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Wednesday, July 30, 2014

Open sourcing sole sourced contracts

Note:  See new updates below.

Protest delays FBI's huge sole-source deal with Motorola (this McClatchy article is available here and here.)
FBI contracting officials contend that proprietary features embedded in their emergency communications contract with its existing Motorola network preclude its interaction with non-Motorola products. Citing a 15-year-old estimate that replacing the entire system from another vendor's product would cost $1.2 billion, they said in a formal notice this month that they can save $300 million in equipment by continuing an exclusive relationship with Motorola.

The bureau circulated the proposal two weeks ago, just as three senior House Democrats asked the Department of Homeland Security's internal watchdog to investigate whether Motorola's contracting tactics have led state and local governments to squander millions of taxpayer dollars on its pricey equipment.

On July 15, Reps. Henry Waxman and Anna Eshoo of California, along with Colorado Rep. Diana DeGette, asked Homeland Security Inspector General John Roth to investigate findings in a recent McClatchy series delving into Motorola's dominance.

The series detailed how Motorola, with help from state and local officials, has outmaneuvered competitors in nearly all of the nation's 20 biggest cities, in many cases through noncompetitive contracts, slanted bid specifications and proprietary features in existing systems.

The company has cashed in on a gusher of grants from Washington aimed at avoiding a recurrence of communications breakdowns that cost lives after the terrorist attacks of Sept. 11, 2001, and Hurricane Katrina's battering of the Gulf Coast in 2005.

The quality of Motorola's radio equipment, widely recognized for its durability and reliability, is not in question. Rather, it's the price of its products cities have paid as much as $7,500 for a single handset and the stunted competition that have drawn consternation.

RELM Wireless Corp., a Florida-based radio manufacturer with $30 million in annual revenues, promptly challenged the FBI proposal on grounds that it "unjustly bars competition" for the sale of radios. The firm sells walkie-talkies with the same functions specified by the FBI for about $1,700, compared with Motorola's average price of $4,200, said Ken Klyberg, RELM's vice president for sales. He said in a telephone interview that RELM is preparing to file a formal protest with the Government Accountability Office.

Bureau spokesman Chris Allen said that "the FBI is reviewing the sole-source" proposal to determine whether it's warranted.

The FBI proposal is the latest development showing that Motorola still maintains an advantage with many public safety agencies, despite efforts to standardize manufacturers' equipment designs so that every first responder's radio can interact with all others.

While standardization has invited increasing competition, Motorola has found ways to hold onto its estimated 80 percent share of the U.S. market.

Besides financing a nationwide system upgrade, the FBI's proposal would allot up to about $170 million to agencies within the Homeland Security and Justice departments for purchase of Motorola equipment, as needed, over the next five years.

Other vendors also voiced strong objections to the decision to keep them from bidding on the FBI upgrade, saying that technology exists to connect Motorola's older system with their own equipment if Motorola cooperates.

"This seems like a bunch of baloney," Larry Emmett, director of bids and proposals for Texas-based EF Johnson Technologies, said after reading the FBI's five-page "Justification for Brand Name Only Acquisition."

"Just saying there is no other option and going down the sole-source path is not justifiable," said Karthik Rangarajan, the company's vice president for sales.

Motorola's largest competitor, Florida-based Harris Corp., has "advanced technologies to interconnect legacy, current and next-generation solutions across multiple vendor systems," even those with proprietary software, said company spokeswoman Victoria Dillon.

Steve Koman, who served as an emergency communications consultant for the city of Charlotte, N.C., called the FBI proposal "half-baked" and said it adds to "the risk to the public that they will continue to overpay for public safety radio communications equipment."

In contrast to the FBI, the U.S. Secret Service took a much different approach in administering the procurement of tactical communications upgrades for its agents and more than a dozen other Homeland Security agencies beginning in 2012. It qualified 30 vendors to compete for a series of contracts for up to $3 billion in "mission critical" radio equipment.

While McClatchy's stories focused on Motorola's state and local contracts, the company is also king of the federal walkie-talkie market, where rival vendors accuse the firm of similar marketing tactics even since the new design standards, known as P25, to improve communications between disparate radio equipment took hold around 2005. One of the P25 standards requires each manufacturer to develop electronic gateways that can overcome proprietary features and connect their systems with other P25-compliant systems.

Anytime that FBI agents make "wideband" transmissions that interfere with another agency's "narrowband" communications, the FBI said, the bureau could be directed to end use of that frequency within 180 days. "Therefore, every location where the FBI continues to operate wideband communications is at risk," the procurement team wrote.

The proposed contract, they said, gradually will eliminate wideband transmissions and employ Motorola equipment that can interface with the bureau's current blend of a 1980s-era Motorola SmartNet network with newer, P25 equipment. Switching to a different contractor, they said, would cause "significant disruption" to communications, risk emergency failures and require the bureau's "over-tasked" staff of technicians to maintain two systems until the new one is ready.

But staying with Motorola, they said, would save $300 million in equipment and extend the system's life by 10 to 15 years. They did not explain how they derived their equipment valuation.

Further, the FBI officials said, such a change would mean that the bureau's 420 electronics technicians would each have to undergo 200 hours of training on the new system.

"After 32 years procuring radios from only one primary vendor," they wrote, "changing that business model would create significant funding, logistical and training challenges."

Both Emmett and RELM's Klyberg scoffed at the bureau's estimates of how long it would take to retrain the FBI's technicians on another vendor's system.

Klyberg said "they didn't blink an eye" when they had to train agents on use of Motorola's latest radio models.

