HDOT FILES LAWSUIT AGAINST CIBER, INC., A CONSULTING FIRM, ALLEGING FRAUD AND BREACH OF CONTRACT ON STATE HIGHWAY SOFTWARE UPGRADE PROJECT
News Release from DoT Sep 2, 2015
HONOLULU – The Hawaii Department of Transportation (HDOT) filed a lawsuit today against Ciber, Inc., alleging that the consulting firm defrauded the State and engaged in other misconduct on a project to implement new software for the HDOT’s Highways Division.
The lawsuit alleges that Ciber pulled a “bait and switch” by misrepresenting its capabilities in order to land a contract to replace HDOT’s existing computer system with a new enterprise resource planning (ERP) system to run the State’s highway financial management operations. The lawsuit asserts that contrary to its pre-contract assurances, Ciber was unable to design and implement a system that could perform essential functions, including obtaining reimbursements from the Federal Highway Administration (FHWA). Such federal reimbursements, usually totaling approximately $170 million a year, are crucial to the State’s work in maintaining and building highways.
According to the lawsuit, the fraud continued during the project, as reflected by internal Ciber documents in DOT’s possession. In those documents, senior Ciber managers acknowledged submitting “erroneous invoices and fictitious change orders,” billing HDOT for work that Ciber knew was of no value, and deliberately under-staffing the Project to meet Ciber’s own internal profitability benchmarks. In addition, the lawsuit charges that Ciber used lobbyists and exercised inappropriate political influence to undercut the authority of HDOT managers and undermine HDOT’s attempts to benefit from independent technical advice.
The State terminated Ciber from the project earlier this year, as a result of missed deadlines, missing functionality and software bugs and glitches. The implementation, known as the FAST project, began in 2008. An attempt to “go live” on Ciber’s defective system in 2013 was cancelled because the system was unable to perform even simple tasks.
The State is seeking tens of millions in damages, including more than $8 million in fees it paid to Ciber.
“This lawsuit reflects Hawaii’s commitment to ensuring that vendors who violate the public trust will be held accountable for their misconduct, and that taxpayers will be protected,” said Ford Fuchigami, Hawaii Department of Transportation Director.
* * * * *
SA: Ciber Inc., “used lobbyists and exercised inappropriate political influence” to persuade the state to continue making payments
...Ciber hired two lobbyists from the firm Capitol Consultants of Hawaii LLP to help make its case to Gov. Neil Abercrombie’s administration that the state should continue with its contract, and Abercrombie Chief of Staff Bruce Coppa was drawn into the dispute in 2013, according to the lawsuit, which was filed in state Circuit Court.
Political appointee Audrey Hidano was then assigned by the governor’s office to oversee the Ciber project, and the lawsuit alleges 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.
The lawsuit also alleges Hidano “repeatedly communicated with Coppa about project status and negotiations” with Ciber from late 2013 to late 2014.
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.
In all the state paid $13.88 million to Ciber and other consultants working on the Financial Accounting System Transportation (FAST), to replace an out-of-date transportation financial management computer system, but the new system never worked....
According to the lawsuit, DOT Deputy Director Jade Butay and other DOT officials briefed Coppa on Ciber’s contract performance failures, but Ciber continued to submit new invoices seeking more payments from the Transportation Department.
The suit alleges Coppa told a Ciber representative in 2013 that the company “did not need to respond” to letters from Butay that warned Ciber was at risk of being terminated for defaulting on the contract.
Ciber hired John Radcliffe, with the lobbying firm Capitol Consultants, and after Radcliffe began lobbying the governor’s office, the governor’s office transferred Butay to the state Department of Labor and Industrial Relations, according to the lawsuit.
Hidano replaced Butay, and oversaw the Ciber project for more than a year, according to the suit. However, the lawsuit alleges Hidano “had little if any experience in transportation financial management, budgeting or accounting, and had no experience whatsoever in information technology” projects.
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, less the money it had already been paid.
The lawsuit alleges the problems with Ciber in Hawaii are part of a “pattern and practice of misconduct” for the company, which is being sued for problems under a similar contract in Pennsylvania, and was “implicated in a public corruption scandal in New Orleans.”...
read ... Firm fraudulent, state says
* * * * *
ILind: Lawsuit alleges “inappropriate political influence,” but the lobbyist law doesn’t apply
...Ciber hired Capital Consultants’ principals, “Red” Morris and John Radcliffe, sometime after the 2013 legislative session ended, and through the 2014 session.
During the course of the year, each of them was paid a total of $5,864 in lobbying fees.
Not as much as one would expect, given the allegations of undue political influence now being made by the state.
But here’s the catch.
Hawaii’s lobbyist law doesn’t regulate the kind of lobbying alleged in the lawsuit, because it was aimed at influencing the governor’s office and the state administration rather than members of the legislature or their staff....
...when it comes to lobbying the governor, his staff, or department heads, all’s fair because it doesn’t count as lobbying and isn’t regulated by the state’s lobbyist law.
There have been bills in recent years that would have extended the lobbyist law to cover a much broader range of executive branch lobbying, but they went nowhere.
Do you suppose this multi-million dollar scandal might encourage the Ige administration to throw its weight behind such a proposal?
* * * * *
State lawsuit weaves a tale of graft, political cronyism
Shapiro September 6, 2015: ...To press its case with the former governor, Ciber hired lobbyist John Radcliffe, a longtime political associate of Abercrombie’s who played leading roles in his 2010 campaign for governor, his fundraising and the transition committee that helped Abercrombie pick his Cabinet.
Abercrombie’s chief of staff, Bruce Coppa, got involved in the dispute and political appointee Audrey Hidano was assigned to oversee the Ciber project....
Kudos to Ige for his willingness to air the dirty laundry of Democratic Party heavyweights to recover public funds that state attorneys believe were lost to political cronyism.
But the legal action so far is limited to Ciber Inc. and seeks no civil or criminal sanctions against public officials who allegedly facilitated the raid on the state treasury.
How is this not public corruption if the facts alleged in the Ciber lawsuit stand up as the case moves through Circuit Court?
If the attorney general can’t find a legal basis to go after the public officials involved, Ige and the Legislature need to take it as an imperative to toughen our anemic ethics, bribery and lobbying laws.
read ... Graft, Cronyism
SA: Ciber cites ‘lies’ in state lawsuit
CB: Hawaii DOT Alleges Fraud, Breach of Contract in Lawsuit
...a spokeswoman for Ciber said the following:
The Hawaii Department of Transportation’s lawsuit is frivolous, contains numerous lies and misstatements, and is completely without merit. Since the beginning of our engagement with HIDOT, we have operated in good faith, fulfilling our contractual obligations and providing the agency with quality IT and consulting services. Ciber was proud to help HIDOT implement a system that would benefit the people of Hawaii, but HIDOT apparently had other priorities. After HIDOT inexplicably terminated its agreement with Ciber, we filed a claim seeking payment for work already completed.
We are disappointed that HIDOT 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. Ciber has been in the IT services business for nearly 40 years, providing technology support to Fortune 500 and midmarket companies, as well as federal, state and local governments. We pride ourselves in delivering quality IT services to our clients around the world and stand by our track record of success....