Firm fraudulent, state says

The state Department of Transportation is seeking “tens of millions” of dollars in damages from an information technology consulting company that allegedly defrauded the state in a failed contract to set up a new computer system for the state Highways Division.

A lawsuit filed Wednesday also alleges the company, Ciber Inc., “used lobbyists and exercised inappropriate political influence” to persuade the state to continue making payments to the company, and to counter pressure from state transportation officials who were trying to enforce the terms of the contract.

“Ciber’s strategy of undue political influence and sham reassurances to string DOT along successfully kept the project — and Ciber’s income stream — alive despite years of Ciber’s incompetence, delays, staff turnover, and repeated failures” to obtain federal certification for the new computer system, according to the lawsuit filed by the state Attorney General’s Office.

Ciber hired two lobbyists from the firm Capitol Consultants of Hawaii LLP to help make its case to Gov. Neil Abercrombie’s administration that the state should continue with its contract, and Abercrombie Chief of Staff Bruce Coppa was drawn into the dispute in 2013, according to the lawsuit, which was filed in state Circuit Court.

Political appointee Audrey Hidano was then assigned by the governor’s office to oversee the Ciber project, and the lawsuit alleges Hidano repeatedly told transportation staff “that the governor’s office wanted Ciber to remain on the project despite its performance failures,” according to the lawsuit.

The lawsuit also alleges Hidano “repeatedly communicated with Coppa about project status and negotiations” with Ciber from late 2013 to late 2014.

Despite the concerns raised by state transportation officials, Ciber continued to receive payments under the contract until August 2014. Coppa joined the Capitol Consultants lobbying firm as a consultant after the Abercrombie administration ended in 2014, according to the lawsuit.

In all the state paid $13.88 million to Ciber and other consultants working on the Financial Accounting System Transportation (FAST), to replace an out-of-date transportation financial management computer system, but the new system never worked.

Testing of system elements either was not completed or resulted in failure, and federal highway officials refused to certify the new system. Efforts to launch the system failed or were aborted, and a news release from the state Attorney General’s Office said an attempt to launch Ciber’s defective system in 2013 was canceled because “the system was unable to perform even simple tasks.”

Gov. David Ige finally canceled the project earlier this year, and the Ige administration’s legal arm — the Attorney General’s Office — filed the lawsuit against Ciber on Wednesday.

When asked to comment on the lawsuit, Coppa said the project began in 2007 during Gov. Linda Lingle’s administration, and that “by the time it got to my desk, it was a problem, and I tried to get it resolved.”

Coppa said he had not yet had a chance to read the lawsuit, and “there’s a lot that went on that I wouldn’t know.”

“The governor’s office wanted to get it resolved,” Coppa said. “I brought all the parties together.” He declined further comment.

Coppa is not named as a defendant in the suit.

Ciber Inc. did not respond to a message seeking comment left Wednesday at the company’s headquarters in Greenwood Village, Colo.

The state’s 49-page lawsuit alleges the company pulled a “bait and switch” by misrepresenting its capabilities to land the contract. The damages sought in the lawsuit include $8 million in fees that were paid to Ciber.

In 2008 the state hired Ciber, a global information technology consulting company, under a contract to design, develop and deploy the DOT system. The new system was supposed to automate the division’s project and financial reporting requirements, improve cash flow by filing for federal highway funding more frequently, and reduce data errors. The work was supposed to be completed in about 18 months.

The lawsuit alleges Ciber was unable to design and implement a system that could perform functions required by the federal government to obtain reimbursements for projects from the Federal Highway Administration.

State officials extended the deadlines for Ciber, but the system still didn’t function properly, and it repeatedly failed reviews by the Federal Highway Administration.

Internal Ciber documents allegedly show that senior Ciber managers acknowledged submitting “erroneous invoices and fictitious change orders,” and billed HDOT for work that Ciber knew was worthless, according to the lawsuit. The suit also alleges Ciber deliberately understaffed the project to meet the company’s profitability targets.

The lawsuit also alleges Ciber lobbyists “undercut the authority of HDOT managers.”

According to the lawsuit, DOT Deputy Director Jade Butay and other DOT officials briefed Coppa on Ciber’s contract performance failures, but Ciber continued to submit new invoices seeking more payments from the Transportation Department.

The suit alleges Coppa told a Ciber representative in 2013 that the company “did not need to respond” to letters from Butay that warned Ciber was at risk of being terminated for defaulting on the contract.

Ciber hired John Radcliffe, with the lobbying firm Capitol Consultants, and after Radcliffe began lobbying the governor’s office, the governor’s office transferred Butay to the state Department of Labor and Industrial Relations, according to the lawsuit.

Hidano replaced Butay, and oversaw the Ciber project for more than a year, according to the suit. However, the lawsuit alleges Hidano “had little if any experience in transportation financial management, budgeting or accounting, and had no experience whatsoever in information technology” projects.

The suit alleges Ciber finally abandoned the project and withdrew its staff without any notice after Abercrombie lost the primary election on Aug. 9, 2014. The company later submitted a claim to the Department of Transportation alleging it had suffered more than $23 million in damages, less the money it had already been paid.

The lawsuit alleges the problems with Ciber in Hawaii are part of a “pattern and practice of misconduct” for the company, which is being sued for problems under a similar contract in Pennsylvania, and was “implicated in a public corruption scandal in New Orleans.”

Ige has said an assessment is being done to determine what work was completed on the FAST project, and what can be salvaged from the effort.