We don’t expect the government to be perfect or even terribly efficient, at least by private sector standards, but it should at least perform due diligence when spending taxpayer dollars.
However, a just-released report by the West Virginia Legislative Auditor finds that the state’s Office of Technology (OT) and the Broadband Technology Opportunity Program (BTOP) failed miserably on a multi-million dollar purchase of Internet routers for public schools, libraries and state police barracks.
First, the background:
In 2010, the state paid $24 million in federal stimulus money to Cisco for 1,164 Internet routers. A router is a piece of equipment that connects computer networks.
Charleston Gazette reporter Eric Eyre began investigating the purchases, revealing that the state significantly overspent for routers that provided much more capacity than most of the locations required, now or in the future.
That triggered an investigation by the Legislative Auditor. Its report details just how poorly the deal was executed and how much money was wasted.
The audit found:
–The majority of the routers were way over the needed capacity and thus unnecessary.
–The state could have saved at least $8 million by following Cisco’s own literature recommendations and bought lower capacity routers that would have easily met the Internet requirements.
–The routers don’t work with the state police voice over Internet (VoIP) phone system, so they have been installed in only two locations. The state will have to spend another $85,000 to buy additional equipment to make them work.
–Some state agencies did not do a proper survey before the purchases to find out the kind of routers needed.
–The State Purchasing Division allowed the Office of Technology to bypass state law in purchasing the routers from Cisco without going through the bid process. Competitive bidding could have saved the state millions.
How did this happen?
Clearly, several state agencies involved in the router deal dropped the ball. However, the audit also points a finger at Cisco, suggesting that the company showed a “wanton indifference to the interests of the public.”
“The Legislative Auditor believes that Cisco sales representatives and engineers had a moral responsibility to propose a plan which reasonably complied with Cisco’s own engineering standards,” the report says.
Perhaps, but up-selling is nothing new, and with billions in federal stimulus money being pushed through, it’s doubtful West Virginia is the only place where taxpayer dollars have been wasted.
However, as the audit reveals, in this case our state government was either negligent or a willing participant in this fiscal fiasco.
26
Comments
epconcerned
Hop,
What do you expect when the government is handed a big check! Perhaps they could use the money from the drone that is at WVU in Morgantown or the one in the Parkersburg area to pay for the other $85,000. Interesting that we have two in WV! Another gross mismanagement of resources!
February 10, 2013 at 6:24 pm | Report comment
the truth
This does not hold a candle to the fifty million they are wasting in stimulus money buying West Virginia Works welfare clients new furniture.
February 10, 2013 at 7:26 pm | Report comment
CaptainQ
More government waste. Sorry Hoppy, I am neither surprised or amused by things like this anymore. It's all just normal, same old same old. Excuse me while I yawn.
February 10, 2013 at 8:19 pm | Report comment
WVITNeeds
What I can't not understand is how the state’s Office of Technology (OT) and the Broadband Technology Opportunity Program (BTOP) did not have particularly clear IT requirements and know what systems are currently in place within this state. These are the same issues that cause WV from obtaining technological advancements in attracting decent jobs to the State.
February 10, 2013 at 9:22 pm | Report comment
Medman
Tomblin's office defending this is beyond belief. The State Legislature should have hearings on this and demand the incompetent dunces responsible for the misuse of the citizen's taxes be fired.
February 11, 2013 at 6:38 am | Report comment
Wowbagger
In a state with a viable two party system this would be investigated, but I'm sure the decision has been made at WW Democratic party headquarters to try to make this issue go away.
Now will those who claim that many conservative West Virginia Democrats are really just Republicans in disguise please comment.
Oh, the buck stops with then Governor Joe Manchin and one of his his pet secretaries now his West Virginia state Director Kelly Goes! Both should be investigated, but I doubt this will ever happen.
