Citing an inefficient and antiquated public benefits eligibility system, Gov. Mitch Daniels recommended that Indiana explore privatization as way to improve the state's eligibility determination process. The state solicited ideas for improving the system from potential vendors in November 2005, and in February 2006 sought bids for providing eligibility and program services for public assistance programs including Medicaid, Temporary Assistance for Needy Families (TANF), Food Stamps, and child care. The RFP laid out the contractor's responsibilities, such as taking applications, making eligibility and re-determination recommendations, case work, managing client data, quality auditing, management reporting, fraud prevention, job placement, and welfare-to-work program management.
In July 2006, Indiana chose the Hoosier Coalition for Self Sufficiency (HCSS), an IBM-led consortium, with Affiliated Computer Services (ACS) as the main subcontractor. On December 27, 2006, the 10-year, $1.16 billion contract was finalized and awarded to HCSS.
In early summer 2009,the new secretary of the state's Family Social Services Administration (FSSA), Anne Murphy, acknowledged that there were problems with the privatized system. FSSA asked IBM to develop a Corrective Action Plan to fix the deficiencies in the program and improve services. Murphy stated that contract could be cancelled if improvements were not made. However, Indiana added $180 million to the contract to help fix the problems. Critics pointed out that this amount represented a 15% increase from the original contract, and was worrisome since the state was only in the second year of a 10-year contract.
A few months later, in October 2009, Indiana announced the cancellation of the contract. Governor Daniels called the fully privatized system "a failed concept." Instead, the state plans to attempt a hybrid method, transferring some functions back to the state government such as face-to-face meetings with clients, while negotiating a new contract with the main subcontractor, ACS, to continue system modernization efforts.