Ohio’s overhaul of aging unemployment benefits IT system suspended after company officials indicted
COLUMBUS, Ohio—A long-awaited overhaul of the nearly two-decade-old computer system used by the Ohio Unemployment Benefits office is on hold after federal officials indict senior officials from the company hired to replace it .
In 2018, the Ohio Department of Employment and Family Services awarded Minnesota-based Sagitec an $86 million contract to replace the computer system, which dates back to around 2004 and didn’t been unable to handle the massive number of unemployment claims filed during the coronavirus pandemic.
The works were due to be completed in the fall of 2023, but about three weeks ago ODJFS suspended the contract after learning that Sagitec partners David Gerald Minkkinen and Sivaraman Sambasivam had been indicted on August 23 in the court of U.S. District of West Virginia, according to the department. spokesperson Bill Tees.
The two are accused of stealing trade secrets – including source code and data – from their former employer, global management consultant Deloitte, and using that information to design, develop and market their own software called “Neosurance”, according to their indictments. .
It’s the same program Sagitec used for the “first phase” of Ohio’s unemployment computer system overhaul, completed last December, which modernized the part of the system used to collect unemployment taxes from employers, according to a statement from the company.
It’s unclear how long their indictments will delay the rest of the computer system replacement, including the portion regarding Ohio’s unemployed benefits, Teets said. When asked if ODJFS might end up hiring another company, Teets said, “That would be something to consider later once we kind of took a look and saw the impact of these allegations.”
Sagitec, in a statement, noted that the company itself has not been indicted along with Minkkinen and Sambasivam and has shared with the government the results of an internal investigation conducted by outside experts.
“While we are actively working with the government on this matter, we continue to operate as normal,” the company’s statement said. “We are confident in our ability to meet our ongoing commitments to our customers, including the State of Ohio.”
Ohio isn’t the only state whose unemployment system upgrades have been delayed by the indictments. After Kentucky unemployment officials didn’t hear from company officials for months about its $47 million contract to replace its equally outdated computer system, state officials discovered the indictments, according to the Louisville Courier-Journal.
Kentucky officials are now considering re-awarding the contract to another company, which will push back the projected 2025 completion date by at least a year, according to the newspaper.