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Router bidding procedures questioned

CHARLESTON, W.Va. -- The West Virginia Office of Technology followed "normal procedures" when it solicited bids and purchased more than 1,000 "enterprise-class" Internet routers, state Homeland Security Director Jimmy Gianato told state auditors Monday.

Gianato was responding to recent questions from the state Legislative Auditor's Office, which is examining the $24 million router purchase. The state used federal stimulus funds to buy the equipment two years ago.

"We are examining his response, and will continue to move forward with this review," Legislative Auditor Aaron Allred said.

The state is removing routers that cost as little as $40 from public facilities and replacing them with $22,400 routers.

In a letter sent Monday to Allred, Gianato said the state purchased the routers through a "secondary bid process," using a 2007 statewide "Internet protocol voice communication" equipment contract.

The state executed that contract after issuing a "request for quotation," which invited select vendors to bid on the right to sell equipment to the state.

In 2010, the state purchased 1,064 Cisco routers from Verizon Network Integration, one of the vendors that successfully bid on the 2007 contract.

"The office followed normal bidding procedures for procuring such equipment on an existing statewide contract," Gianato wrote in his letter to Allred.

Gianato previously had said that the state purchased the routers under a "request for proposal," or RFP -- a more formal and comprehensive bidding process.

Gianato twice mentioned the RFP in a June 28 letter to Congress, after Reps. Greg Walden, R-Ore., and John Shimkus, R-Ill., raised questions about the router purchase.

"The RFP dictated that Cisco routers were to be provisioned by the winning entity," Gianato wrote in his response to Walden and Shimkus, who head two U.S. Energy subcommittees. "Since only 1,064 routers had been planned for the project, that number was specified in the RFP."

Two weeks ago, the Gazette asked Gianato for a copy of the request for proposal.

"You will have to get it from OT [Office of Technology]," Gianato responded via email. "I don't have that."

On Monday, Gianato acknowledged that the state never used a comprehensive RFP to buy the routers.

Gianato said his letter to Congress included a typographical error and should have referenced the "secondary bid process."

"We are sending a clarifying letter to Congress," he said Monday.

State agencies typically use the secondary bid process and existing statewide contracts for smaller purchases -- items such as computers and office furniture -- in the hundreds of thousands of dollars.

On Aug. 2, Allred sent a letter to Gianato, asking why state officials bypassed formal bidding procedures and selected a single type of router manufactured by Cisco. Allred also requested the names of those who took part in the decision.

Gianato said members of the state's "Grant Implementation Team" -- Gianato, former Commerce Secretary Kelley Goes, former Chief Technology Officer Kyle Schafer and Col. Mike Todorovich of the West Virginia National Guard -- decided to use the existing 2007 contract to purchase the routers.

At the team's request, the state technology office solicited bids for 1,064 high-end Cisco routers on the agency's "bulletin board." The request was never publicly advertised, and the state Purchasing Division never reviewed the bids.

Only two vendors - Verizon Network Integration and Pomeroy -- bid on the routers. Verizon sold the Cisco routers to the state, after bidding $800,000 less than Pomeroy.

In 2010, West Virginia received a $126.3 million federal stimulus grant to bring high--speed fiber-optic cable to 1,064 "community anchor institutions" -- schools libraries, state agencies, 911 centers, county courthouses, health-care clinics and other public facilities. The state used $24 million from the grant to purchase routers.

The Gazette has reported that the Cisco 3945 series routers were designed to serve a minimum of 500 users or Internet connections. But the state has installed the devices in some public facilities with only a handful of Internet connections.

Seventy percent of the routers, which funnel data from one computer network to another, wound up in schools and libraries.

Gianato has said that the Cisco routers are the appropriate size for all public facilities that have received the devices. He also has said the decision to purchase 1,064 routers of the same size saved the state money.

The U.S. Department of Commerce inspector general has started a review of the state's use of the $126.3 million stimulus grant. 

Auditors from the inspector general's office were scheduled to arrive in Charleston Monday night, according to state officials. The auditors plan to examine documents related to the router purchase throughout the week. 

Reach Eric Eyre at ericeyre@wvgazette.com or 304-348-4869.


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