West Virgnia Auditor Finds Cisco Router Purchase Not Performed Legally 280
coondoggie writes "West Virginia wasted millions in federal grant money when it purchased 1,164 Cisco routers for $24 million in 2010, a state audit concluded. A report issued this month by the West Virginia Legislative Auditor found the state used a 'legally unauthorized purchasing process' when awarding the router contract, paid for with federal stimulus funds, to Cisco. The auditor also found Cisco 'showed a wanton indifference to the interests of the public' in recommending the investment in its model 3945 branch routers, the majority of which were 'oversized' for the requirements of the state agencies using them, the report (PDF) stated."
Re:COUNTDOWN TO ZERO !! (Score:4, Insightful)
And even if something did, it's just part of the cost of doing business for both companies attached to the tit of government and those officials getting off on shoveling out other peoples' money.
Re:Cisco Sucks BUT... (Score:5, Insightful)
There's a whole lot of room to go down in specs before you could even consider talking about "insifficiently specced gear".
It's kind of like using that argument when someone needed a shovel and got sold a truck with a plough.
Re:Newspeak (Score:5, Insightful)
In a decent world, this would get the company blacklisted for all government-funded future purchases for a certain time. Which would make company care a LOT about not fleecing the public.
Re:Cisco Sucks BUT... (Score:5, Insightful)
Apparently you are totally unaware of the state of bridges in this country if you think our infrastructure is fine.
We've got lots of infrastructure that is falling apart. West Virginia just happens to have IT clueless folks running the place spending money where they shouldn't, and the biggest networking IT specialist around recommended something insane.
Re:It's honestly slightly astonishing... (Score:5, Insightful)
It's the same worldwide, when I worked in public sector in the UK some years back it was absolutely no different.
The companies know it too, which is why public sector contracts are seen as so lucrative most the time. This is also why I made the move to private sector, sure I miss my 38 days leave a year + 15 more through accrued flexi time and my final salary pension scheme, but ultimately I'm not working with the kind of idiots who are responsible for this sort of thing, and that's worth more than any amount of leave or pension (and besides, private sector career progression is more about talent, than how old you are, so it's been a good move career wise too anyway).
This isn't to say I'm some kind of right wing capitalist that Republican's love, on the contrary, I'm quite socialist in my views, but at the end of the day you can still give too much money to a particular public sector department, and this is exactly what happens when you do, and it's the same wherever you are in the world.
Re:Cisco Sucks BUT... (Score:5, Insightful)
Most equipment has a finite life. Yes we have all see that 15y/o Cisco box in the back room everyone is afraid that if the UPS allowed to power down the fans in the Cisco or its power-supplies would never spin back up. Mostly competent business or state agencies depreciate stuff faster than that and replace it.
You should be able to reasonably estimate the needs of a facility like a library 3-5 years out. Then you build yourself a little head room. Take your most critical estimated capacity requirement multiply by 1.4 and size accordingly. Even that can lead to some over kill; like putting a 2811 where an 1841 might do, but its usually enough prevent any nasty surprises that require replacing equipment before the end of its service life. On balance it works out okay cost wise and may leave you with some residual value in the equipment that you can then resell. No reasonable person would have faulted Cisco for doing what I just described but some of the reports on this clearly show them over specifying by 5 or 10 times and more.
Re:It's honestly slightly astonishing... (Score:5, Insightful)
When I worked public sector, the first priorities weren't getting the best price or best value. They were, in order:
1) Buy it from a registered state contractor (most of which had ridiculously jacked-up prices)
[or, if a state contractor didn't have it]:
2) Find a state contractor and get a "quote" on it (translation: Have a registered state contractor buy it for you and then attach a hefty fee on top of what they paid, rather than buy it directly and save money)
Re:COUNTDOWN TO ZERO !! (Score:5, Insightful)
Three things will happen:
