Failed Welfare Privatization Deal Cost Taxpayers $500 Million

The original IBM-led privatization of welfare services agreement FSSA entered into may be dead, but the costs to taxpayers is still being tallied. FSSA Secretary Anne Murphy pegs the cost at $500 million to date and climbing. WRTV reports:

Indiana's human services chief said the costs to modernize the state's welfare eligibility system since 2007 have topped $500 million.


Family and Social Services Administration Secretary Anne Murphy told state lawmakers Tuesday that IBM Corp. has received nearly $442 million of that total through Aug. 31.

Gov. Mitch Daniels fired Armonk, N.Y.-based IBM in October 2009, citing poor performance, including lost documents, lengthy hold times for the call centers and too many errors in processing of food stamps and Medicaid.

Its work ended in December, but it collected more than $4 million more after that for "disengagement services."

FSSA and IBM have sued each other to recover costs each claim to be owed.

Murphy said federal agencies have paid more than $275 million of the total. The state's share comes in at just under $225 million.

Nearly $59 million has gone to IBM subcontractors who now work directly for FSSA.

The largest amount of the $59 million paid to IBM subcontractors went to ACS, the same company with whom Mayor Greg Ballard wants to award a 50-year parking meter lease deal if he can convince the Indianapolis City-County Council to go along.