IBM Case Heads to Appeals Court

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The Indiana Court of Appeals is slated to hear arguments Monday in the case involving the state and IBM Corp. (NYSE: IBM). Indiana is appealing a lower court ruling ordering it to pay the company tens-of-millions of dollars following a failed welfare system privatization deal. Both sides will have 45 minutes to make their arguments. The state entered into a 10-year, $1.3 billion Indiana Family and Social Services Administration contract with IBM in 2006.

The plan to modernize the welfare system fell apart and the contract was terminated less than three years later.

The state took the action citing performance issues.

A lower court has ruled Indiana did not have cause to end the deal.

The appeals court will consider whether the lower court erred in that decision, whether the state should pay IBM fees and if it could keep equipment following the end of the contract.

IBM claims it is eligible for millions of dollars in change order and deferred fees.

Source: Indiana Court of Appeals