HP Sued by Michigan Over Botched $49 Million Technology Job

Hewlett-Packard (HPQ) has been hit with a lawsuit from officials in Michigan over a $49 million project 10 years in the doing that the state claims is some five years late.

The project was intended to replace aging computer systems at Michigan’s Secretary of State offices throughout the state.

“I inherited a stalled project when I came into office in 2011 and, despite our aggressive approach to hold HP accountable and ensure they delivered, they failed,” said Ruth Johnson, Michigan Secretary of State. “We have no choice but to take HP to court to protect Michigan taxpayers.”

Michigan officials said they negotiated with HP for months before issuing a termination for cause letter on Aug. 28. Under terms of the contract, even if terminated, HP must provide support to ensure services to Michigan are not affected.

HP staff has failed to report to work since Aug. 31, Michigan said.

Other states, including California, Minnesota, New Jersey, New Mexico and Vermont, also have reportedly terminated contracts with HP over non-performance.

The IT vendor has been on the job since 2005, officials said, as primary contractor for the Business Application Modernization project, intended to replace the Secretary of State’s mainframe-based computer system used by all 131 offices and many internal work areas. The legacy system is some 50 years old with outdated coding and is costly to maintain and update, Michigan said.

Because the 2010 deadline for HP to deliver the system replacement was not met, the department is saddled with using old technology.

In 2011, Johnson publicly addressed the project’s lack of progress after the state had already paid out $27.5 million to HP for a system that was not operational. Johnson demanded HP reset the terms of the contract to put in place clear timelines for delivery and penalties if HP was unable to deliver and HP agreed, Michigan said.

“Our DTMB (Department of Technology, Management and Budget) partners and I are gravely disappointed that this action to sue is necessary, but HP simply failed the state of Michigan,” Johnson said. “Our focus now will be on looking for options that allow us to continue to provide the best possible service at the lowest possible cost to our customers.”

In an emailed statement to ComputerWorld, HP said, “It’s unfortunate that the state of Michigan chose to terminate the contract, but HP looks forward to a favorable resolution in court.”