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Documents suggest Turnpike wasted millions on computer system

| Friday, March 28, 2014, 12:01 a.m.

The Pennsylvania Turnpike spent nearly $50 million more than necessary to buy computer software, which doesn't work as it should, according to internal agency documents the Tribune-Review obtained.

Turnpike executives are discussing whether to spend more public dollars to replace the software, purchased as part of a no-bid contract with a company under scrutiny in a corruption case.

“It's an operating system, and if it's not operating (properly), it really sets you back. It is of deep concern to me and the commissioners,” Pennsylvania Turnpike CEO Mark Compton said.

The commission is suing Colorado-based Ciber Inc. to recoup what it spent and other costs, officials said on Thursday.

“We've put them on notice,” said commission spokesman Carl DeFebo, referring to an August 2012 court filing that did not detail allegations.

The problems are outlined in a report to the commission by Texas consultant Phoenix Business Inc..

Ciber spokeswoman Betsy Loeff said she could not comment on the report because she had not seen it. She said the firm wasn't contacted by Phoenix.

“The Ciber contract with the Turnpike Commission was timely and properly performed. The system was accepted and approved by the client,” Loeff said.

Ciber figured prominently in a March 2013 grand jury presentment against eight former commission officials and contractors, including former Ciber Vice President Dennis Miller, 52, of Harrisburg. Miller, who could not be reached, awaits charges of bid-rigging, theft and conspiracy.

With Miller serving as its point man in Pennsylvania, Ciber secured $82 million in contracts with the commission from 2004 to 2008. The grand jury said Miller solicited campaign contributions from the company's subcontractors and gave gifts to commission executives to help land work.

“My client was a vendor trying to navigate the political reality that was the Pennsylvania Turnpike Commission,” said Mark Sheppard, Miller's Philadelphia attorney.

The commission hired Ciber to develop a request for proposals that outlined the agency's needs for a software program to handle finance, payroll, human resources and other functions, then awarded the implementation contract to Ciber in 2005 without taking bids.

“Each and every deliverable under the contract was accepted and approved by the Turnpike before any money was approved to Ciber,” Sheppard said, adding no one was paid until “after someone at the Turnpike signed off on it.”

Sheppard said Miller maintains his innocence and looks forward to clearing his name in court. A trial date is set for August.

“It is highly unusual for a public-sector organization to select the firm that develops an RFP … as the implementation firm for the (software) project since it raises the possibility of an unfair advantage,” Phoenix wrote in an assessment of the software program and the commission's concerns about Ciber.

Phoenix questioned why there wasn't competitive bidding.

The turnpike hired Phoenix in August, about seven months after seeking bids from firms interested in doing the assessment. Fifteen companies submitted bids. Phoenix received $216,000 for the work, completed about two weeks ago, DeFebo said.

“The $58.3 million paid to Ciber for implementing the (System Analysis and Program) software … is extremely high when compared with similar implementations of SAP (software) to support organizations of similar size and complexity,” Phoenix wrote.

“We estimate that an SAP project similar to the Pennsylvania Turnpike Commission's should be implemented with a cost of $10 (million) to $15 million in consulting services.”

Phoenix pointed to problems with the software, noting that a number of systems are out of date and “very few of the original implementation goals were met.”

Barry Kauffman, executive director of the government watchdog group Common Cause Pennsylvania, said, “I don't have a business degree from Wharton, but it's pretty clear to me that if you're going to be a good fiduciary of public funds, you don't allow the firm that did the RFP to bid on the contract. The commission set itself up for failure, and I'm not sure if it was incompetence, corruption or both.”

Tom Fontaine and Bobby Kerlik are staff writers for Trib Total Media. Reach Fontaine at 412-320-7847 or tfontaine @tribweb.com and Kerlik at 412-320-7886 or bkerlik@tribweb.com.

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