The state has terminated its contract with a consultant hired to oversee the $60 million modernization of the state tax department computer systems after the supposedly independent consultant revealed it had been coached by Department of Taxation officials on what it should say about the project in its reports.

The tax department hired Advan­Tech LLC under a $1.431 million contract, but AdvanTech said in a report made public last month that it had been instructed by state tax officials on which subjects “should and should not” be addressed in its monitoring reports.

The tax department also requested changes in the reports by Advan­Tech before they were made public, which the consultant said is “not the norm” in its experience.

State Tax Director Maria Zielinski abruptly resigned after that report was made public, but has said her resignation was not directly related to the AdvanTech issue. “I can unequivocally state that to my knowledge, no facts or findings were manipulated in any way,” Zie­linski said last month.

The House Finance Committee was told last week that the state has since terminated the contract with the company “by mutual agreement.” State Rep. Jarrett Keohokalole, who is a member of the Finance Committee, cheered the news that the contract with AdvanTech was ended.

“We should have fired them. I’m glad we did fire them, because it’s outrageous,” said Keohokalole (D, Kahaluu-Aliamanu-Kaneohe). “It’s pretty clear … that they were misleading the public on the status of the project. We have these guys serving as watchdogs, we pay them to serve as watchdogs, and it appears as though they were colluding with the department to water down the reports on the status of the project. So, they deserve to be fired.”

AdvanTech is an “independent verification and validation” consultant that was hired after the state fumbled a series of information technology projects that date back to previous administrations. The idea was that an oversight consultant would ensure the Tax System Modernization project progresses as planned and works as the contractor promised it would.

The tax department itself awarded the contract to AdvanTech, and Keohokalole said the state should have learned by now that oversight contractors such as AdvanTech should answer to an outside agency. The oversight contractor should not be beholden to the department that is implementing the computer project that the contractor oversees, he said.

“It looks like we’re moving in the right direction, but it came after the fallout from this (tax) project,” he said.

Linda Chu Takayama, the newly appointed director of the tax department, said the state is preparing a request for proposals for a new independent verification and validation contractor for the project.

Ford Fuchigami, administrative director for Gov. David Ige, said he discussed the contract with officials from AdvanTech, and “it was mutually agreed that they would go their separate ways and we would go our separate ways and just separate ourselves.”

Terminating the contract means AdvanTech will forgo a significant amount of money it otherwise would have earned under its contract with the state, and Fuchigami said he does not know why the company agreed to those terms. State officials reported in November they had paid AdvanTech $291,500 up to that point.

Fuchigami said he does not know if the company received any kind of severance payment because “severance payment never came up in the discussions” that involved him.

“We just felt that what we expected out of that report was not exactly what we got,” he said. Specifically, state officials believed the monitoring reports should be about contractor Fast Enterprises, which is implementing the tax system project. Instead, the report focused largely on issues involving the tax department, he said.

Rick C. Townsend, president of AdvanTech, declined comment other than to confirm in an email that “it was mutually agreed by both parties to terminate the contract.”

Ige in July named state Chief Information Officer Todd Nacapuy as “executive sponsor” of the $60 million tax project, and placed it under the control of Nacapuy and tax department Deputy Director Damien Elefante.