Hawaii recovers $20M from vendor of failed IT upgrade

The State of Hawaii announced Tuesday that it will recover an additional $20 million from a former vendor that had been hired to upgrade a financial management system used by the state’s transportation department.

The Colorado IT firm Ciber, Inc. has agreed to pay the state after a project dating back to 2009 fizzled out five years later. The contract was to develop an accounting system for the Hawaii Department of Transportation’s highways division. The $20 million announced Tuesday is the second payment the company has agreed to, following an $11 million settlement in 2017, bringing the state’s total cost recovery to more than $31.7 million — an amount officials said exceeds the state’s damages and fees on the failed project.

“When HDOT hires vendors on projects, it expects them to perform as required – and the department is committed to holding them to account when they fail to do so,” Jade Butay, the state’s transportation director, said in the announcement. 

Major IT modernization projects in government commonly go over budget and take longer to complete than originally planned. However, the state claimed that Ciber’s work was abandoned before a functioning system was developed and that the company didn’t represent itself honestly. The state attributed the project’s failure to “delays, design defects, failed tests, and a shortage of skilled consultants.”

The state was represented by the law firm Kasowitz Benson Torres. One of its partners, Marc Kasowitz, has represented former President Donald Trump in cases ranging from divorce proceedings to Trump University lawsuits and sexual misconduct allegations. Backed by Kasowitz, Hawaii state officials said they uncovered documents in which Ciber management admitted they were unequipped to complete the project. The documents contained admissions by Ciber managers that their team “lacked necessary skills, made critical mistakes during the project, and misled HDOT about the quality of Ciber’s work and the ability of Ciber’s team to deliver a working system,” the state’s announcement reads.

After filing for bankruptcy protection in 2017, Ciber was acquired by HTC Global Ventures for $93 million.