Court ruling permits HDOT to pursue fraud claims against Ciber, Inc. for botching software implementation project and submitting false invoices

Posted on Feb 29, 2016 in Highways News, Main, News

HONOLULU — The Hawaii Department of Transportation (HDOT) announced today that a favorable court decision issued earlier permits HDOT to pursue virtually all of its claims against consulting firm Ciber, Inc. arising out of a failed project to upgrade the computer accounting systems in HDOT’s Highways Division.

In its decision, dated February 15, 2016, the Circuit Court for the First Circuit rejected nearly all of Ciber’s challenges to HDOT’s claims, including its claims against Ciber for fraud, unfair competition and violating the False Claims Act by submitting false invoices to the State.

HDOT’s claims arise out of Ciber’s alleged misconduct on the FAST Project (Financial Accounting System Transportation), during which Ciber collected more than $8 million in fees from the State, but failed to implement a new Oracle computer system to manage the financial operations of the Highways Division. HDOT terminated Ciber in 2015 after Ciber abandoned the project. Ciber’s work on the project was marred by missed deadlines and repeated performance failures, including its delivery of a system that was unable to perform basic functions towards obtaining reimbursements from the Federal Highway Administration.

HDOT’s fraud claims allege, among other things, that Ciber admitted its fraud in internal reports. In those reports, Ciber officials acknowledged that Ciber submitted what it called “erroneous invoices and fictitious change orders” to HDOT, billed HDOT for work that Ciber knew was of no value, and deliberately under-staffed the project to meet Ciber’s own internal profitability benchmarks. HDOT also alleges that Ciber pulled a “bait and switch” by misrepresenting its capabilities to properly design and build the new system.

In its ruling, the Court also granted HDOT’s motion to compel Ciber to turn over internal documents referenced above, including internal emails, that Ciber was seeking to avoid producing.

HDOT is seeking recovery of tens of millions of dollars in damages, including the fees it paid to Ciber. HDOT’s fraud claims expose Ciber to possible punitive damages, and HDOT’s false claims and unfair competition claims expose Ciber to trebled damages. The next court date has yet to be scheduled.

“This ruling marks a big step forward in the State’s case and we will continue to fight on behalf of Hawaii’s residents,” said Ford Fuchigami, HDOT Director. “It also solidifies our commitment to holding contractor’s accountable when they do not deliver what was promised and violate the public’s trust.”