Indiana cancels IBM welfare contract due to budget problems; opposing lawsuits

IBM: Indiana canceled deal because of budget woes

The real reason Indiana canceled its nearly $1.4 billion contract with IBM Corp. for a troubled welfare automation system was state budget problems, a lawyer for the computer giant argued Tuesday. But the state said IBM was more concerned about profit than getting assistance to needy people.

Both sides traded jabs during five hours of closing arguments before Marion Superior Court Judge David Dreyer, who is considering dueling lawsuits in the case. Gov. Mitch Daniels canceled IBM's privatization contract in 2009 amid complaints about long wait times on calls, lost documents and improper rejections from clients and federal officials.

Indiana had sued for the $437 million it paid the company, but Dreyer capped the damages the state could seek at $125 million. IBM is seeking about $100 million that the company claims it's still owed.