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02/02/2013 – Click here for the original article in the Des Moine Register

by John Noble, Des Moine Register

To win a contract to outfit law enforcement officers at the Iowa Department of Natural Resources with 200 new radios back in 2011, communications equipment suppliers faced a list of unusually exacting specifications.

The radios’ “push to talk” buttons had to be at least 44 millimeters tall and 15 millimeters wide, and their knobs at least 19 millimeters apart.

For Michael Miller, president and CEO of the Marshalltown-based Racom Co., those rigid requirements amounted to disqualification: The push to talk buttons on the Harris brand radios his company sells measure 40 millimeters by 13 millimeters, and the knobs are 11 millimeters apart. Failing to meet those specifications meant Racom couldn’t even submit a valid bid — sidelining it before the contest began.

Only one supplier, in fact, could meet every spec for a contract worth perhaps $1 million: Illinois-based industry leader Motorola Solutions Inc.

“Some of the past RFPs seemed more like sole-source purchases, when we had hoped they would have been truly vendor-neutral and competitive,” Miller said.

That DNR contract, first posted in November 2011, initiated what has become a 15-month ordeal. Over and over, communications suppliers and state lawmakers charge, the Iowa Department of Administrative Services has slanted its requests for bids on law enforcement radio equipment in Motorola’s favor, denying other companies a fair chance and undermining the cost-saving objectives of the competitive bidding process.

One national authority on state procurement said law-enforcement radio purchasing generates heavy scrutiny nationwide because of the small pool of vendors involved and the massive size of the contracts.

The latest contract out for bid could cost the state $7 million, but the stakes may be even higher than that. Some experts contend the type of radios the state buys will commit it to a certain type of statewide communications network, at a cost ranging from about $33 million to more than $100 million.

After more than a year of wrangling, three separate contract offers and an intense lobbying effort by both companies, a bipartisan group of state senators is now calling for an investigation.

“It stinks like somebody’s got a conflict of interest and somebody’s getting greased behind the scenes to make this deal happen,” said Sen. Matt McCoy, D-Des Moines.

Administrative Services, the state agency responsible for issuing requests for proposal, or RFPs, to procure equipment, has acknowledged that the first contract for DNR radios was pulled in part because of fairness concerns.

“I think that’s probably fair to say” that the Motorola-specific specifications contributed to the RFP’s cancellation, department spokesman Caleb Hunter said. “I don’t know that that was the only reason, but certainly that was a factor.”

But the department maintains that subsequent offers have been fair and have complied with state law.

“Certainly we don’t believe that the RFPs are unfair or disproportionately slanted toward one vendor or another,” Hunter said. “We do everything we can to make sure we have a defensible process.”

The initial bid for DNR radios

Racom was eager to pursue the contract for DNR radios, Miller said — right up until the company saw those to-the-millimeter requirements for knobs and buttons. The RFP also mandated that the radios be equipped with an “Intelligent Battery,” the model name for batteries made by Motorola.

“They put all those in there to sort of quietly specify a single radio,” Miller said.

Seeking redress, Racom reached out to members of the Iowa Legislature.

“The only way we could get anyone to listen to us was to go straight to the Legislature,” Miller said. “Legislators both listened and got fired up.”

Within weeks, the department canceled the RFP altogether.

A Motorola spokesman declined to comment on its bids for business in Iowa, citing the ongoing procurement process.

Even with the RFP dropped, lawmakers continued to examine the situation. Last February, the Legislature’s Transportation, Infrastructure and Capitals Appropriations Subcommittee called in officials from the DNR, the Department of Public Safety and the Department of Transportation to grill them on the manner in which the contract had been written and underscore lawmakers’ demand for a fair process.

“It just doesn’t seem ethical or fair to have specs designed to only allow one company to bid on things,” Sen. Bob Dvorsky, D-Coralville and a member of the subcommittee, said in an interview. “That’s way beyond the pale.”

