Pennsylvania sues IBM over $170M jobless claims contract

Pennsylvania Gov. Tom Wolf's administration has sued IBM, saying the company failed to deliver on a 2006 contract to build an integrated system to process unemployment claims.

The lawsuit, filed Thursday, says the computer company was paid $170 million, but delivered a failed project when the state let the contract expire in 2013. The suit says the project was nearly four years behind schedule and $60 million over budget.

The state accuses IBM of breach of contract, and seeks undisclosed damages.

Armonk, New York-based IBM says the claims have no merit and it'll fight the lawsuit.

The suit comes amid a fight between the Democratic governor and Republican senators over how the unemployment compensation system is run and funded.

It was filed in Dauphin County by a private law firm representing Pennsylvania.

IBM has been locked in a legal battle in Indiana for nearly seven years over its failed $1.3 billion contract to modernize the state's welfare system.

The Indiana Supreme Court last year found IBM breached the contract entered into in 2004 that was canceled in 2009 by then-Gov. Mitch Daniels. The justices upheld some of the damages awarded to IBM and ordered the lower court to determine how much in damages the state is entitled.

Marion Superior Judge David Dreyer was removed last July from the case, which is now pending before Marion Superior Judge Heather Welch. Attorneys for the state and IBM appeared before Welch Feb. 10 and argued on the issue of damages.

According to the chronological case summary on, Welch will issue a written ruling within 90 days.

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