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An information technology company that allegedly defaulted on a multimillion-dollar contract to set up a new transportation department computer system contends the lawsuit filed against it this week by the state Attorney General’s Office “contains numerous lies and misstatements.”
The lawsuit filed Wednesday seeks “tens of millions” of dollars in damages from the Colorado-based Ciber Inc. after the company allegedly abandoned a failing project that was supposed to establish a new financial management computer system for the state Department of Transportation.
The system never worked, and the attorney general’s lawsuit attempts to recover $8 million in fees paid to Ciber. It also demands that Ciber pay damages to the state, and cover the cost of installing a workable new system for the department as required under the terms of the 2008 contract.
Ciber replied with an emailed statement Thursday that says the state lawsuit “is frivolous, contains numerous lies and misstatements, and is completely without merit.”
“Since the beginning of our engagement with HDOT, we have operated in good faith, fulfilling our contractual obligations and providing the agency with quality IT and consulting services,” the company said in its statement. “Ciber was proud to help HDOT implement a system that would benefit the people of Hawaii, but HDOT apparently had other priorities.”
The Ciber statement said it was the state that “inexplicably terminated its agreement with Ciber,” and Ciber filed a demand for payment for work already completed.
“We are disappointed that DOT has refused to honor its contractual obligations with Ciber and has now filed an inflammatory lawsuit as retaliation after we attempted to collect funds properly due to our company,” the company said in the statement.
The state paid a total of $13.88 million to Ciber and other consultants working on the new system, known as the Financial Accounting System Transportation, or FAST. The new system never functioned properly, and it repeatedly failed reviews by the Federal Highway Administration. Gov. David Ige finally scrapped the project earlier this year.
The lawsuit filed Wednesday also alleges Ciber “used lobbyists and exercised inappropriate political influence” to press the state to continue making payments to the company, and to undermine state transportation officials who were trying to enforce the terms of the contract.
Ciber hired Capitol Consultants of Hawaii LLP, which includes lobbyists John Radcliffe and George “Red” Morris, to help make its case to Gov. Neil Abercrombie’s administration that the state should continue with its contract.
According to the lawsuit, DOT officials including Deputy Director Jade Butay briefed Abercrombie Chief of Staff Bruce Coppa on Ciber’s alleged contract performance failures, but Ciber continued to submit new invoices seeking additional payments from the state.
After Radcliffe began lobbying for Ciber, Butay was transferred out of the transportation department and Audrey Hidano was assigned to the department by the governor’s office to oversee the Ciber project, according to the lawsuit.
The lawsuit alleges Hidano repeatedly told transportation staff “that the governor’s office wanted Ciber to remain on the project despite its performance failures,” and Hidano repeatedly communicated with Coppa about the Ciber project from late 2013 to late 2014.
Ciber continued to receive payments under the contract until August 2014, and Coppa joined the Capitol Consultants lobbying firm as a consultant after the Abercrombie administration ended in 2014, according to the lawsuit.
The suit alleges Ciber abandoned the FAST project and withdrew its staff without 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.
Coppa said this week his role was to bring the parties together in an effort to resolve the contract dispute. He noted that 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.”
The lawsuit and recent public debate about the Ciber case have drawn attention to the role of a number of officials who were involved in the project and are still in key positions in state government.
Those include Butay, who returned to the Department of Transportation as a deputy director after Ige took office, and Hidano, who was appointed by Ige to the position of deputy comptroller in the state Department of Accounting and General Services.
Hidano said Thursday she was advised not to discuss the attorney general’s lawsuit, but said that “I’m very disappointed in the information that was printed” on Thursday. She declined further comment, adding only that “it’s already messy, so I don’t want to make it even more messy.”
State Sen. Donna Kim (D, Kalihi Valley-Moanalua- Halawa), has repeatedly expressed frustration in public hearings and interviews that state officials who oversaw the project continued to approve payments to Ciber even after the new computer system repeatedly failed performance tests.
Kim points out that two other Ige appointees — state Tax Director Maria Zielinski and Department of Business, Economic Development and Tourism Director Luis Salaveria — sat on the executive steering committee that approved payments for Ciber for work the company did on the FAST contract. Butay also sat on that committee.
“What about the checks and balances?” Kim asked. “The executive committee, everybody was all pressured out to do it? I don’t know. It happened on their watch, and all these guys who were part of that now have been elevated.”
When asked about her role on the executive committee during a public hearing last month, Zielinski said she was not deeply engaged in the Ciber project, and was not involved in its daily oversight. She said she was named to the executive committee years after the project got underway, and said Ciber appeared to be “making progress” when the state canceled the project.
House Finance Committee Chairwoman Sylvia Luke said the state has not done a good job of implementing large-scale computer upgrades, and that the administration can expect state lawmakers to insist that specific benchmarks be met before the state makes payments to contractors.
Luke, (D, Punchbowl-Pauoa-Nuuanu) said lawmakers also want the state to hire more in-house state technical staff with the skills to oversee complex information technology projects.
“We just trust whoever the contractor is, and I don’t think that’s the right approach anymore,” she said. “I suspect DOT probably approved (payment) because they thought it was OK, or they were told it was OK and on track.”
“We’re still dealing with taxpayers’ money, and there need to be benchmarks, and there need to be penalties when we’re dealing with large amounts,” Luke said. “Trying to recoup it at the end after it’s screwed up — that never makes sense.”
A spokeswoman for Ige said he would not comment on the Ciber case because it is in litigation. Previously Ige has said the problems with the Ciber contract demonstrate that the state has been relying too heavily on consultants as it tries to implement complex information technology projects.
