EXCLUSIVE: State spends nearly $14 million on failed DOT system

EXCLUSIVE: State spends nearly $14 million on failed DOT system
Published: Apr. 23, 2015 at 9:34 PM HST|Updated: Apr. 23, 2015 at 10:00 PM HST
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HONOLULU (HawaiiNewsNow) - The state spent $13.88 million on a failed effort to improve the Department of Transportation's financial accounting system, so the state terminated the contract last month, Gov. David Ige said Thursday.

In 2008, the state Department of Transportation entered into a contract to upgrade its antiquated 30-year-old highways accounting system, hoping to automate project and financial reporting on highways projects that use millions in federal funds.

Among other things, the system was supposed to allow weekly billing of the federal government for highway projects instead of monthly billing.

The administration of former Gov. Linda Lingle hired well-known global IT firm Ciber -- which is based in Colorado -- to handle the job.

During the last seven years while the state has paid the company $6.9 million. Ige said the system has never worked.

"They have failed every single intermediate step in the project," Ige said. "This is typical of how a lot of state projects have been conducted in the past."

Ige told Hawaii News Now his administration terminated the contract with Ciber last month.

"It was clear that they didn't deliver what the contract required them to deliver," Ige said.

State DOT records show in September of 2012, then-Gov. Neil Abercrombie's administration increased the value of Ciber's contract by $2.7 million, even though the system had failed key tests and was unable to "go live" or get certification from the federal government.

"As of today we still have nothing. No system. No working system," said State Senate President Donna Kim, who said she's working with the governor to prevent failures like this in the future.

"Over $13 million. What do we have to show for it? Zero. If this was the private sector, somebody's heads would roll," Kim said.

Kim and Ige are upset that the two consultants – BEI and Gartner -- who the state hired to monitor the contractor and manage the project were paid $6.9 million, the same amount that the main contractor – Ciber -- was paid by the state.

Usually consultants are paid a fraction of the overall project cost.

"The state in the past has had an over reliance on consultants and this project is a perfect example of that," Ige said.

Ige said his administration is refocusing on IT projects to make sure they are overseen more closely.

In February, Ciber filed a claim with Hawaii DOT, saying Hawaii taxpayers owe the company $17 million in damages and costs for the highways project that never worked.

The state plans to pursue legal action against Ciber, assuring a long battle in the courts over this case.

Ciber representatives did not return Hawaii News Now's messages for comment Thursday.

The first consultant, BEI, was paid $5.4 million to develop the initial request for proposals, manage the system software and implementation services and monitor Ciber, the main contractor, according to DOT records.

Gartner Consulting is the consultant brought in midway through the project and paid $1.5 million for a "health check" of the troubled system and to manage the project.

In a November 2013 report, Gartner said the project suffered from a "lack of executive oversight and involvement early in the project's life span."

The Gartner assessment also faulted Ciber, consultant BEI and the state for "inadequate project management and planning."

The project also lacked clearly defined phases, was hurt by high staff turnover and lack of full-time resources as well as a lack of early involvement of federal resources, Gartner found.

Ciber describes itself as a leading global IT consulting company with 6,500 consultants and contractors in North America, Europe and Asia/Pacific, with approximately $1 billion worth of annual business.

Its client list includes 14 states besides Hawaii, such as California, Colorado, Florida, New Jersey and North Carolina. Ciber's private sector clients range from Bayer and GlaxoSmithKline to Boeing, Chrysler and Ford. Nonprofits that have hired Ciber include the American Red Cross and the AARP.

Here's a partial timeline of the troubled Hawaii Financial Accounting System Transportation (FAST) project, according to the state Department of Transportation:

  • June 2006: State hired BEI as consultants to help develop the request for proposals and other services for the FAST project.
  • Sept. 2008: Ciber awarded $8.1 million contract.
  • Dec. 2009: State DOT said objectives of key “unit test” were not met.
  • April 2010: Integration test failed.
  • June 2010: Go-Live #1 failed. Unable to get federal certification.
  • Nov. 2010 – Feb. 2011: Ciber provided notice of intent to file claim against the DOT, demanding past payments.
  • June 2011: State accelerated schedule of payments to Ciber.
  • Sept. 2012: Supplemental Ciber contract approved for another $2.7 million.
  • June 2013: Federal Highways Administration certification review failed.
  • July 2013: Go-Live #2 aborted because the system was “malfunctioning.”
  • Aug. 2013: Federal Highways Administration certification review failed.
  • September 2013: Project stalled.
  • November 2013: State hired Gartner Consulting to perform “health check” of troubled system.
  • June 2014: DOT hired Gartner Consulting to provide project management services.
  • July 2014: FAST project restarted.
  • Nov. 2014: State rejected supplemental $2.9 Ciber contract.
  • Feb. 2015: Ciber said state “in effect” abandoned the project by not approving the supplemental $2.9 million contract. Ciber filed claim against the state for $17 million in alleged damages and costs.
  • March 2015: Hawaii Attorney General sent Ciber notification terminating Ciber's right to proceed with the contract.

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