State wins breach of contract suit against Ciber

The Hawaii Department of Transportation and Office of the Attorney General said it has prevailed in a lawsuit against Colorado-based Ciber Inc., the now bankrupt company that it had hired to implement a new financial accounting system.

The HDOT Highways Division receives $11 million, including $1 million from Ciber and $10 million from one of Ciber’s insurers. In addition, Ciber assigned HDOT the rights to its other insurance policies to ensure that the state can seek further recovery from Ciber’s other insurers.

“The outcome is a complete vindication of the state’s decision to pursue its claims against Ciber for failing to deliver a financial accounting system for HDOT,” said Gov. David Ige in a press release. “This sends a clear message that we will hold vendors accountable when they fail to deliver on what was promised.”

HDOT hired Ciber in 2008 to design and build a new financial accounting system for its Highways Division. After obtaining $7 million in fees from the state, Ciber abandoned the project in 2014 even though the software system was unfinished and unable to carry out essential HDOT functions. When HDOT demanded that Ciber complete the project for the agreed-to price, Ciber refused.

After abandoning the project, Ciber sued the state for breach of contract. HDOT fought those claims but also pursued its own counterclaims against Ciber for fraud, false claims, breach of contract and unfair competition, even after Ciber filed for bankruptcy in April 2017.

HDOT’s case described, among other contentions, how internal Ciber documents reflected that its managers had admitted its team lacked necessary technical skills, made critical mistakes during the project and misled HDOT about the quality of Ciber’s work and ability to deliver a working system.