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​Pennsylvania sues IBM over jobless claims system upgrade

Lawsuit alleges the company failed to deliver on a contract to replace a system for processing unemployment claims, costing the state $170 million.

Pennsylvania sued IBM on Thursday for $170 million, claiming the company failed to deliver a promised upgrade to its outdated system of processing unemployment claims.


Pennsylvania Gov. Tom Wolf's office filed suit Thursday against IBM over its alleged failure to delivery an updated system for unemployment claims.

Governor Tom Wolf's office

IBM didn't immediately respond to a request for comment, but a company representative told the Associated Press the suit had no merit and the company would fight it.

The suit stems from a 2006 fixed-price contract awarded to IBM for $109.9 million with a completion date of February 2010, the state said in a press release. As delays and costs mounted, the state let the contract lapse in 2013 when an independent assessment determined the project had a high risk of failure.

"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. Tom Wolf said in the release.

The suit, filed in the Dauphin County Court of Common Pleas, asserts claims for breach of contract, fraudulent misrepresentation, negligent misrepresentation, constructive fraud, and fraudulent concealment, the release says.

The lawsuit comes as Wolf, a Democrat, is reportedly fighting with Republican state senators over the unemployment compensation system, "prompting the layoff of hundreds of state employees in December and a spike in wait times for callers," according to the AP report.