1. Someone will step forward to say that he predicted this would happen, but nobody would listen to him.
2. Some low-level functionary will have his life ruined.
3. Some high-level functionary will get a lobbying job or be appointed to a government regulation agency.
Re:Being a crook is not illegal (Score:4, Insightful)
It looks like the state wrote a RFP the specified cisco kit and specific cisco kit at that. It looks like they wanted a single box for routing, switching, wireless, secure voip with PSTN fallback, waas, and POE. Cisco charges a HUGE premium to put all that into a single box. The VOIP and WAAS are baby servers each and add the switch in you have filled the add in slots. Anyways this is not something to blame on cisco the IT guys picked a winner by what they specked and how they specked it. Having worked with government IT before it's easy to get stuck doing something stupid, case in point agency was looking to upgrade there 80's 56k frame relay bridged network. I came in as a sub, they had specified a cisco 7500 as the core for a upgrade to DS3's and that it be bridged. Well noting that they were an all IPX shop I recommended routing it took longer to get that change put into the contract and I had auditors questioning if I was trying to give them something lesser. They extended the project and had be connect up the locations via preexisting fiber they are paying 130k a month for DS3's to facilities they have dark fiber to. I had to fight to let the dark fiber be the primary routed path as they did not want to loose face with there 7500 DS3 5 year contract boondoggle, in the end they went from 56k frame to gige fiber with a 45mbs DS3 backup network. At the end of the day if you let the gov IT guys spec more than what they want to do they can easily start picking winners as far as manufacturers, in the case of that 7500 I'm very sure he wanted it as a resume point that he worked with them.
Re:Newspeak (Score:5, Insightful)
"Not Performed Legally"? "'legally unauthorized purchasing process"?
So, the opposite of legal... would be illegal.
Also: "Cisco showed a wanton indifference to the interests of the public"
Really, a profit driven company tried to fleece the public? I'm shocked, shocked like a man making toast in the bath!
Cisco did not fleece the public they put in their proposal and the government accepted it, this has all the markings of money burning a hole in the auditors pocket. The auditor had $24 million to spend so they spent it, they don't care if they had a cheaper option, they wanted the best they could get for the money they had, even if they didn't need it. Unfortunately the way government spending works is you are expected to spend every dime they give you. If you don't spend it all then you are punished by getting less or none next time around.
Re:Nice spin there... (Score:5, Insightful)
performed their legal duty to maximize shareholder value
I'm getting tired of people translating this meme into reasons why a sales rep performed jackassery like the sale in question. Yes, the company owes its shareholders a true and ongoing effort to make their shares valuable. Part of that effort includes making the company valuable by maintaining its market-worthiness through the stewardship of its reputation with its customers. When a sales rep oversells like this, and it comes out in the press, it erodes the value of the company, and is counter to the make-shareholders-happy mandate.
The "corporate America is inherently bad because publicly traded companies must do wrong-headed things because they're required to" attack on businesses is just wrong. Thousands of businesses, every day, increase their near and long term value by being valuable to their customers. Nobody likes to talk about that in ranty internet forums because it takes all the fun out of shouting about The Man etc.
What Cisco did in this case was demonstrably not in the shareholders' interests.
I hate corporate America as much as the next guy
What you hate are the people and incidents that make you hate those people and incidents. In the meantime, millions of people at work in thousands of companies do sensible things every day, and have loyal customers as a result. But that never makes the news because it doesn't provide something to bitch about, and where would Slashdot be without that?
Re:It's honestly slightly astonishing... (Score:4, Insightful)
"I don't see it as particularly a public/private difference, but a difference of well-run and poorly-run organizations. That might correlate, but I've seen plenty of examples on the opposite sides as well."
Yes, this is absolutely true. The problem (at least here in the UK) is that public sector is almost universally bad because there is absolutely no accountability. In private sector, if you do a bad job, you eventually go bankrupt and lose your job, in public sector that never happens.
