Obama administration official defends $24M state router purchase
CHARLESTON, W.Va. -- The Obama administration's telecommunications chief has praised West Virginia officials for their decision to spend $24 million in federal stimulus money to buy oversized Internet routers.
The state is installing the routers primarily in rural schools, libraries and health clinics, even though the devices were designed to serve research universities, major medical centers and large corporations.
On Wednesday, U.S. Assistant Commerce Secretary Lawrence Strickling told federal lawmakers that West Virginia's bulk purchase of more than 1,000 "scalable" routers saved the state money.
"Overall, it appears to us, based on a review of the situation, the state made an economical decision that is well justified by the facts," said Strickling, an Obama appointee who also serves as administrator of the National Telecommunications & Information Administration.
Republicans on the Housing Energy and Commerce communications subcommittee weren't buying Strickling's assessment and conclusion.
"As hard as you try, you just can't defend what's going on in West Virginia," said Rep. John Shimkus, R-Ill.
Republicans also raised questions about whether Strickling had conducted an independent review of West Virginia's $24 million router purchase.
"It sounds like your agency takes the word of whoever has the grant, and then hands over the money," said subcommittee Chairman Greg Walden, R-Oregon. "Let me put it more clearly: You're relying on whatever you're told is going on there."
Shimkus and Walden peppered Strickling with questions about the West Virginia router purchase, citing a Charleston Gazette report about the state's use of the stimulus funds. Several lawmakers brought copies of the newspaper's stories to Wednesday's subcommittee hearing in Washington.
The Gazette has reported that the Cisco 3945 series routers were built to serve a minimum of 500 users and up to tens of thousands of users, but the state has installed the pricey devices in some public facilities with only a few Internet connections.
"Can you tell me what [you're] doing about this and the $24 million in taxpayer money that seems to be wasted here?" Walden asked.
"First off, I would warn everyone, don't believe everything you read in the newspaper," Strickling responded.
Strickling said some of the routers were "going into large facilities like universities and hospitals."
"It's a router necessary to meet the needs of many of the anchor institutions," he said.
However, a state online database shows that no public universities in West Virginia have received the Cisco routers.
In fact, Strickling's agency rejected West Virginia's request for stimulus grant funds to improve high-speed Internet service at the state universities. The West Virginia Higher Education Policy Commission had applied for a $45 million grant.
Meanwhile, eight of West Virginia's 62 hospitals have received routers, according to the state database.
The majority of routers -- 650 -- are going to K-12 schools and libraries.
Strickling told lawmakers that the routers cost $12,000 each -- not $22,600 as the Gazette reported.
The newspaper included "add-ons" -- additional equipment that came with the devices, along with a service warranty -- in the purchase price. Strickling's figure presumably didn't include the extra features.
At Wednesday's hearing, Strickling also said that West Virginia's router purchase was competitively bid, and Cisco was the low bidder.
Bid documents show that Cisco never bid on the routers. Verizon Network Integration was the low bidder and sold the Cisco routers to the state.
Republicans on the communications subcommittee directed Strickling to provide them copies of West Virginia's bid documents.
"I would like to see the bids," Shimkus said. "I would like to see what they put out on the bid application. If it was my money, or if someone has a fiduciary responsibility, I would identify the bid based upon the need."
Shimkus and Walden asked why West Virginia officials didn't purchase routers of various sizes -- smaller ones for small facilities, bigger ones for large sites.
Strickling said the routers were "scalable," and could be expanded as facilities added computer terminals.
West Virginia will save money on training technicians because they'll only have to learn how to fix one type of router, not multiple routers, said Strickling, Obama's point man on broadband issues.
"West Virginia believes they have found the most economical solution by buying a single product and getting a substantial discount," Strickling said.
In April 2010, Strickling's agency awarded West Virginia a $126 million federal stimulus grant to bring high-speed fiber-optic cable to 1,064 "community anchor institutions" -- schools, libraries, county courthouses, 911 centers, health-care clinics and state agencies.
Four months later, the state purchased routers to hook up to the new fiber-optic connections. Verizon gave the state an additional 100 routers at no cost.
On Thursday, Rob Alsop, chief of staff for Gov. Earl Ray Tomblin, said state officials continue to work diligently to implement the $126 million grant.
"Just like Assistant Secretary Strickling, we believe that the purchase of the routers in 2010 was justified and that the end result of this forward thinking project will expand opportunities in every corner of the state," Alsop said.
As of last week, more than 300 routers remained boxed up in storage. The stored routers came with a five-year service warranty, so the state has already lost two years of free maintenance on the devices.
At Wednesday's hearing, Strickling was asked why West Virginia purchased more routers than needed. State officials, he said, later learned that many sites already had suitable routers and fiber connections.
Strickling said West Virginia officials should be praised, not scolded for holding back routers until they had a place to put them. "It was good project management, good oversight," he said. Shimkus disagreed. "Your answer to this West Virginia stuff is really bad," he said. "I hope people continue to dig into this."
Reach Eric Eyre at email@example.com or 304-348-4869.