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Thursday, October 15, 2009

Ind. Gov't. - More on "State will cancel its $1.34 billion contract with IBM and other vendors to automate the application process for food stamps, Medicaid and other benefits"

Updating this ILB entry from earlier this afternoon, the Washington Post has posted the AP report by Ken Kusmer - Kusmer has been on this story since the beginning. Some quotes:

INDIANAPOLIS -- Indiana has ended its $1.34 billion deal with IBM Corp. to automate the application process for food stamps, Medicaid and other benefits, Gov. Mitch Daniels announced Thursday.

Daniels said he canceled the contract with Armonk, N.Y.-based IBM because the company did not make satisfactory progress to improve services as required by a corrective action plan ordered last spring.

IBM was notified Thursday that its contract would be terminated in 60 days. During that time, the state's Family and Social Services Administration will develop a detailed plan for a "hybrid system" that Daniels said will incorporate successful elements of the old system along with parts of the so-called modernized system run by IBM.

The new system will involve companies that had worked with IBM, including Affiliated Computer Services Inc. of Dallas, which will work for FSSA as the project's leader, FSSA spokesman Marcus Barlow said. * * *

The Indiana project was one of the most ambitious efforts by a state to automate welfare systems and move away from cost-intensive, hands-on work by government case workers. Daniels has said repeatedly that he inherited one of the nation's worst welfare systems, which was troubled by fraud, high error rates, long customer wait times and slow progress in moving people from welfare to work. * * *

The government services industry, federal officials and some members of Congress have scrutinized Indiana's effort after a similar one run by Accenture in Texas failed in 2007.

Mary Beth Schneider of the Indianapolis Star has this story. Some quotes:
Gov. Mitch Daniels said today that Indiana is canceling its contract with IBM for welfare services, calling it a mistake that didn’t work.

The cancellation is a stunning turnaround from Daniels’ December 2006 decision to award the $1.34 billion contract.

Instead, Daniels said he would move to a “hybrid” system that keeps some elements of privatization, by having ACS-employed workers continue to handle the initial application for services from people seeking Medicaid, food stamps and Temporary Assistance to Needy Families.

But instead of doing so via call centers, which caused confusion, delays and high error rates, they will do so in person at county offices. Then, a state-employed caseworker still will make the decision on whether to approve the application for assistance.

Daniels said this was a “major mid-course correction.”

State Rep. Peggy Welch, a Bloomington Democrat who had been one of numerous legislators who heard complaints from constituents about the IBM-led system, called it “gutsy” and the right move.

So, too, did House Speaker B. Patrick Bauer, D-South Bend, though he said lawmakers should continue to monitor Indiana’s welfare delivery system as some privatized elements remain. * * *

[Governor Daniels] also thanked IBM. “They did try hard. If resources would have fixed this problem, we wouldn't be making this announcement,” Daniels said. “It wasn't resources. It wasn’t effort. It was a flawed concept that simply did not work out in practice.”

He said there were some positive changes that will be kept – including less fraud and a move to a paperless system for tracking clients’ cases.

He said the hybrid system will still save Indiana taxpayers “tens of millions of dollars” though less than had been expected when the IBM contract was first signed in 2006.

Posted by Marcia Oddi on October 15, 2009 05:21 PM
Posted to Indiana Government