OPINION ISSUED JANUARY 28, 2000
COMPUTER ASSOCIATES INTERNATIONAL, INC.
DEPARTMENT OF TAX AND REVENUE
Claimant appeared pro se.
Joy M. Cavallo, Assistant Attorney General, for respondent.
This claim was submitted for decision based upon the
allegations in the Notice of Claim and respondent's Answer.
Claimant seeks $254,000.00 for extra work that it performed
under a contract with the respondent State agency for computer
conversions of certain systems necessary to meet Y2K compliance.
There were projects for these computer conversions being undertaken
by all State agencies at this particular time. Claimant originally
bid on the project for a little less than $1,300,000.00 in March
1998 at which time claimant agreed to reduce the contract bid price
to $795,000.00 based upon the representations of the respondent
that its own employees would be able to accomplish a portion of the
conversion work necessary to bring the computer systems into Y2K
compliance. A subsequent change order brought the total amount of
the contract to $837,000.00. The claimant agreed to this
arrangement and work on the computer system was begun in April
In August 1999, it became apparent to both parties that the
Y2K conversion process would not be timely accomplished unless
claimant provided the expertise necessary to accomplish this feat.
There was a "fixed in stone" deadline of January 1, 2000, facing
the respondent, and it was determined that unless the claimant
provided additional resources to respondent, the conversion would
not be completed by the critical deadline. The parties agreed
that claimant would provide whatever services were needed to meet
the deadline and the charges for the work would be submitted by
claimant after the work was completed.
As explained by respondent's computer consultant, Mark L.
Starcher, President of Scanmark, Ltd., the remediation work was to
be a shared project by claimant and respondent's employees. There
were three systems to be addressed, specifically being the personal
income tax system, accounts receivable system, and the business tax
system. The personal income tax system was completed and put into
production in December 1998. As work progressed on the Y2K
compliance issues, it became apparent that additional work was
necessary which was beyond the scope of the Y2K remediation effort.
This work involved the library of the software itself. There were
obsolete programs in the library and it became apparent to all
concerned that it was necessary to redo completely the software
library to bring it up to date. Claimant provided the expertise and employees to address the problems with the software library so
that respondent now has a production library that works. All of
this work was beyond the scope of the contract entered into by the
As a result of the efforts of the claimant, the Y2K computer
project was completed in a timely manner on November 15, 1999, the
systems were tested, placed into production, and found to be Y2K
After the systems were all in order, the parties began
discussions as to the amount due the claimant for the additional
work that it had performed during this critical period of time. An
analysis of the amount claimed to be due by the claimant was
undertaken and the parties eventually agreed that the amount of
$254,000.00 was fair and reasonable. Respondent's consultant, Mr.
Starcher, took an active role in the evaluation of claimant's
request for additional compensation and he was of the opinion that
the amount agreed upon by the parties was reasonable. However,
claimant could not be paid by respondent under the terms of the
contract and claimant was advised to file this claim.
A hearing was conducted on January 19, 2000, at which time the
facts and information as stated herein above were provided to the
Court. At that hearing, the Commissioner for the Tax Division,
Joseph M. Palmer, informed the Court that he had appeared before an
interim committee of the Legislature in October 1999 to provide an
update on the efforts underway to address Y2K computer issues. He
informed the committee that extra work was being undertaken by
claimant and a claim would be filed for consideration by this
The Court, having considered all of the testimony and amount
of the claim, has determined that the services performed by
claimant were necessary, that respondent received the benefit of
expert computer services provided by the claimant, and that the
amount agreed upon by the parties is fair and reasonable. Further,
the Court is of the opinion that the State of West Virginia would
be unjustly enriched if claimant is not compensated for the
valuable expertise that it provided respondent. The respondent, as
well as our State, was in a crisis at that time because the year
2000 was fast approaching. Respondent would not have been able to
process business tax receipts payable to the State, it would not
have been able to track its accounts receivable or determine
payments made to the State or amounts due for delinquencies. This
would have been a catastrophic event for the fiscal affairs of our
State. Respondent had a duty to meet the 2000 year deadline and it
could not have done so without the efforts put forth by claimant.
Therefore, the Court is of the opinion that an award should be made
to the claimant in the amount of $254,000.00 for consideration by
the Legislature during its session in 2000.
Accordingly, the Court makes an award to claimant in the
amount of $254,000.00.
Award of $254,000.00.