to deliver on a 2006 contract to build a modern and integrated system to process unemployment claims.

The about 50-page lawsuit was filed Thursday in Dauphin County court by a private law firm representing the state.

The state says IBM was paid $170 million, but had delivered a failed project when the state let the contract expire in 2013, nearly four years behind schedule and $60 million over budget.

IBM had an obligation to ensure that all elements of the project were coordinated well and completed competently and on time, the lawsuit said.

“IBM repeatedly failed to live up to these commitments and made decisions that thwarted successful completion of the project,” it said.

It accuses IBM of breach of contract and misrepresenting project information. It seeks undisclosed damages.

A telephone message left with Armonk, N.Y.-based IBM’s media relations department wasn’t immediately returned.

The contract and the ensuing legal fight have now spanned three governors. The lawsuit comes as Wolf, a Democrat, and Republican senators are fighting over funding the unemployment compensation system, prompting the layoff of hundreds of state employees in December and a spike in wait times for callers.

With the old system still in use, the state mails forms to an employer to check whether someone filing for benefits had been employed and laid off, instead of messaging the employer’s online account. Also, the system is built on a 50-plus-year-old legacy system that uses software that is no longer taught, a department spokeswoman said.

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