Hawaii embroiled in contentious legal battle over highway IT system

Efforts to replace an antiquated computer system within Hawaii’s Department of Transportation have ground to a halt after nearly a decade of delays. Now, the state and IT services firm Ciber Inc. are pointing fingers over who’s to blame, both seeking millions of dollars in damages.

In the latest development, a circuit court judge this week dismissed the state’s $19 million suit against Ciber, saying the state hadn’t exhausted administrative avenues to find a resolution. But Attorney General David Louie’s office said the decision doesn’t dampen the state’s resolve to seek damages. Right now, the office is planning its next moves.

“The state will continue to vigorously pursue its claims against Ciber for defrauding the state and engaging in other misconduct,” Joshua Wisch, special assistant to the attorney general, told StateScoop.

The state alleges that Ciber did not design and launch the Financial Accounting System Transportation project, a system known as FAST that would manage the highway division’s finances, according to contract. It accuses the firm of defrauding the state and employing “inappropriate political influence” to keep the project alive.

Meanwhile, Ciber says the circuit court ruling shows the state’s case was “retaliation after Ciber tried to collect funds due to the company for the work it had already completed.” The company is seeking millions for that work, blaming the state for the project’s shortcomings. Its claim is still pending.

FAST was supposed to go live on July 2010, but the project hit snags early on: Ciber kept cycling new consultants in and out, hindering its ability to hit benchmarks, the state said. And, months before its planned launch, the Federal Highway Administration conducted a “scathing” initial review that found deficiencies in the system. The state had hoped the system would be able to process reimbursements issued by the FHWA, as they “amount to roughly $170 million per year” for the state.

Hawaii pushed the system’s launch to July 2011, then to July 2013. But the system never came online, and the state canceled the contract in March.

In its suit, filed last month, the state alleges a report by a Ciber consultant showed that company’s executives “acknowledged submitting ‘erroneous invoices and fictitious change orders.’” The state claims that Ciber never disclosed the contents of these reports, and that the consultant further advocated that the company “use its apparent political influence in the state to land additional lucrative work.”

The suit also alleges that Ciber executives met with then-Gov. Neil Abercrombie’s chief of staff late in 2013, and hired two lobbyists to advance the company’s interests with the governor. The state claims those moves prompted the governor to reassign political appointees in the department that were critical of Ciber’s efforts.

In February, Ciber filed a claim with the state’s chief procurement officer, alleging the state still owed the company roughly $17 million for damages it suffered due to the lengthy process. Ciber said that its contract with the state never required the company to ensure FWHA compliance, and that the department “failed to competently staff, manage and make necessary project decisions only it could.”

Now Ciber is asking to prove that it’s owed damages at trial to recoup that cost, and is hoping a circuit court will hold the company without fault for the state’s termination of the contract.

A judge has yet to set a date to hear Ciber’s case against the state, but the company said it regrets that the dispute has dragged on so long.

“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 a statement. “Ciber was proud to help HDOT implement a system that would benefit the people of Hawaii, but HDOT apparently had other priorities.”