East Hawaii News

State Sues Company for Alleged Fraud, Misconduct

September 2, 2015, 4:21 PM HST
* Updated September 2, 4:22 PM
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The state of Hawai’i is suing Ciber, Inc. for alleged defrauding and breach of contract regarding a project to implement new software for the Hawai’i Department of Transportation’s Highways Division. In the lawsuit, the state is seeking tens of millions of dollars in damage, including more than $8 million in fees that were paid to the company.

DOT filed the lawsuit Wednesday against the company, alleging 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 system to run the State’s highway financial management operations.”

According to the lawsuit, despite Ciber’s pre-contract assurances, the company was not able to design and implement a system that would perform essential functions, which include obtaining reimbursements from the Federal Highway Administration.

The state says that these federal reimbursements are crucial in the state’s work in maintaining and building highways and can total up to $170 million a year.

In the lawsuit, fraud is alleged during the project. DOT reportedly has Ciber documents that include Ciber managers acknowledging that they were “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.”

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The lawsuit also accuses Ciber of using lobbyists and exercising inappropritate political influence to undercut the authority of HDOT managers and undermine the department’s attempts to benefit from independent technical advice.

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“This lawsuit reflects Hawai’i’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, Hawai’i Department of Transportation Director.

Missed deadlines, missing functionality, and software bugs and glitches, led the state to terminate Ciber from the project earlier in 2015. The project, known as the FAST project, began in 2008. State officials say the project attempted to “go live” in 2013 but was cancelled after the system was unable to perform basic tasks.

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