A lawsuit filed by the Attorney General’s Office to try to recoup millions of dollars the state spent on a failed Department of Transportation computer project was tossed out of Circuit Court this week.
The state is alleging that information technology consulting company Ciber Inc. defrauded the Transportation Department in a failed effort to set up a new computer system for the state Highways Division.
However, Circuit Judge Rhonda Nishimura ruled Tuesday the state should have filed its complaint against Ciber with the chief procurement officer of the state DOT before pursuing a lawsuit in Circuit Court.
Joshua Wisch, special assistant to Attorney General Douglas Chin, said the decision to dismiss the case was made on “purely procedural grounds.”
“The court’s decision is unrelated to the merits of the state’s claims and does not affect the state’s ability to assert those claims against Ciber,” Wisch said in an emailed statement. “The state will continue to vigorously pursue its claims against Ciber for defrauding the state and engaging in other misconduct, including pulling a ‘bait and switch’ by misrepresenting its capabilities to implement new software.”
Robert Klein, a lawyer representing Ciber, said the state’s lawsuit against Ciber was filed without following the law “just to make a big splash.”
“To me, when you’re accusing somebody of not following the law, and you’re not following it yourself, something should be said about that, and that’s exactly what the judge said,” Klein said.
Ciber went on to file its own lawsuit against the DOT last month, accusing the state of improper termination and breach of contract. That lawsuit is pending in Circuit Court.
The state paid Ciber and other consultants working on the Financial Accounting System Transportation a total of $13.88 million, but the new system never worked. FAST was supposed to replace an out-of-date transportation financial management computer system, but federal highway officials refused to certify the new system.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 in September said an attempt to launch the 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 Attorney General’s Office sued Ciber in September.
The lawsuit alleges the Colorado-based 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. The damages sought in the lawsuit include $8 million in fees that were paid to Ciber.
The state lawsuit also claimed Ciber 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 hired two lobbyists from the firm Capitol Consultants of Hawaii LLP to help persuade Gov. Neil Abercrombie’s administration that the state should continue with its contract, and Abercrombie Chief of Staff Bruce Coppa was given updates about the project from late 2013 to late 2014, according to the lawsuit.
The lawsuit also alleges political appointee Audrey Hidano was then assigned by the governor’s office to oversee the Ciber project, and 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.
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.
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, which was partially offset by money it had already been paid.
Ciber responded in September with a written statement that the state lawsuit “is frivolous, contains numerous lies and misstatements, and is completely without merit.”
The Ciber statement said it was the state that “inexplicably” terminated its agreement with the company, 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.
The lawsuit Ciber filed last month alleges that for years state transportation officials were “incapable” of working with the company until the governor’s office finally intervened. The company’s suit alleges DOT “failed to competently staff, manage and make necessary decisions only it could make” to allow the project to go forward, which prevented Ciber from meeting the project objectives.
The lawsuit against the state blames DOT for making numerous changes in the scope of the project, and for causing delays. It also alleges the state refused to make payments that were required when the project reached various milestones, and “as a result of HIDOT’s failures, Ciber was forced to suspend its work on the project.”