I'd be interested to know why public sector projects do work better in Scandinavia, is it because there is more accountability, or is it simply because they're not given so much money to work with? On a project that can be achieved with £1million for example, what should happen is:
Person 1) Here's £1million to go do x
Person 2) I can't do x with only £1million
Person 1) Okay, you're fired, we'll get someone who can
What actually happens is:
Person 1) Here's £1million to go do x
Person 2) I can't do x with only £1million
Person 1) Okay, here's £2million more
Or just outright:
Person 1) Here's £3million to go do x
Person 2) Okay
I do completely agree the problem isn't specific to public sector just because public sector is public sector, but because of the nature of public sector generally in that it tends not to be held to account or given enough incentive to do a good job (and by incentive, I mean, you get to keep your job if you don't do a shit job). Natural selection is inherent in private sector - those businesses or employees that do shit, go bankrupt or get fired, but it's not inherent in public sector due to the fact central government will just bail them out, and up taxes to cover the cost if need be. There it needs to be created artificially, and I don't think many governments do that.
This is also why the bank bailout may not have been particularly smart, but interestingly as a result of the bank bailout governments have created a lot more legislation to govern how they operate and what they can get away with precisely to create at least some of the necessary accountability artificially. Yet they wont do that with public sector even though it suffers the exact same problems - institutional incompetence fed by lack of accountability.
Re:COUNTDOWN TO ZERO !! (Score:3, Insightful)
Don't forget that the person who actually did predict that this would happen or even protested at the time is now effectively demoted or had to find another job, for being a "poor communicator" or "not a team player."
Re:It's honestly slightly astonishing... (Score:5, Insightful)
You missed the looping which is important, what happens is:
Person 1) Here's $3 million to go do X
Person 2) OK, I shall do it
[ time passes ]
Person 2) Ive finished, and I only spent $1 million, so here's $2 million back.
[ time passes]
Person 1) Here's $1 million to do do Y
Or:
Person 1) Here's $3 million to go do X
Person 2) OK, I shall do it
[ time passes ]
Person 2) We've run out of money but we are almost done.
Person 3) OK, here's another $1 million.
[ time passes]
Person 2) Ive finished.
[ time passes]
Person 1) Here's $4 million to do do Y
If you've worked in anywhere that sells to large businesses/government you will have seen the end of budget rush as departments rush orders to get billed before the end of the budget year so they can spend their allocated budget before they have to give anything left back and get less next round. It's always our busiest time of year.
Re:It's honestly slightly astonishing... (Score:5, Insightful)
I don't see it as particularly a public/private difference, but a difference of well-run and poorly-run organizations.
Assuming that the private sector is always efficient is wrong, because anyone who's worked in large private sector companies knows full well that it's not. For example, most of the "management consulting" industry shouldn't really exist, because it's entire reason for existing is so that some manager Smith can hire an outside firm to tell their boss that Smith's plan is better than Jones' plan and thus secure Smith that promotion. One of the things that's becoming clear in corporate governance is that an employee of a corporation faced with making a decision that benefits themselves versus a decision that benefits the organization will pick themselves almost every time.
Assuming that the public sector is always inefficient is also wrong. There are public agencies that are ridiculously efficient at what they do. For example, the administrative overhead of Social Security is approximately 0.9%. The VA gets more bang for the health care buck than Medicaid, Medicare, and private medical insurance. The CFPB [consumerfinance.gov] is doing a pretty good job on a shoestring budget. The National Park Service costs about $3 billion a year, which sounds like a lot but is actually about $10 per American, and in return it serves 280 million visitors a year, which certainly seems like a pretty good value.
More to the point, assuming the public sector inherently sucks means we stop rewarding those public servants that do a really good job, which will reduce their motivation and pretty much guarantee that they'll do it badly. And assuming the private sector inherently is efficient means we stop holding private organizations accountable when they screw up. Doing either is really stupid.
Re:COUNTDOWN TO ZERO !! (Score:3, Insightful)
How is this different from any other government purchase, ever?