Governor and State Government and Government & Economic Development and Government and Technology

Judge tosses claim that IBM misled to land state contract

March 25, 2012

Marion County Superior Court Judge David J. Dreyer on Sunday dismissed the state's claim that IBM knowingly or intentionally provided false information to the Family and Social Services Agency in order to obtain a contract with the agency.

In dismissing all 17 counts, Dreyer said the state "introduced no credible evidence that IBM knowingly or intentionally made any false statements to the state or any other government entity."

"The state made no showing that IBM's tort claims were frivolous, groundless or litigated in bad faith..." Dreyer said. "IBM had reasonable, good faith arguments that the state's right to use the equipment was limited to the terms of the [Master Services Agreement] and that title would transfer to the state only upon the state's purchase of the equipment."

The state cancelled its 10-year, $1.37 billion contract with IBM in 2009 after complaints arose over the automated system for services and then sued IBM to recover hundreds of millions of dollars. IBM countersued on breach-of-contract allegations, arguing the state still owes approximately $100 million.

In February, the Indiana Supreme Court reversed Dreyer 5-0, sparing Gov. Mitch Daniels from being deposed.

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