State DOT alleges fraud, sues consulting firm for millions

State DOT alleges fraud, sues consulting firm for millions

HONOLULU (HawaiiNewsNow) - The Hawaii Department of Transportation (HDOT) filed a lawsuit on Wednesday 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.

The preceding was a news release provided by HDOT.

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