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In May 1989, the State of Florida signed an agreement for EDS to supply a system to manage welfare benefit payments for the disadvantaged. The system was based on IBM 3090 mainframe and was intended to integrate six software modules, covering social security payments made for food stamps, child support payment enforcement, and Medicaid, which offers federal care to the poor.
In its original specifications, Florida said it would prefer a distributed system that would not depend on a single processor. However, in its requests for proposals, it gave the prospective suppliers the freedom to propose any equipment configuration, provided it guaranteed that the system performance could cope with at least a 120% increase to the projected 1993 departmental caseload level of more than 2.3 million cases.
In outlining its complaints against EDS to the Florida courts, the state's Department of Health and Rehabilitative Services (HRS) insisted that, because of the expected growth in social service programs, the system should have been designed to cope with any further loads without adversely affecting the overall configuration. The state said that EDS had insisted that its proposed CRIS-E system design offered "tomorrow's solution today".
EDS found that a fear culture within HRS inhibited decision-making. To support this claim, EDS quoted from a report by the Florida Governor's Chief Inspector General: "The corporate culture at HRS seemed to promote and reward those who didi not raise problems; and thus the Secretary [head of HRS] was often the last, not the first, to know."
Things deteriorated as Florida's caseload continued its exorable growth. Because of the additional cases, HRS's required CPU capacity now reached over four million transactions a day.
In March 1992, the two sides clashed again, this time over a benchmark test intended to show that the chosen hardware was up to the job.
HRS claimed that, from March 1992 until June of that year, the Florida system experienced stability and reliability problems with frequent crashes. During the crashes, the system could not be used for any business purpose, and the state was forced to turn away its customers. Poor response times meant that claimants had to queue for hours to receive benefits, leading to unfavourable publicity.
By the contract termination date of June 1 1992, HRS claimed EDS had delivered a system based on a configuration that was "unproved, inflexible and insufficient to meet the capacity requirements, either present or future". The state insists that because of the stability of the welfare system, some old systems had to remain in use to provide backup or to supplement existing operations, leading to financial losses.
Three months after the termination of the contract, the two sides resorted to legal action. In September 1992, EDS sued HRS, seeking damages of more than $40 million because the State of Florida had stopped making payments. HRS immediately counter-sued for $65 million in damages, alleging breach of contract and warranty.
Two years into the legal battle both sides agreed to alternative dispute resolution (ADR) which avoided a full blown court case. A "Special Master" in this case the former CIA head William Webster was appointed to adjudicate between them.
His judgement was that the state owed EDS $50 million and, late in December 1995, a circuit judge backed EDS and said the state should be held to Webster's ruling. The state siad it would appeal to the district court and, if necessary, to the state's Supreme Court.
EDS was awarded much of the money it had sought from the state. Eventually a court ruled that the state of Florida should pay EDS $42.8 million (approx. £30m) to settle all disputes relating to the system developed and implemented by EDS. This compares with the $55 million originally sought by EDS. The case is now over.
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