Hawaii business registration backlog hits 40,000 amid system failure
Lawmakers questioned the state’s system upgrade as businesses described months of delays.
HONOLULU (HawaiiNewsNow) - State lawmakers demanded answers Tuesday about the collapse of the state’s business registration system, which is affecting thousands of people and costing local businesses millions of dollars.
The House Consumer Protection and Commerce Committee was told the Department of Commerce and Consumer Affairs is four months and 40,000 filings behind. The delays are affecting real estate deals, nonprofit grants and business startups.
Backlog affects businesses
Hawaii’s business community depends on updated documents from the department for thousands of transactions. Those transactions have been backed up for months after a failure to update the department’s computer system.
Ty Nohara, the state securities commissioner, said upgrading the system went through multiple failed tests, fixes and failures that frustrated staff and customers who couldn’t predict when it would work properly.
“It was working, and then it stopped working,” Nohara said.
Jonathan Kim, a new business owner, runs a pet import company still waiting for needed documentation four months after trying to register.
“I really, really wanted to be based in Hawaii, but the difficulty in doing that has been insurmountable, kind of ridiculous to be honest,” Kim said.
Department flooded with calls
People waiting on their transactions are calling the department in large numbers.
“To put it in perspective, we are getting 7,000 calls a month since July,” Nohara said.
Honolulu attorney Matthew Cohen said clients ask him to contact people he knows at the department.
“It creates a weird situation for me where, ‘Oh, you know somebody at DCCA. Can you call them?’ I can’t be overloading my contacts at the DCCA with those requests. No, there is no standardized process. There’s no standardized procedure,” Cohen said.
Contract and subcontractors
Lawmakers were told the state hired Pacxa, a local computer company, in 2021 on a $2 million contract. Pacxa is part of the Tradewind Group, which is chaired by local business leader Colbert Matsumoto.
Pacxa was not experienced with the Salesforce business platform the state wanted, so it hired subcontractors. Two of the subcontractors left the project.
Committee chair Scott Matayoshi questioned the state’s process.
“It doesn’t make a lot of sense about why we did this, and it seems like it led to a bunch of problems. This company that did not know Salesforce hired sub after sub and kept failing and failing,” Matayoshi said.
State notified in 2023
The state was notified of multiple issues in an oversight report in 2023 but continued working with Pacxa despite multiple false starts.
Matayoshi said the state’s information technology leadership failed to step in.
“There were these small things going wrong that led to this huge system collapse, and at some point someone needed to step in to make that call to say this is too far, this is too bad, we need to change course right now,” Matayoshi said.
Salesforce sends team
Salesforce, a national business software company, has sent a team to Hawaii to repair the system free of charge.
Nohara said at least 20 people from various locations are on the team.
“I call them the wizards because I feel like they are the ultimate people who know Salesforce, and they have brought at least 20 people from all over,” Nohara said.
The Salesforce experts said it will take 11 weeks to get the system running again.
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