(Oregonian (Portland, OR) Via Acquire Media NewsEdge) March 05--Multnomah County is likely out $2 million dollars after a Colorado company failed to uphold its end of a software development contract, despite multiple extensions.
County leaders have refused to comment on the matter but an item on the agenda for Thursday's Board of Commissioners meeting indicates that county attorneys are poised to sue Colorado Customware Inc. for breach of contract and negligence.
Multnomah County Attorney Jenny Madkour's request for permission to sue alleges the company failed to deliver on a deal to create software for the Department of Assessment, Recording and Taxation, "despite seven amendments to the contract's deliverable schedule."
Colorado Customware won the $3.95 million contract against four other firms back in 2009. In May 2013, according to the agenda request, Colorado Customware officials informed the county that they would stop working on the software unless it made another payment. At the time, Multnomah County taxpayers had already paid $2 million.
County officials, worried that the company would never come through with the software, then terminated the contract.
Colorado Customware executives could not be reached for comment.
The company's shortcomings left Multnomah County tax assessors "scrambling to find a solution that will allow us to replace our aging and increasingly outdated software system," according to a July 2013 letter that county assessor Randy Walruff sent to county purchasing manager Brian Smith. Walruff's department would later seek the county board's consent to award Tyler Technologies a contract for software to perform the same functions that Colorado CustomWare's software was meant to perform.
If county commissioners agree to sue Colorado Customware, lawyers will try to recover the county's $2 million and reimbursement for other costs incurred.
But it's unlikely county taxpayers will recover anything.
Colorado Customware went bankrupt last July, and owed more than $10 million to a long list of creditors. The best Multnomah County can likely do is get in line with other government agencies seeking refunds for money they gave the company without receiving anything in return.
Mark Doherty, an assistant county attorney in Boulder County, Colo., said his office settled with Colorado Customware for $119,000 of the $238,000 it had paid for new software in the county treasurer's office. The company paid $75,000 of that settlement before declaring bankruptcy and ceasing payments.
"Ours was supposed to be a two-year scope of work, but then three years went by, and they weren't even close to being done," Doherty said. "So we decided to discuss cutting our losses."
Other governments including Larimer County, Colo., and Salt Lake County, Utah, have tangled with Colorado Customware over similar issues.
Canadian company N. Harris Computer Corp. bought Colorado Customware for $3.25 million last November. Doherty said it's unlikely any money from the sale to Harris would ever reach his county, let alone Multnomah.
"We're probably way at the bottom of the list," Doherty said. "There will be other creditors ahead of us who won't even see their money."
-- Kelly House
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