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Saturday, September 12, 2015
FULL TEXT: Hawaii DoT v Ciber
By Andrew Walden @ 4:18 PM :: 6956 Views :: Ethics, Hawaii State Government

The full text of Hawaii DoT v Ciber may be found HERE

Question: Is this the secret history of Abercrombie's high-tech initiative?

Meanwhile, these are some of the juiciest quotes complete with line numbers:

62. In November 2010 the State elected a new governor, Neil Abercrombie.  Abercrombie appointed a new deputy director, Jan Gouveia, to oversee the Project. Gouveia enlisted an outside consultant, Brian McKee, to assist in evaluating the Project.

...

68. In the months following his hiring in mid-2011, McKee authored a series of internal Ciber reports about the Project. Those internal Ciber reports- which DOT did not discover until long after McKee had left - described wide-ranging fraud and misconduct by Ciber management, and highlighted Ciber's efforts to prioritize profit over performance on the Project.

...

71. McKee's August (2011) report...concluded by focusing on Ciber' s plan to use its apparent political influence in the State to land additional lucrative work, explaining that "[o]ur executive sponsor is now in a political position to dictate the rollout of Oracle throughout the State, including the Dept. of Education."

...

96. When FHWA officials performed another on-site review at DOT's offices the following week, the system again failed, and the FHWA again refused to approve the system.  Shortly thereafter, Ciber began to reduce its staffing on the Project and, in an August 15, 2013 letter, made the incredible allegation that DOT was to blame for the failed FHWA test.

97. On September 10, 2013, (DOT Deputy Director Jade) Butay wrote another letter to Ciber, rejecting Ciber's assertions that, among other things, DOT was responsible for the failed FHWA review. Butay pointed out that, among other things, Ciber had known about the FHWA requirements for years, yet still failed to meet them. Butay demanded that Ciber submit a detailed project work plan within 10 days. Shortly thereafter, Butay and other DOT officials met with the Governor Abercrombie's Chief of Staff, Bruce Coppa.  At that meeting DOT detailed Ciber's performance failures, the failed go-live, and Ciber's false allegations that DOT was to blame. Coppa advised that the Governor' s office would assist DOT in handling Ciber.

(NOTE: About this time, the Abercrombie admin began soliciting bids for a massive tech upgrade project for Human Services.  Ige scrapped the project in March, 2015.)

98. Instead of responding to Butay's September 10 letter, Ciber submitted new invoices to DOT. Butay wrote a follow-up letter to Ciber on October 11, 2013 demanding a response to the issues he raised in his September 10 letter.

99. Butay's September 10 and October 11 letters made it clear to Ciber that it was at risk of being terminated by DOT for defaulting on the Contract. Refusing to lose the opportunity to squeeze more funds out of the State, Ciber implemented a plan to evade responsibility for its deficient performance by using inappropriate political influence to muzzle its critics at DOT and pressure DOT into paying Ciber still more fees for a worthless system. Specifically, in or about September and October 2013, Ciber executive Douglas met with Coppa, Sanjeev "Sonny'' Bhagowalia, the Chief Information Officer (CIO) of the State's Office of lnformation Management Technology (OIMT), and OIMT Deputy Chief Randy Baldemor. During that meeting Coppa told Douglas that Ciber did not need to respond to Butay's inquiry. There is no indication that at that meeting Ciber disclosed its prior misconduct to Coppa, including its submission of"erroneous invoices and fictitious change orders," the fact that all the money DOT spent on training and testing between 2009 and mid-2011 had been "wasted," or that Ciber had deliberately withheld necessary staffing to achieve its internal profitability goals.

100. Around the same time as the meeting with Coppa, Ciber hired two lobbyists from Capitol Consultants of Hawaii, LLP to lobby on Ciber's behalf. One of the lobbyists was John Radcliffe.

101. After Ciber met with Coppa, Bhagowalia, and Baldemor, and after Radcliffe began lobbying the Governor's Office on Ciber's behalf, the Governor's Office transferred Butay to a different agency (the Department of Labor) and replaced him another political appointee, Audrey Hidano. Although Butay's replacement had little if any experience in transportation financial management, budgeting or accounting, and had no experience whatsoever in information technology or ERP implementations, Hidano oversaw the Project for more than a year, from late 2013 to late 2014. During that period, Hidano repeatedly communicated with Coppa about Project status and negotiations between DOT and Ciber.  During meetings with DOT staff and outside consultants, Hidano also repeatedly stated that the Governor's Office wanted Ciber to remain on the Project despite its performance failures.

