RI sues HP over notorious DMV computer project

PROVIDENCE, R.I. (WPRI) – The Raimondo administration filed a lawsuit Tuesday against technology giant Hewlett Packard Enterprise for failing to complete a notorious R.I. Division of Motor Vehicles computer project that’s now dragged on for a decade.

State officials filed the suit in R.I. Superior Court on Tuesday afternoon, alleging that HP Enterprise recently demanded nearly $12 million more from taxpayers to finish the project, despite signing a contract last year promising to complete it by this past Sept. 28, and threatened to walk off the job Tuesday otherwise.

Officials said at the time they signed the 2015 contract that the project’s cost would total $13.5 million, so the additional money HP Enterprise has allegedly requested would nearly double the price tag for the system. The project’s launch was recently delayed yet again, until June 2017.

The state is asking a judge to issue a temporary restraining order and preliminary injunction to force HP Enterprise to continue working on the project until at least Nov. 21, among other requests. The state says it’s paid HP Enterprise $13.3 million so far.

Raimondo’s team came out swinging Tuesday afternoon, declaring in a statement the governor would not be “held hostage.”

“After publicly pledging, time and time again, to do right by Rhode Island, it is incomprehensible that Hewlett Packard Enterprise would now seek to bail on its obligations rather than finish the job they promised to do,” R.I. Department of Revenue Director Robert Hull said in a statement.

The suit notes HP Enterprise CEO Meg Whitman promised then-Gov. Lincoln Chafee in 2013 that the company would devote more resources to the project in order to get it done. Gov. Gina Raimondo said she’s spoken personally with Whitman in an effort to keep things on track, to no avail.

But Tom Brandt, a spokesman for HP Enterprise, argued the state is the party at fault.

“HPE has met all contractual obligations with the state of Rhode Island and has made a substantial effort to reach a fair resolution of the dispute under the Rhode Island Motor Vehicle System (RIMS) contract,” he said in a statement.

“Given the progress that has been made by both parties, it is unfortunate the state has derailed this project by being unwilling to pay for additional work that the state requested and HPE performed,” he continued. “HPE is now forced to pursue legal remedies to recover compensation for its work.”

The state has tapped John Tarantino, one of the most prominent lawyers in Rhode Island, to handle the case. He previously defended the state in the union lawsuit over the 2011 pension overhaul, which ended in a settlement last year.

“While certain aspects of the RIMS System are nearly complete, other aspects are far from completion,” the lawsuit alleges. “A number of critical interfaces that will allow the DMV to communicate with other state and federal agencies and third parties and are required to make the RIMS System fully functioning have not been completed.”

“In addition, the data migration required to move to data from the current legacy system to the RIMS System is not complete or functional,” it continues. “Significant and critical testing necessary to have a fully functional RIMS System is also not complete.” According to the governor’s office, the project is 98% complete.

The lawsuit was filed the same day Raimondo administration officials were bracing for new problems with a much larger IT project, the $364-million Unified Health Infrastructure Project (UHIP) for social services, which has been plagued by glitches since it launched Sept. 13. But Raimondo said she’s not ready to file suit against the vendor on UHIP, Deloitte, because the latter company has been “really responding to our demands.”

Rhode Island isn’t the first state to take legal action against HP for a botched government project. Michigan sued the company last year over a $49-million IT modernization project allegedly gone wrong, and in 2012 Vermont reached an $8-million settlement with the company over that state’s DMV IT project.

The DMV’s current mainframe computer system has been in use since the early 1980s. Former Gov. Don Carcieri’s administration first announced plans to replace it with a new one back in 2006.

The original contract for the DMV projected totaled $8.8 million and was awarded in 2008 to Saber Corp., a technology consultancy. The system was supposed to be done by 2010. But Saber was soon sold to another company, EDS Corp., which itself was then quickly sold to Hewlett-Packard.

While the corporate changes made the project difficult to track, a significant share of the blame for its woes also belonged to the state, which wound up paying $1.3 million to HP after all its work from 2008 to 2010 had to be scrapped. By 2011, with $8.7 million already out the door, the state stopped paying HP. (Complicating matters further, HP split itself into two companies – Hewlett Packard Enterprise and HP Inc. – last year.)

Drivers, meanwhile, have been shouldering the rising cost of the project by paying a $1.50 technology surcharge on DMV transactions. The state borrowed $11 million to fund the new computer system back in 2010.

Multiple governors have bemoaned the DMV project over the last half-dozen years as deadline after deadline has been blown. Carcieri said in 2010 that HP had “really let our people down.” His successor, Chafee, described the project as “a nightmare” in 2013. Current Gov. Gina Raimondo said last month, “We’re learning how hard it is to do IT implementations.”

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes The Saturday Morning Post and hosts Executive Suite. Follow him on Twitter, Facebook and Instagram