Maryland Pension System Agrees to Settle Up With Technology Provider

June 5, 2003 ( - Over $20 million dollars later, the Maryland state employee pension system has received approval to settle with a contractor that provided a benefits-tracking computer system that the agency had trouble with and never used.

With the Board of Public Works-approved write-off of $21.9 million and a settlement with the provider, comes the close of a long-running tug-of-war between the pension system and Baltimore-based Syscom Inc., which attempted to upgrade the fund’s 1970s-era computer system, according to a Baltimore Sun report.

However, more importantly to Syscom, the pension fund tacitly admits that its errors in an electronic procurement process made a lawsuit against the company too risky.    “Basically, it validates that the system did deliver quality work to the agency,” Ted Bayer, president of Syscom, told the Sun. “I regret that the agency chose to discontinue the work before it could be implemented or fully evaluated.”

Computer Bugs

Maryland signed the ill-fated, $32.6-million contract with Syscom in May 1998. The contract, which swelled to $37.3 million because of various add-ons requested by the pension fund, called for the company to supply a system with two basic components: optical imaging and benefits administration.

The $8.9 million optical system was installed in 1999 and has worked satisfactorily.   However, the other component, which was intended to streamline the payment of benefits to the system’s 90,600 retirees, has been a disaster virtually from the start, pension officials conceded.

The installation of the system, originally supposed to go online in October 2000, fell into such disarray that the pension agency ordered the company to stop work on it in 2001. To this day, it has not processed a single benefits check.

Under the settlement, the pension system will pay Syscom $2.9 million in payments it withheld as a result of its dissatisfaction with the company’s work. In return, the company agreed to settle its $5.7 million in claims against the system for a dime on the dollar, or $572,000.

Officials emphasized that the computer problems have not prevented any retirement checks from going out – even though the system now in use was brought on line in 1973.