Indiana, IBM near $1B deal

IBM is close to landing a $1 billion-plus social service eligibility system contract with the state of Indiana.

The pact, under negotiation for several months, cleared a hurdle this week when Gov. Mitch Daniels accepted a state panel’s recommendation to award a back-office services contract to an IBM-led bidding team. The contract would be worth $1.16 billion over 10 years to the IBM coalition, according to the state. The governor will decide whether to sign the contract after a public hearing Dec. 8.
The pending contract has been scaled back from the original conception. The Interagency Review Committee that examined the eligibility modernization project recommended what it describes as a hybrid approach. In that approach, IBM will modernize the state’s client eligibility information intake process, while the state retains responsibility and control over the client eligibility system as a whole, according to the panel’s recommendation.

In the hybrid system, state employees will make the final eligibility determinations for individuals applying for social services. The in-house portion of the eligibility system over 10 years is worth $500 million. That amount combined with IBM’s contract totals $1.6 billion. The state compared that total with an estimated $2.1 billion outlay if the state’s Family and Social Services Administration kept the entire modernization project in-house.

IBM’s coalition includes Affiliated Computer Services, Alpha Rae Personnel, Crowe Chizek and Co., Haverstick Consulting, Interactive Intelligence, Phoenix Data, RCR Technology and Arbor Education and Training.

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