IBM Vows Appeal After $128M Ruling

The Indiana Family And Social Services Agency says it made a "number of enhancements" to the new contracts during negotiations.

The state of Indiana has been awarded $128 million in damages for a long-running lawsuit with IBM. The case involves what the state has maintained was a breach of contract by the software provider for welfare system modernization services for the Indiana Family and Social Services Administration. IBM issued a statement following the ruling, saying it will continue to fight the decision.

The company’s statement reads:

IBM worked diligently and invested significant resources in its partnership with FSSA to help turn around a welfare system described at the time by Indiana’s governor as one of the worst in the nation. IBM will appeal this decision which is contradicted by the facts and the law.

The state terminated its contract in 2009, citing IBM’s poor performance. The initial, 10-year contract was signed in 2006 and valued at $1.3 billion. IBM was seeking back payment once the state pulled out of the deal. Last year, the case was sent back to Marion Superior Court to set damages following an Indiana Supreme court ruling that sided with the state.

A statement by the state’s legal representation, John Maley and Peter Rusthoven of Barnes and Thornburg in Indianapolis, says:

We are very pleased the court awarded $128 million in damages for IBM’s failure to keep the important promises it made to the State of Indiana. This has been a long, tough battle with a big corporation that refused all along to take responsibility for its poor performance. This hurt Hoosier families most in need, who depend upon the help of the Family and Social Services Administration. Today’s ruling is another victory for those families, for our State, and for all our citizens and taxpayers. It also vindicates the consistent determination of former Governors Mitch Daniels and Mike Pence and now Governor Eric Holcomb that IBM must be held responsible for not doing what it promised.

The state’s payout includes more than $78 million in damages and 8 percent interest from the judgement date for a total of $128 million.