IBM took $170M of taxpayer dollars for a website that doesn't exist
“As a result of the COVID-19 catastrophe, Pennsylvania has experienced the highest unemployment rates since the Great Depression. Our residents have been struggling not only with the impact of the virus but also with the impact of an outdated and obsolete Pennsylvania Unemployment Compensation System.”
In 2010, IBM entered a deal with the state of Pennsylvania for an overhaul of its unemployment benefits system, which was aimed to help residents with filing claims and finding a semblance of stability in trying times. The entire contract ran the state a whopping $110 million, according to The Markup. And costs grew over time.
In 2013, the contract became null without ever reaching complete status, a 2017 audit shows. It was such a profound waste of resources suffered by a state that already struggles with poverty that Pennsylvania entered a tense legal battle with the company, which carries on to this day.
The entire debacle is reflective of the tech sector's uncanny ability to make grandiose claims and promises without following up. Given the ongoing COVID-19 pandemic and mass unemployment, IBM's failed contract stings Pennsylvania much sharper than ever before.
Criticism dating back several years — In 2017, the state's Democratic governor Tom Wolf let loose on IBM. According to a press statement, Wolf stated:
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.
"Instead," Wolf went on to say, "the Department of Labor and Industry has been forced to continue to support many of its UC program activities through a collection of aging, costly legacy systems, incurring tens of millions of dollars in server, support and maintenance costs."
At the time, Wolf's press release pointed to multiple accusations against IBM, which included an alleged breach of the contract between the state and the company, negligent misrepresentation, fraud, and concealment. In response, an IBM spokesman told The Morning Call that the company denied all allegations.
IBM "will vigorously defend itself against the unfounded claims by the commonwealth. The claims are without merit and IBM will vigorously defend the lawsuit," the representative stated.
Pennsylvania's COVID-19 blues — Pennsylvanian Republicans, too, have lambasted the current system. In a recent letter penned by the Republican Caucus of Bucks County, signees criticized the "outdated" unemployment system, which has seen a massive influx of traffic due to the mass layoffs induced by COVID-19.
"Our district offices have dealt with hundreds if not thousands of constituents who have applied for unemployment, and many have yet to collect benefits or receive a resolution to filing claim," the letter reads. "Daily, constituents call to request assistance with claims dating back to March. In addition, we have had many constituents call regarding fraudulent claims, as they received checks for claims they did not apply for; they are concerned about identity theft and how this may impact their income taxes in 2020."
With a website that won't work and millions down the drain, anger is only natural.