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4/1/2011
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IBM Files Motion Against Indiana Governor

Big Blue wants Mitch Daniels to reveal what he knows about failed state outsourcing contract.

IBM this week filed a motion that seeks to compel Indiana governor Mitch Daniels and his chief of staff to make themselves available for deposition in a lawsuit over the state's outsourcing contract with the tech services giant, which Daniels terminated in 2009.

The move follows informal efforts by Big Blue last week to get Daniels, seen as a possible Republican presidential candidate in 2012, to testify.

"Both Governor Daniels and [chief of staff Earl] Goode were intimately involved in all stages of the project, including key events at issue in this lawsuit," IBM states in its motion, which was filed in state Superior Court in Indianapolis.

IBM and Indiana last year filed claims and counterclaims against each other over the deal, under which IBM was to have modernized the state's aging welfare administration system. Indiana fired IBM as the primary contractor in October 2009 and now wants Big Blue to pay back hundreds of millions of dollars to make up for its "failed performance," according to the state's complaint.

For its part, IBM has said the work it did on the initiative improved service to residents, and saved Indiana millions of dollars through operating cost reductions and curtailment of fraud. IBM said it also brought 1,000 new jobs to Indiana. It wants the state to surrender $53 million it says it's still owed on the contract.

Indiana's Family and Social Services Administration tapped IBM in 2006 for what was to have been a ten-year, $1.3 billion revamp of the creaky systems it was using to process applications for Medicaid, welfare, food stamps, and more than 160 other public assistance programs. IBM was also to handle a number of back office functions related to the services.

The arrangement called for about 1,500 state employees to be transferred to IBM.

Indiana's welfare administration had been overly reliant on outdated client-server technology and time consuming face-to-face meetings with benefits applicants and recipients, according to court records.

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