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Pennsylvania Just Sued IBM Over an Allegedly Botched $100 Million Project

Mar 10, 2017

The state of Pennsylvania is suing IBM.

Pennsylvania Gov. Tom Wolf and his administration said this week that it filed a lawsuit against the business technology giant over allegations that IBM failed to live up to a contract to update the state’s unemployment claims system.

The allegedly botched project dates back to 2006 when the state hired IBM to replace its old unemployment payment technology, according to the Pittsburgh Post-Gazette. Pennsylvania said that IBM was supposed to finish the $109.9 million project by Feb. 2010, but that the work stalled.

Ultimately, Pennsylvania decided to let its contract with IBM expire in Sept. 2013. By that time, the project was “45 months behind schedule and $60 million over budget,” the statement says.

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“All told, Pennsylvania taxpayers paid IBM nearly $170 million for what was supposed to be a comprehensive, integrated, and modern system that it never got,” Gov. Wolf said in a statement. He added that the Department of Labor and Industry has instead been forced to maintain its unemployment payment system "through a collection of aging, costly legacy systems, incurring tens of millions of dollars in server, support and maintenance costs.”

The lawsuit does not list the amount of damages that Pennsylvania is seeking.

One reason for IBM’s alleged delay in completing the project is because of high employee turnover within the company during that time, reported the Post-Gazette. Additionally, Pennsylvania claims that IBM misrepresented several parts of the project that it said were complete at the time, even though the state alleged that software errors in the system remained.

After Pennsylvania let the contract expire, IBM laid some of the blame for the project's problems on the state, saying that “there is accountability on both sides for system performance and service delivery," according to the Associated Press.

An IBM spokesperson told Fortune that Pennsylvania's allegations are without merit.

“IBM will vigorously defend itself against this lawsuit," the spokesperson said.

IBM isn’t the only huge technology company to be sued by a state in recent years. Oregon sued Oracle (orcl) in 2014 over a failed healthcare enrollment website that the state claimed had cost it hundreds of millions of dollars.

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Last year, Oracle settled with Oregon by agreeing to pay $100 million.

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