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Legal Battle Over State-Owned Coding Erupts in Michigan

Michigan is pursuing legal action against HP for failure to turn over the source code to the state's online vehicle registration, while the company claims that the city's employees are not sufficiently trained to use it themselves.

by Paul Egan, Detroit Free Press / November 2, 2015
Diego Rivera's "Detroit Industry" mural at the Detroit Institute of Arts. flickr/ashleystreet

(TNS) -- A devastating crash of the Express SOS vehicle registration system, the political reputation of Secretary of State Ruth Johnson, and even the ability to implement proposed hikes in vehicle registration fees as part of a deal to increase road funding all are at risk unless a judge orders a computer vendor to immediately turn over state-owned intellectual property, state attorneys are arguing in advance of a Monday hearing.

The battle is over coding that is needed to make security and other upgrades to the Express SOS system, and that a new contractor would need to access in order to take over from HP Enterprise Service LLC, which built the system but has been fired by the state.

HP says it wants to hold onto the "source code" for the Express SOS system for now because state officials don't know what to do with it and a system malfunction is more likely with the code in the state's hands.

"It is like turning the keys over to the young driver before he begins his driver's education courses," HP attorney Robert DeJong told Kent County Circuit Judge Christopher Yates at an Oct. 16 hearing in Grand Rapids.

"And Dad says, 'you know, sometimes adolescents need to be protected from themselves.'"

The state rejects HP's "offensively patronizing argument" and says in an Oct. 23 court filing that the company's desire to hold onto the source code for several more weeks represents "thinly veiled coercion (if not corporate extortion)" as HP is "squeezing more money from Michigan taxpayers, while it wrongfully withholds the state's rightful property."

The Free Press first reported on the legal dispute between the Secretary of State's Office and HP on Oct. 16. Now, the war of words continues, despite recent progress in resolving certain issues.

HP, which took its workers off the job on Aug. 31 after the state gave notice it planned to terminate the contract over alleged poor performance, has in the last two weeks reached a "termination plan" with the state and sent a team back on the job to help with the transition to a replacement vendor — both items that are required under the contract in the event of a termination.

But the fight continues over the source code.

HP says it plans to turn it over to the state once Secretary of State officials are trained in how to use it.

The Secretary of State's Office says the code is state property and should be turned over immediately. And officials say the risk of a system crash continues, even with HP back on the job in a transition role.

Jay Madrid, a Texas attorney assisting the Attorney General's Office in the case, told Yates that Michigan has to date paid HP $33 million under the contract and "received a pittance" in return.

"Having a vendor on-site that has a long history of negligent performance does nothing to assure that state that its Express SOS web application is ultimately safe or even stable," Assistant Attorney General Christina Grossi said in a court filing. A third-party vendor has recently identified more security risks to the system that must be addressed, ones HP was not even aware of, the filing said.

HP has said in court filings that the state does not have justification to terminate it "for cause," and that the state was responsible for many of the project delays and other problems.

Grossi also said in a court filing that the state's inability to control the source code puts the reputation and goodwill of Johnson, the elected head of the agency, at risk.

She also noted that during recent debate in the Legislature over a planned $1.2-billion road funding fix, a state lawmaker questioned whether the Secretary of State's Office would even be able to implement a proposed 40% vehicle registration fee hike, if approved.

"Without the source code, this fear, and the diminution of the Department of State's reputation, is a reality," Grossi said in the filing.

Lawyers for HP say to justify a judge ordering it to immediately turn over the source code, rather than according to a timetable the company is willing to negotiate, the state must show it faces irreparable harm, and it hasn't done so.

"This lawsuit is beginning to resemble a game of whack-a-mole," DeJong said in a Friday court filing. "The state's legal theories constantly change as it tries in vain to find some basis to justify its demand for immediate relief."

©2015 the Detroit Free Press Distributed by Tribune Content Agency, LLC.

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