Sacramento city schools paid $5.2 million to tech firms. Now it wants its money back

Sacramento City Unified has sued two Delaware-based technology companies it says didn’t deliver on a $5.2 million cloud computing system.

Instead, the district alleges the companies used contracts with the school district to enrich and market themselves to other districts as experts in K-12 education technology.

The complaint, filed Tuesday in Sacramento Superior Court, alleges that Sierra-Cedar Inc. committed fraud and that both Workday Inc. and Sierra-Cedar violated the business and professions code, misrepresented themselves and breached contracts they had with the district, among other things.

The district is asking for unspecified damages, restitution, revocation of the contracts, attorneys fees and interest.

“We paid $5.2 million for a new modernized system that was supposed to increase efficiency and cost savings in the management of our payroll, finances and human resources, so that the district could better serve the needs of our students and families,” according to a statement from Sacramento City Unified. “However, for approximately two years the project flailed, then ultimately failed. While Workday and Sierra-Cedar got paid, in the end, they put the district right back where it started with nothing to show after over two years. “

Workday responded via email Thursday: ”We’re disappointed that this matter has become litigation but are fully confident in our factual and legal position.”

An official at Sierra-Cedar Inc. told The Bee that the company would not comment on the lawsuit.

Sacramento City Unified hired Workday in 2014, and the company brought in Sierra-Cedar to roll out the system, the suit says.

The district alleges that Sierra-Cedar Inc. sent a project manager and other key consultants with no K-12 experience or expertise, as the two firms had promised. The company struggled to configure the Workday product for the school district, causing delays and cost overruns, according to the suit.

The company tested a payroll system for the district between January and June 2016, but could never get more than a 70 percent accuracy rate, according to the lawsuit.

The project originally had an Oct. 1, 2015, completion date. That was extended to Jan. 1, 2016, and, when it was clear the product wasn’t working, July 1, according to the suit. The district opted to shelve the project and to terminate the contracts in November 2016.

Sacramento City Unified alleges the companies wrote their contracts to ensure they were paid regardless of the project’s outcome. The companies collected subscription and training fees before the product was completed. The Sierra-Cedar contract called for payments on an hourly basis.

“Among other damages, the district is seeking to recover the hefty fees that it paid to the two companies,” Sacramento City Unified said. “It is wrong for Workday and Sierra-Cedar to take public resources intended for the benefit of our students and then not deliver on their promise. The district owes it to our students, families and taxpayers to fight to reclaim these resources and hold Workday and Sierra Cedar accountable.”