Government // Enterprise Architecture
Commentary
5/2/2010
08:42 PM
Bob Evans
Bob Evans
Commentary
50%
50%

Global CIO: IBM Took 'Goldmine Of Taxpayer Money,' Claims Bureaucrat

Indiana cancels a $1.34B outsourcing deal with IBM and the always-ugly "disengagement" process has begun.

The dirty laundry from a massive, $1.34 billion IT deal gone bad is being aired very publicly as the state of Indiana has cancelled the remaining seven years of a 10-year deal with IBM while Big Blue says Indiana still owes it $125 million, including a $43 million "annual fee" as part of a deferred-payment plan.

Some of the expense items in that $125 million invoice have stirred the profound indignation from a very surprising source—politicians and bureaucrats—who generally think the only thing wrong with spending $125 million of other people's money is that it could have and should have been $1.25 billion.

A news article detailing the messy breakup notes that Indiana levied "fines" against IBM for underperformance in five separate months during 2009. And now that the 10-year outsourcing deal calling for IBM to manage welfare benefits in 59 of the state's 92 counties has been cancelled, the two parties are going through the difficult and highly contentious morning-after process of determining what is owed to whom.

According to a news story in Sunday's Fort Wayne Journal Gazette, non-elected "advocate" working for the Indiana Home Care Task Force took particular umbrage at IBM's contention that the state owes it $9.3 million for computers and related furniture purchased by IBM as part of the wide-ranging contract.

"Advocate" John Cardwell said the state failed to oversee IBM's expenditures properly:

"IBM has already walked away with a goldmine worth of taxpayer money, and we've gotten very little out of it," he said according to the article.

Global CIO
Global CIOs: A Site Just For You
Visit InformationWeek's Global CIO -- our new online community and information resource for CIOs operating in the global economy.

Early last year, Indiana cancelled the megadeal with IBM because, three years into it, only about one-third of Indiana's welfare recipients were being covered by the system, the newspaper said. And now, in one of those situations that makes one wonder if perhaps Homer Simpson is making the big decision-maker here, the very same state agency that originally brought IBM in—the Family and Social Services Administration—is now reaassuming control over the entire process.

In addition to the $9.3 million for computers, phones, and furniture, the $125 million bill from IBM to the state includes the following:

Previous
1 of 2
Next
Comment  | 
Print  | 
More Insights
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest, Nov. 10, 2014
Just 30% of respondents to our new survey say their companies are very or extremely effective at identifying critical data and analyzing it to make decisions, down from 42% in 2013. What gives?
Video
Slideshows
Twitter Feed
InformationWeek Radio
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.