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HDOT Gets $11 Million+ in Ciber Settlement

February 16, 2018, 1:59 PM HST
* Updated February 16, 2:00 PM
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The Hawai‘i Department of Transportation (HDOT) and the Office of the Attorney General reported that they have prevailed in litigation with Ciber Inc., the now-bankrupt company that HDOT had hired to implement a new financial accounting system.

The state thus far has recovered $11 million as part of the litigation, including $1 million from Ciber and $10 million from one of Ciber’s insurers.

In addition, at HDOT’s demand, Ciber assigned HDOT the rights to Ciber’s other insurance policies to ensure that the state can seek further recovery from Ciber’s other insurers.

“The outcome is a complete vindication of the state’s decision to pursue its claims against Ciber for failing to deliver a financial accounting system for HDOT,” said Gov. David Y. Ige. “This sends a clear message that we will hold vendors accountable when they fail to deliver on what was promised.”

HDOT hired Ciber in 2008 to design and build a new financial accounting system for HDOT’s Highways Division. After obtaining $7 million in fees from the state, Ciber abandoned the project in 2014, even though the software system was unfinished and unable to carry out essential HDOT functions. When HDOT demanded that Ciber complete the project for the agreed-to price, Ciber refused.

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After abandoning the project, Ciber sued the state for breach of contract. HDOT not only aggressively fought those claims but also pursued its own counterclaims against Ciber for fraud, false claims, breach of contract and unfair competition, even after Ciber filed for bankruptcy in April 2017. HDOT’s case described, among other contentions, how internal Ciber documents reflected that Ciber managers had admitted that Ciber’s team lacked necessary technical skills, made critical mistakes during the project, and misled HDOT about the quality of Ciber’s work and the ability of Ciber’s team to deliver a working system.

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HDOT is grateful to the Office of the Attorney General and the attorneys with Kasowitz Benson Torres LLP for helping secure this victory for the people of Hawai‘i.

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