February 11, 2013 at 7:19 am | Report comment
Mountain Coot
Buying oversize routers today for planned increased service needs in the future makes sense. What doesn't make sense is not having a reasonable grasp on what that future might be or even what routers and other equipment or support (data lines, electricity, secure location) was available before placing the router order.
In any case, the approach WV took did not comply with the Federal intent - to bring Internet access to people who didn't have it.
What WV tried to do was increase access capacity in areas that already had it in hopes the private sector would springboard off the routers, etc. to build out "the last mile" to residences.
This is the third time this approach has been tried over the last 15 years or so. It didn't work because the return on investment for the last mile is not great enough to attract the private sector.
So far, it appears this method won't work this time either. WV rural folks will remain in a two tin cans and a string world.
February 11, 2013 at 7:49 am | Report comment
Sampeer
Dr. James M. Buchanan, Professor Emeritus at George Mason University, sums the whole matter up. Dr. Buchanan was a leading proponent of public choice theory. This theory states politicians and government officials, like everyone elese are motived by self interest. this means that public officials and politicans are motivated by retain office and gaining power and seldom act in the interest of the public. (I paraphrased this description from the New York Times)
Dr. Buchanan is dead on and the router issue is one more example of what he speaks. While I haven't followed the story of the routers and I don't know any of the people involved, I am willing to gaurentee you, that discision process went as follows.
1. The politicans saw they had a sizable chunk of money to the spend, and tasked the Office of Technology to spend it.
2. The Government Officials in the Office of Technology saw the large sum of money and knew that if they left any unspent, some politician may want funds for a pet project later and reduce Technology's budget.
3. The specs were written in a manner to obtain the most expensive item they could find.
At no time was any regard given to where the money came from, the taxpayers, or any consequences of what the spending would so.
What this story really illustrates is people are so foolish to depend on government to do anything properly or with the taxpayer in mind.
February 11, 2013 at 8:13 am | Report comment
gold&blue
Is a car salesman morally obligated to keep you from buying features you don't need? How is this any different? The buyer needs to be aware of what they are buying.
February 11, 2013 at 8:38 am | Report comment
wirerowe
Hoppy The audit's estimate of $7 million overspending is way low. I would think it would be closer to $20 million. With all of the federal audit and state audit there has been no identification of who was responsible for the decisions to buy these routers and to determine what was the relationship between these individuals and Cisco. Am I missing something? Are we trying to make sure no one's feelings get hurt?
February 11, 2013 at 8:45 am | Report comment
DWM
Now, multiply this $24,000,000 mistake by thousands, that is what we will get with Obamacare. Government employees, spending millions of someone else's dollars with no oversight or accountability and no motivation to do so in an efficient manner.
February 11, 2013 at 9:23 am | Report comment
JMR
Complaining about these routers is a stale, old, old, OLD talking point of the WV GOP. Those who can do, do. Those who are politically irrelevant, complain. Such whiners.
February 11, 2013 at 9:53 am | Report comment
NorthernWVman
so nearly $8million is a stale talking point? I guess it is only a talking point if it was wasted by the GOP.
February 11, 2013 at 11:18 am | Report comment
Hop'sHip
I think I understand why my earlier posting might have been removed, because it might have not been considered to be appropriately respectful of the commentator. But why was Keith's utterly sensible and informative posting removed? What censorship criteria is being applied here.
February 11, 2013 at 10:11 am | Report comment
NorthernWVman
umm I think you are on the wrong article. Check out "Audit finds State blew Stimulas"
February 11, 2013 at 11:16 am | Report comment
Hop'sHip
Oops! My bad. Thanks for exposing my paranoia. By the way, that article by Hoppy includes a link to the actual report which I would refer to everybody.
February 11, 2013 at 11:32 am | Report comment
mntnman
So lets see. We blame the government for not doing its due diligence, but the experts (the company hired to provide the routers) is just "up selling" and that's OK? I don't understand the bashing of government while letting the private company off the hook.
