Fort Collins company keeps taxpayer money following settlements over failed software deals

Failed computer contract costs taxpayers $350,000

FORT COLLINS, Colo. - Taxpayers from two Front Range communities lost hundreds of thousands of dollars because of a failed computer software deal, CALL7 Investigators found.

Larimer and Boulder County Treasurers hired Fort Collins-based Colorado CustomWare, Inc. (CCI) to produce software to help collect property taxes, but county officials in both communities said the software did not work.

Larimer County Treasurer Myrna Rodenberger decided to issue a contract without bid for nearly $500,000 for the software. The county initially bid the software, but records show the county determined none of the bidders were responsive so Rodenberger gave the bid to CCI.

CCI had previously done business with the county.

Rodenberger repeatedly refused to explain her decisions to CALL7 Investigators. So CALL7 Investigator John Ferrugia caught up with her outside her office.

“Hi I'm John Ferrugia, how are you?  I was wondering if I could talk to you just briefly?” Ferrugia asked. “This is about the contract -- the $500,000 contract. Could you speak to me about it?”

The county paid CCI nearly $500,000 staring in 2008, and after we started asking questions the county and contractor went into mediation. The county reached a settlement where the company would pay back $240,000, according to documents and county officials.

"Hindsight is 20/20,” Larimer County Commission Steve Johnson told Ferrugia. “We were developing a software program that didn't exist."

“And it cost you how much?” Ferrugia asked.

“About $230,000,” said Johnson, who had to approve the settlement along with the other commissioners. "Obviously, we wished the contract had been successful so does the company. Whenever you contract with somebody you wish that to be the case but that wasn't the case here. But there was information learned from it, and there was benefit from it.”

“Was the lesson worth $230,000?” Ferrugia asked.

“Experience is a good teacher, but the tuition is high,” Johnson said. 

The Boulder County Treasurer had a similar problem with CCI software, but in Boulder County the contract was bid. CCI was the winning bidder.

Boulder County officials paid CCI $238,000 before realizing the software wouldn't work, according to a county attorney. The settlement required CCI to pay back $119,000, and the county settled to avoid the expense and risk of litigation, the attorney said.

Both settlements prevent the county and CCI from disparaging each other, but there is no language that would have prevented government and company officials from describing their actions in the situation.

Ferrugia went to CCI to look for company president Lori Burge.

“I wanted to talk to Lori. We're looking at the settlement,” Ferrugia told an employee. “I wanted to talk to her about it. Do you think she's going to be around today?”

The employee told Ferrugia that Burge wasn't there, but he would pass on his message. Burge never called CALL7 Investigators to explain why her company kept thousands of dollars in taxpayer money.

CCI is still a contractor for the Larimer County Assessor, but the Assessor said the software CCI provided for his office works properly.

CALL7 Investigators reached Burge Wednesday morning, and she said her system is working in other counties. She declined to discuss specifics.

When a producer asked why CCI should be allowed to keep hundreds of thousands in taxpayer money, she directed 7News to county officials.

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