Indiana welfare eligibility support award in sight for IBM

Indiana is inching closer to awarding IBM Corp. a 10-year, $1.1 billion contract to handle the state's welfare eligibility needs.

Republican Gov. Mitch Daniels accepted a recommendation today from an interagency team that would award Big Blue a contract for all administrative, or "back office," functions related to processing eligibility for public assistance programs.

The team's recommendation is a scaled-back, hybrid approach that would tap both private and public sector resources to furnish administrative support for eligibility determination in an effort to save the state nearly $500 million in administrative costs over the next 10 years.

Under the performance-based contract, IBM would handle intake service and technology support for the eligibility system. Indiana and the contractor intend to maintain offices in each of the state's 92 counties.

All state employees who determine welfare eligibility would keep their jobs, working either for Indiana or for IBM, the governor's office said.

IBM will implement the contract geographically in four stages, beginning in August 2007. The contract is expected to include performance standards in five areas. The state plans to assess financial penalties if targets are not met.

The outsourcing of eligibility determination is part of a sweeping modernization project under way within the Indiana Family and Social Services Administration.

The governor plans to make a final determination on the proposed contract following a Dec. 8 public hearing on the contract terms and after the state receives final approval from the federal government.

IBM of Armonk, N.Y., ranks No. 17 on Washington Technology's 2006 Top 100 list the largest federal IT contractors.