You put out a bid. Ask for a product. The company knows what you want. They are the experts. They provide you more than you need. They make a larger profit. But that's OK -- its all the governments fault.
Once again we see that anything private companies do is OK, but government can't make any mistakes. CISCO is as much to blame, as much at fault and should be held to task just like the government. Both failed to do the right thing with taxpayers dollars. Greed and incompetence.
Apparently, as long as taxpayers are fleeced by private industry its OK...but government has to be perfect.
Stop the train, I want to get off.
February 11, 2013 at 12:40 pm | Report comment
NorthernWVman
well they did not put out a bid as I understood the article and that is part of the issue. I do agree both are to blame to a point BUT when a consumer asks for something the seller will oblige. If you went to the grocery store and decided to buy a 25lb bag of sugar and only needed 2 cups where would the fault lay?
February 11, 2013 at 1:11 pm | Report comment
mntnman
Not apples and apples. Routers are technical by nature. A better example would be more like my 78 year old mother-in-law going to Staples in need of a computer. The salesperson then sells her a $1500 computer telling her how much she needed it when a $400 notebook would do, since all she wants is to surf the web and send emails. The salesperson would be to blame. My mother-in-law would be to blame for not researching more, but then she went to an expert to help her decide. The expert scammed her to make a buck.
Trust matters. So does morality. CISCO did have a moral responsibility to sell the state what it needed, not what was most profitable. My complaint is all too often we excuse the lack of morality in the private industry, saying essentially let the buyer beware. But government must be perfect. Can't have it both ways in my mind.
As for the bidding, I missed that. Of course a project that big should have been bid. On the other hand, sometimes the low bidder stinks. Seen that too many times.
I stand by my thought -- business, particularly technical experts at what they do, have an obligation to provide the best advice and do what is best for the customer. But in the name of almighty profit, we let them off the hook.
February 11, 2013 at 3:17 pm | Report comment
Shadow
Any bid should have a set of Requirements that are specific to the needs of the user, in this case, the WV Government. If the Government is inept, as it was in this case, and doesn't know what it wants, it isn't the suppliers fault. They can fulfill a lot of different needs. You can't fix stupid.
February 11, 2013 at 3:22 pm | Report comment
mntnman
In private industry, when I want a product, but am not an expert, I contact an expert and tell them what I need the product to do. I then ask them to tell me what I need. I will communicate with multiple vendors, ask questions and do my own research. Nonetheless, I am at the mercy of the experts in highly technical matters.
The same applies in my position as board member. Here's what can go wrong. We needed bus routing software. We put out an RFP. (Request for Proposal.) We reviewed three companies product. Interviewed them. Looked at the product. Asked them about what we needed to do.
We then selected a product. It didn't work. Why? Well, they didn't tell us that all the 911 county re-addressing had to be completed, then the US Postal Service had to fix the addresses. Only then can we use the product. (We are waiting on the US Postal Service.) No one offered this information. We did not know to ask. We were told we simply put the GPS units on the bus and drive the bus routes. Then, the addresses could be put in the computer; then the computer would provide the most efficient bus routing. So, critical information was left out -- information we didn't know to ask because we aren't experts at routing software. We got hosed. Customer service matters. (Guess who is the lead company to get the State Bus routing software contract. Yep -- same company.)
So, your assumption that government knows what it needs in the first instance is probably not accurate. Government knows what they want to do with a product; they do not necessarily know what product will do it the best. The expert supplier having been told what they need and then not telling government that there is a better option is the suppliers fault. Particularly when the supplier based their recommendation on profit, not what was best for the customer. Simply an issue of customer service, if you ask me.
Burnt once, not again.
February 11, 2013 at 4:29 pm | Report comment
Shadow
It is obvious that you were not qualified to authorize the purchase, nor were the people that helped you from your government.
February 11, 2013 at 5:12 pm | Report comment
Just the facts
Cisco is laughing all the way to the bank at us.
February 11, 2013 at 8:26 pm | Report comment