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Baltimore receives $4.8M in settlement with IT firm

The City of Baltimore will receive $4.8 million to settle a breach of contract lawsuit with an IT company over the city’s property tax system software.

The Board of Estimates approved the settlement with Unisys Corp. at the city spending panel’s meeting Wednesday morning, ending three years of federal litigation.

The city and Unisys entered an agreement in May 2002 to modernize and integrate the city’s tax system in the hopes of creating a single tax bill for real and personal property owners in Baltimore. But by December 2010 the system still had not gone live and a test found 217 “critical issues,” or problems “severe enough that any one would prevent the system from going live,” according to the lawsuit.

The city terminated its agreement with Unisys in December 2011 and filed suit the following month in Baltimore City Circuit Court. The case was transferred to U.S. District Court in Baltimore in January 2012.

“After approximately nine years and numerous missed deadlines by Unisys and its subcontractors, as well as payment of over $8 million by the City to Unisys, the City still does not have the functional and integrated tax system as contracted by the two parties,” the lawsuit states.

Unisys filed a $10 million counterclaim in March 2012, alleging the city breached the contract by failing to provide adequate resources and personnel and repeatedly changed the scope and nature of the project.

“From early on, the City took actions changing the scope and nature of the Contract from an off-the-shelf solution into a full custom system,” the counterclaim states.

The two sides were a few million dollars apart in settlement talks as of earlier this year, City Solicitor George A. Nilson said Wednesday. A pretrial conference had been scheduled for Friday, with a three-week trial set for May.

The agenda for the Board of Estimates meeting Wednesday states the parties agreed to the settlement in part because of the “great expense of further protracted litigation and the uncertainties and unpredictability of jury verdicts.”

Fix still needed

The city has the upgraded tax software system in place for personal property but still needs an upgraded system for real property, Nilson said.

“We still don’t have the system we thought we bought,” he said.

Geoffrey R. Garinther, a lawyer for Unisys, declined to comment on the settlement. Garinther is a partner with Venable LLP in Washington, D.C., and Towson.

The case is The Mayor and City Council of Baltimore v. Unisys Corp., 1:12-cv-00614-JKB.