Pennsylvania sues IBM over $170M benefits system

HARRISBURG, Pa. (WHTM) – Gov. Tom Wolf’s administration is suing IBM over a multi-million dollar contract to build a modern, integrated system for processing unemployment claims.

Wolf says Pennsylvania taxpayers paid IBM nearly $170 million for a system it never got.

The project was awarded to IBM in a fixed-price contract for $109.9 million with a completion date of February 2010.

In July 2013, an independent assessment recommended the Department of Labor and Industry not continue with the project because it had a high risk of failure. When the contract was allowed to lapse in September 2013, it was 45 months behind schedule and $60 million over budget, Wolf said.

The governor said Labor and Industry has been forced to continue its use of aging, costly systems that have incurred tens of millions of dollars in maintenance and other costs.

The lawsuit filed Monday in Dauphin County Court claims breach of contract, fraudulent misrepresentation, negligent misrepresentation, constructive fraud, and fraudulent concealment.

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