...

104. On December 23, 2013, DOT Director of Transportation Glenn Okimoto sent a letter to Ciber demanding a response to Butay's Sept. 10 letter. Rather than responding, Ciber executive Douglas emailed Coppa to complain. Expressing frustration to Coppa, Douglas wrote, "we were told in our face to face meeting not to respond to Jade Butay' s letter dated September 10th. John Radcliffe, our lobbyist, has also indicated that his discussions with you and Sonny [Bhagowalia] wanted to proceed with the project ... "

105. In a follow-up letter dated December 31, Douglas chided that Okimoto "may be unaware of how this project is currently being run," and directed Okimoto to "check in with Mr. Coppa or Mr. Baldemor at the OIMT to receive updated instructions." Douglas cc'd Coppa, Bhagowalia, and Baldemor on the letter.

(NOTE: Bhagowalia suddenly left the State in Feb 2014.)

...

119. In January 2015 Capitol Consultants -the same company that had lobbied former Chief of Staff Coppa on Ciber's behalf in 2013 and 2014- hired Coppa as a consultant.

...

121. On February 5, 2015, Ciber sent DOT a 14-page claim letter (the "Feb. 5 Claim").  In that letter Ciber blamed DOT for the failed Project and claimed Ciber had suffered damages of $23,292,877, only partially offset by the $6,252,973 ("net of sales tax") it had already been paid by DOT. Ciber's letter did not address the "erroneous invoices and fictitious change orders" that it had submitted to DOT. Nor did it disclose that the money DOT had paid for training and testing between 2009 and mid-2011 had been "wasted," or that Ciber had purposefully held back necessary staffing on the Project to meet its internal profitability goals.

...

126. DOT has paid more than $13 million to date in professional fees for the Project, and has incurred thousands of hours of staff time and other expenses. All of these funds were wasted as a result of Ciber's fraudulent conduct and performance failures. To recover these and other damages that Ciber inflicted on the State, and in the face of Ciber' s claim for damages and continued threats of litigation, DOT has filed this action.

127. The fraud scheme that Ciber perpetrated on DOT is consistent with allegations that other governmental entities have leveled against Ciber in recent years relating to its work on other public entity software implementation projects. Indeed, Ciber's fraud against Hawaii, and the publicly-reported schemes it is alleged to have engaged in against other public entities, show a pattern and practice of misconduct. For example:

128. On or about January 12, 2015, The Pennsylvania Turnpike Commission ("Pennsylvania"), a division of the Pennsylvania Department of Transportation ("PennDOT"), filed a lawsuit against Ciber and a former Ciber Vice President, Dennis Miller, in Pennsylvania state court. The lawsuit, which is pending, seeks $45 million in damages arising out of Ciber's work on a project for PennDOT to implement an ERP system on an SAP software platform.  PennDOT alleged that Ciber and Miller, who was the Ciber project lead, had orchestrated a fraudulent overbilling scheme, had failed to adequately perform on a series of contracts it was awarded between 2005 and 2008, and had misrepresented Ciber's skills and experience in order to obtain the contracts. PennDOT alleged, among other things, that Ciber had its consultants engage in "repetitive and useless assignments in an effort to make work" to increase billing amounts to PennDOT, bill for positions not authorized under contract agreements and for services not delivered, and overcharge for the software implementation. PennDOT alleged that through its fraudulent billing scheme, Ciber obtained approximately $45 million in fees to which it was not entitled.

129. Miller, the Ciber Vice President, had previously been named in a criminal indictment by Pennsylvania's Attorney General, which charged him with theft and other crimes in connection with a bid-rigging scheme that "arose out of Ciber's desire to influence and gain favor with [PennDOT] in order to secure lucrative multi-million dollar contracts for pure profit and recognition in the industry." According to the indictment, Miller and another Ciber executive had bribed Pennsylvania officials with gifts and political contributions in exchange for higher payments on PennDOT projects.

130. In 2011, Ciber was also implicated in a public corruption scandal in New Orleans, Louisiana, that resulted in the conviction of a Ciber subcontractor for paying bribes to a public official. The corruption scandal ultimately resulted in the conviction of former New Orleans mayor Ray Nagin. In testimony at Nagin's trial, former Ciber executive Ed Burns admitted to providing public officials with football tickets, limousines and political fundraisers during a time that Ciber held contracts with the city. Ciber and its executives also made direct contributions to Nagin's re-election campaign.

PDF: Full Text of Complaint

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