Legislative audit: State misspent millions on oversized routers - Business, Government Legal News from throughout WV

Legislative audit: State misspent millions on oversized routers

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West Virginia misspent federal funds to the tune of $15 million, and lawmakers are starting to hear more details.

A legislative audit presented Feb. 10 looked at the 2010 decision from the state Office of Technology and the Broadband Technology Opportunity Program Grant Implementation Team to spend $24 million on 1,164 Cisco model 3945 routers for community anchor institutions – mainly schools, libraries and West Virginia State Police detachments.

That audit claims the state used a legally unauthorized purchasing process and misspent millions in federal funds on those routers that did not expand the state's fiber optic broadband network.

Router Levels

Legislative Auditor Aaron Allred presented the details of the audit. He said Cisco classifies routers in different levels, with level one equal to what an average home would have and level five routers are used at the core of the Internet.

The Cisco 3945 routers the state purchased are level three routers, but level one routers would have been adequate for the state's libraries, according to the audit.

Allred said the state could have saved about $2.8 million if smaller routers were purchased for the state's 172 libraries. Smaller routers would have saved $1 million for the West Virginia State Police, and smaller routers could have been put in nearly every public school to meet the 2017 Broadband standards set by the national State Educational Technology Directors Association at a $3.6 million savings.

The purchase was made while now-Sen. Joe Manchin, D-W.Va., was governor.

Audit Response

Gov. Earl Ray Tomblin's Chief of Staff, Rob Alsop, responded to the audit, saying he disagreed with some of its claims, and the Grant Implementation Team was trying to aim high in terms of broadband deployment.

"I think the real question is what are the successes going to be five years from now?" Alsop said.

He said the BTOP Grant Implementation Team didn't look at the purchase as an opportunity to put in routers that would meet current facility needs, but with a goal of forcing broadband opportunities in communities, while fostering and planning for future development, especially in rural areas.

"We're behind the curve, and we need to make changes to get ahead of it," Alsop said. "It wasn't what a rural community could do now, but what areas and schools should be able to do in the next decade."

Alsop said the Grant Implementation Team "realized there would be no second chances," and the rural 911 centers, schools and other community centers couldn't purchase that kind of technology alone.

"I hope every institution uses those routers to their full capacity," Alsop said.

Telephone Savings

According to the audit, the state's Office of Technology found that the routers' ability to provide Voice Over Internet Protocol, or VoIP, creates a savings in telephone services. The West Virginia Legislature uses a VoIP system, according to the audit.

But the audit states Cisco recommends the model 3945 routers for remote sites with 700 to 1,200 phones, and Allred said he did not think any of the state's libraries, schools or WVSP detachments have 700 phones.

Alsop said the federal government has already come in and done a review of the router purchases and found that their can be savings, especially in the use of VoIP.

"There are opportunities that our schools are using from this technology," Alsop said. "I believe our education system will be the biggest beneficiary."

Cisco recommends routers based on the number of users on Virtual Private Networks, or VPNs, which are ways to access a computer from outside the initial network. The Cisco model 3945 router can support 200 simultaneous VPN sessions, but Allred said 87 percent of the libraries have Internet connections of less than 20, and more than half the state's libraries have Internet connections of less than 10.

Assessing the Need

"These are far greater than anything a West Virginia library would ever need," Allred said.

The Grant Implementation Team assigned 77 of the routers to the West Virginia State Police. The WVSP did its own study four years ago and purchased what it found to be appropriately sized Cisco routers that were at level two, except for one level three router put in the WVSP central office in South Charleston, Allred said.

Only two of the WVSP routers, which were purchased in July 2010, are being used, Allred said, and the other 75 are still in boxes because they will not work with the current WVSP phone system.

Allred said the WVSP is working with the Office of Technology to update the routers at a cost of $84,000 so they will work for the detachments.

Assessing the Placement

Allred said he thinks every community in West Virginia should have equal broadband access, but he questions how the routers were deployed.

"Having the same access doesn't mean you buy the same number of busses for the Pendleton County school system that you buy for the Kanawha County school system," Allred said. "For Clay County, with a population of less than 500, they have seven of these routers, and five of them are located within a half-mile of each other."

Allred said Kanawha County Commission President Kent Carper's staff indicated that the router in the Marmet Public Library is probably worth more than the building.

"Cisco's local sales representatives' personal desires might not mesh with what's best for the state," Allred said.

He said the BTOP Grant Implementation Team also purchased $6,667,215 worth of additional features for the routers.

Ultimately, Allred said just $5 million the team overspent on routers could have funded an additional 104 miles of broadband fiber throughout the state.

Alsop said the state received a 25 percent discount on the routers that would not have been applied to smaller routers. But he said he is working with the Department of Education and the community centers to be sure the routers are in the best possible places.

Audit Recommendations

Three recommendations from the audit include asking the State Purchasing Division to determine if the actions or inactions of Cisco representatives would fall under the section of state code that would make those representatives banned from further state purchases.

Another recommendation is a capacity and user need study presented to the 2013 Legislature, and the final recommendation is for the state Office of Technology to contact Cisco to see if the state could trade out any unnecessary features or models of routers.

The second major finding of the audit was that the inappropriately sized routers were purchased because the State Purchasing Division allowed the Office of Technology to use a purchasing process that was not authorized by neither statute nor legislative rule.

The secondary bid process, something Allred said he had never even heard of in his more than 19 years as the legislative auditor, was used on an existing contract approved by the State Purchasing Division.

According to the audit, the law dictates that the purchase should have gone through the competitive bid process open to non-Cisco vendors.

"This is not just an issue with these routers, but with secondary bidding overall," Allred said.

Even though an IT contract from 2007 allowed purchases from Cisco, or their equivalent, the Request for Purchase in 2010 stated that only Cisco equipment could be bid.

Allred said that meant the state couldn't be sure it was receiving Cisco's lowest price, or a lower-priced alternative from another vendor.

Alsop said there is a statutory basis for the secondary bid process, and that the state has already put some of the auditor's bidding safeguard suggestions into place.

Sen. Evan Jenkins, D-Cabell, asked Allred to respond to Alsop's statement that the routers were purchased with the future in mind. Allred said the routers "far exceed future needs."

Jenkins suggested an annual review of the routers and their usage so the Legislature could track them and know in the future whether or not the purchase was a good decision.

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