July 31, 2013
HARRISBURG — Gov. Tom Corbett’s administration is ending a multi-year contract with IBM to modernize Pennsylvania’s unemployment compensation computer system after dedicating $153 million in federal money to the project.
The 7-year-old project is 42 months behind schedule and $60 million over budget, State Labor and Industry Secretary Julia Hearthway said Wednesday.
The original contract was for $106.9 million in 2006 and it expires in late September after no-cost extensions were allowed to assess the program. It was designed to calculate and provide unemployment compensation benefit payments in Pennsylvania.
“The bottom line is that the problems we’ve identified cannot be solved and we will not renew our contract with IBM,” Hearthway said. “The level of risk, combined with the critical nature of the system, demands that the (department) has a system that produces timely decisions reliably and accurately.”
Carnegie Mellon University’s Software Engineering Institute says it identified numerous problems with the design and implementation of the system. Its study was commissioned by the department last year.
An IBM spokesman, Scott Cook, said the company was surprised by Hearthway’s announcement and that the decision is based on “a third-party report that we have not seen.” He said IBM has repeatedly asked to review the report with department officials.
“In complex information technology implementations, there is accountability on both sides for system performance and service delivery,” Cook said.