Pennsylvania sues IBM over $170M jobless claims contract

Written by Marc Levy/The Associated Press | Mar 9, 2017 11:43 AM

Photo by AP Photo/Marc Levy

FILE PHOTO: Gov. Tom Wolf speaks during a Capitol news conference in his chambers in Harrisburg.

(Harrisburg) -- Governor 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 approximately 50-page lawsuit has been filed 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.

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

"All told, Pennsylvania taxpayers paid IBM nearly $170 million for what was supposed to be a comprehensive, integrated, and modern system that it never got," Governor Wolf said in a statement. "Instead, the Department of Labor and Industry has been forced to continue to support many of its UC program activities through a collection of aging, costly legacy systems, incurring tens of millions of dollars in server, support and maintenance costs."

A telephone message left with Armonk, New York-based IBM's media relations department wasn't immediately returned.

The lawsuit comes amid a fight between Wolf and Republican senators over how the unemployment compensation system is run and funded.

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