California County Sues Deloitte For Fraud In SAP ERP Project


Marin County on Friday filed a lawsuit against Deloitte Consulting alleging fraud related to an SAP ERP software implementation the county said is still not working four years after it initially went live.

In its lawsuit, filed Marin County Superior Court, the county is asking for actual and compensatory damages of at least $30 million, along with unspecified punitive and, or exemplary damages and interest.

Deloitte in turn filed a claim on Friday with the Marin County Board of Supervisors that the County owes it $444,171.50 for work completed, plus an additional late charge of $111,713.80.

According to a 38-page court document filed on Friday, the case stems from a 2004 decision by the County of Marin to replace its aging and fragmented financial management, payroll, and human resources systems an Enterprise Resource Planning, (ERP), system and contacted Deloitte.

The County alleged that Deloitte claimed to have assembled a team with “deep SAP and public sector knowledge,” but instead knew at the time it did not have the skilled resources to do the County’s SAP implementation.

The County in April 2005 hired Deloitte to implement its SAP ERP system. However, the County alleged in the court document, “rather than providing the County with SAP and public sector expertise, Deloitte used the County’s SAP project as a trial-and-error training ground to teach its consultants -- many of them neophytes -- about SAP for Public Sector software, all at the county’s expense.”

The County also alleged that, after two years of working on the SAP ERP implementation, Deloitte collected over $11 million in fees even though it knew that the SAP system would not meet the County’s requirements.

The County also alleged that it has spent over $30 million in connection with the Deloitte’s SAP implementation, continues to incur significant costs related to the project, and is exposed to potential liability from third parties “adversely impacted by the SAP system’s failure to perform.”

The County of Marin was not able to provide further information at the time this story was published.

 

Next: Deloitte Responds To The Lawsuit