On its face, the bureau's justification "sounds reasonable," said Joe Boucher, chief technology officer for Connecticut-based Mutualink, a firm that uses software gateways to interconnect two-way radio networks. "But it's impossible to tell without knowing the supporting details."

Boucher said that Motorola is well known in the industry for making it "prohibitively expensive" for a customer to acquire software that can join its Motorola system with another vendor's. Providing such a hookup "would be inviting competition," he said. Boucher said, one feature in the FBI system may be "difficult to overcome": Motorola's SmartNet software version that enables special agents to periodically change, over the air, the codes for their encryption programs that ensure secure communication.

If Motorola provided such gateways to the FBI's system, "pretty much anybody on the planet can sell them radios for that," said EF Johnson's Emmett.

The bureau seems to be basing its decision on the need to buy Motorola "to keep continuity," according to RELM's Klyberg. "The federal government's not supposed to be allowed to do that," he said. "They're supposed to get best value for the taxpayer dollars."
On Guam, in 2006, the local Department of Homeland Security sought to acquire an emergency telecommunications system by sole source, with the "justification for sole source procurement based on interoperability and standardization of the existing equipment". The Guam Public Auditor years disallowed the sole source procurement in a Decision on a protest of the solicitation, in the Appeal of L. P. Ganacias Enterprises, Inc. dba RadioCom, OPA-PA-06-003.

In 2007, Guam was awarded a Public Safety Interoperable Communications Grant in the amount of $2.6 Million, about 10% of which was allocated for "Emergency Project 25 (P25) Radio Cache to Support Island wide response to Natural or Man-made Disasters".

The last I remember, the controversy over the acquisition of communications equipment was still evolving and winding its way through the courts.

UPDATES: MORE ON THIS STORY...

August 8, 2014
Second contractor protests FBI’s no-bid, $500 million deal with Motorola 
The Harris Corp. has become the second contractor to formally protest the FBI’s plans to award a no-bid contract worth up to $500 million to Motorola Solutions Inc., calling the bureau’s proposal to forgo competitive bidding “factually unsound, legally unwarranted and wholly unnecessary.” The FBI gave other vendors only a couple of weeks’ notice late last month that it planned to hand the contract to Illinois-based Motorola Solutions.

“Harris’ infrastructure and portable radio equipment can work with legacy Motorola equipment until such legacy equipment is replaced,” they wrote. Indeed, the FBI already owns two Harris “cores,” or controllers, that have connected with Motorola equipment for years, they said.

It was Harris, Motorola’s biggest rival in the domestic market, that installed infrastructure under a contract to upgrade two-way radios for multiple departments in the nation’s capital in 2007. Hence, Harris lawyers wrote, if the FBI seeks to justify a “follow-on” contract, it selected the wrong company.

On its face, Harris said, the FBI proposal also must be scrapped because it seeks to allow 11 other agencies within the Justice and Homeland Security departments to buy up to about $170 million in Motorola equipment off of the contract over the next five years. Harris said that proposal “renders improper any sole-source award to Motorola,” because those agencies are already using Harris equipment.

Harris’ protest also took issue with the FBI’s assertions that two of its procurement officials spoke with other vendors at a trade show and concluded that none could overcome the proprietary barriers of Motorola’s legacy equipment, noting there was no visit to Harris’ booth.
This last issue, about speaking to vendors other than the bidder about the bidder's compliance, resonated with me when I read it.

A few years back, the company employing me bid on a contract to provide copier machines. It was low bidder, so the higher bid competitor, who had been sole sourcing the machines for years (illegally), sent a "confidential" letter to the head of the department, with whom there was an established business relationship by this time.  The competitor should have formally protested the matter to have it contested, but it chose to poison the well, a fact that was not discovered until much later.

The letter said the machines were nonresponsive because they did not natively provide certain tracking information specified, quoting an employee of the competitor saying he was familiar with the machines and had discussed the tracking issue with a person with experience with our company's machines. This letter had the desired effect, and the award was never made.  

It should be noted that the IFB did not require that any documentation be provided with the bid to evidence responsiveness; it relied on the bidder's responsibility to provide a machine that met the specifications.  In fact, the purchasing agency never raised the question.

The company protested the failure to award and, despite never raising the issue of the alleged non-compliance, the matter proceeded to appeals. I raised the nonresponsible impropriety of the subversive communications and failure to raise the issue by protest, but found no fertile field on appeal for the argument. 

Nevertheless, the company won the appeal but with the proviso that the government specifically decide that the bid of the machines was responsive. It was obvious, then, that the tainted message had infected the appeal, too. 

So the company judicially appealed that part of the decision since the responsiveness of the bid was never asserted by the purchasing agency as an issue; it was pursued only by the competing bidder.  The inference was that the bid was responsive and the only grounds to not award the contract were internal administrative issues, such as lack of funding.

The aggravating thing was, and remains, that had the government actually asked the question whether the machine was noncompliant as "confidentially" alleged by the competitor, and sought assurance of compliance, the company could have and would have answered that, though the machine itself was noncompliant, the company intended to provide common third party software with the machine, which performed the same function as the competitor's imbedded software, and made the bid compliant even if the machine, standing alone, may not have been.


September 4, 2014
FBI Scraps $500 Million Potential Deal With Motorola Solutions Following Protests
The FBI has canceled plans to award a potential $500 million, five-year sole-source contract to Motorola Solutions, following protests from competitors RELM Wireless Corporation, Harris Corporation and E.F. Johnson Technologies. It is unclear how the FBI intends to go ahead with the infrastructure equipment and mobile radios contract now, with the agency saying that it will “reassess its requirements, as well as the acquisition strategy for meeting them.”

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