State pays $2.6 million to settle dispute over community college computer system

OLYMPIA – Washington paid a bankrupt technology company $2.6 million to settle a dispute arising from the ongoing problems of installing a new computer system at community colleges in Spokane and Tacoma.

Originally estimated to cost $100 million, the system is several years behind schedule and at least $10 million over budget. It has been the source of ongoing problems for administrators, staff and students at the Spokane and Tacoma campuses, which served as a test sites for software and equipment the state plans to install in all its community colleges. Expansion of the system, called ctcLink, has been halted until problems in Spokane and Tacoma are worked out.

Ciber Inc., a Colorado-based information technology company, signed the contract in 2013 to install ctcLink and train community college staff. Initially scheduled to be operating on all 34 of the state’s community and technical colleges by June 2017, that schedule was set back several times and is now uncertain. The project fell further behind schedule after hitting major snags when installed in Spokane and Tacoma. Students were unable to register for classes or were bounced out of classes in which they’d been accepted. Some students did not receive financial aid, while some employees didn’t receive paychecks.

The State Board of Community and Technical Colleges last year withheld some payments, arguing work in the contract was either not done or not up to standard. Ciber filed for bankruptcy in April and a few days later sued the state, saying the board hadn’t paid for some $13 million in work the company had done.

In June, the state denied Ciber’s claims of breach of contract and allegations that the board was responsible for all delays. It argued the state didn’t owe Ciber anything; rather, it was the company that had failed to complete most of the tasks in its contract. Ciber should be paying the state, not the other way around, Senior Assistant Attorney General David Stolier said in a counterclaim.

A month later, the state and Ciber reached a settlement. The state paid the company $2.6 million, not the $13 million it requested. The community colleges will keep the software and equipment that has been installed so far and have the right to hire some former Ciber employees who were involved in setting up the system.

Neither side admits liability as part of the settlement, and each releases the other from any claims.

The cost of the project – which comes out of the community college system’s innovation fund, not the state’s general fund – is not expected to grow because of the $2.6 million settlement, said Laura McDowell, director of communications for the State Board of Community and Technical Colleges.

“The settlement was about work that was already factored into our budget,” McDowell said. “However, our costs will likely go up because of the time and resources involved in the important remediation work underway with our pilot colleges.”

Those costs, too, would come from the innovation fund, which gets its money from a 3 percent share of tuition operating fees that all state community college students pay.

The board has hired a new project manager to oversee the project, she said.

But ctcLink is not yet ready to be installed at the state’s other community colleges. Although most problems with student registration and employee paychecks have been fixed, the Spokane colleges are still working on problems with accounting functions for the system’s main books, known as the general ledger.

Community Colleges of Spokane Chancellor Christine Johnson recently said those problems should be fixed by the end of November, allowing the colleges to close out its books for the 2015-16 school year – about a year and a half late. It should be able to close out the 2016-17 accounts by March, which would be on time. Software in ctcLink is due for a major upgrade in December.

“We have made real progress,” Johnson said. “We’re not done yet.”

In its lawsuit against the state, Ciber claimed staff at the community colleges was “hostile” to the new system and worked against ctcLink by not participating in necessary training.

“We absolutely refute that,” Johnson said. The Spokane colleges spent some $1.2 million in planning, training and overtime before the launch of the new system and another $500,000 after that initial phase on additional training and overtime.

The colleges have asked the state board to reimburse some of those unexpected costs and hope it will agree, she added.

“No one thought it would be quite as (troublesome) an implementation,” Johnson said.