By the end of the hearing, lawmakers secured promises that future contracts wouldn’t be slanted in any one supplier’s favor.

Legislators step in

But lawmakers wanted more reassurance of a level playing field for vendors.

So they set out to pass a bill.

Language written into Senate File 2316, a budget bill funding infrastructure projects, outlined the considerations that departments should take into account when buying radios. That language outlined broad coverage goals and emphasized compatibility with federal standards.

“They wanted to do it that way to ensure they got a truly open and fair process for the RFP and got away from actually spec’ing out the size and distance between the keys on the radio, which were proprietary to Motorola,” said McCoy, chairman of the Senate subcommittee that held the hearing.

The bill quickly attracted attention from Motorola. On April 3, the company hired the Nyemaster Goode law firm to lobby on its behalf, records show, and eight days later, four of the firm’s lobbyists formally declared their interest in the legislation. All four registered as “undecided.”

(Racom also lobbied heavily on the issue, hiring the BrownWinick law firm. Records show two of the firm’s lobbyists registered the company as a client.)

“I was lobbied heavily by Motorola after that language went in,” McCoy said. Lobbyist Paula Dierenfeld, in particular, argued that the bill disqualified Motorola rather than qualifying its competitors, he recalled.

In an interview, Dierenfeld declined to comment on the lobbying effort, expressing concern that speaking about the issue might compromise Motorola’s pending bids for business in Iowa.

“Speaking with a reporter and having quotes in the paper could be seen as an indirect attempt at influence,” she said.

Despite the pressure, the bill passed the Senate and House on May 7, sending it to Gov. Terry Branstad to be signed into law.

Before Branstad signed the bill, though, the issue underwent discussion among his top aides. Chief of staff Jeff Boeyink called a meeting of five department directors, including the director for Administrative Services, to discuss radio language, according to an email obtained by the Register through an open records request.

The officials were concerned the bill’s wording might actually limit, rather than expand, the pool of eligible vendors, Branstad spokesman Tim Albrecht said — an echo of the argument McCoy said he heard from Dierenfeld. Those concerns were resolved during a June 5 meeting, and Branstad signed the bill two days later.

New request issued

While the bill was waiting to become law, Administrative Services moved forward with a new RFP.

The contract sought radios not only for the DNR, but also for the Iowa State Patrol and the Department of Corrections. Altogether, it authorized the purchase of more than 3,000 separate pieces of radio equipment at a cost of perhaps $7.5 million.

The agency released the request for proposal on May 14, and set a June 1 deadline for vendors to submit their proposals.

The new request wasn’t quite as specific as the DNR proposal that preceded it — it contained no language outlining the size of or distance between buttons — but suppliers interested in bidding found what they considered to be similar biases to ensure a sale for Motorola. In a letter sent to Administrative Services on May 17, Racom Vice President Terry Brennan cited several aspects of the RFP that appeared to favor Motorola while excluding his company and others.

The control panel on in-car radio units, for example, had to be no larger than 2 inches by 7 inches by 2.5 inches — measurements that exactly matched the Motorola unit and disqualified the equivalent product offered by Racom. Elsewhere in the RFP, procedures for testing radio equipment made explicit reference to an “APX7500 mobile” — a Motorola-brand radio — seemingly presupposing that the company’s equipment would be used.

“Please consider changing these mandatory requirements so that they are written in a way that is truly competitive and less single-vendor specific,” Brennan wrote in the letter. “We believe the changes will allow for a procurement process that will deliver the most competitive pricing and value to State of Iowa agencies.”

In response to questions from the Register, Hunter, the Administrative Services spokesman, called the reference to the Motorola model an oversight and said it should not have been included in the RFP.

McCoy, meanwhile, questioned the timing of the plan, referring to it as a “May surprise.” The agency acted with surprising speed in pushing the contract out for bid in the narrow window between the bill’s passage in the Legislature and Branstad’s signing it into law. That prompted McCoy to wonder whether the agency was trying to avoid complying with the new mandates.

Within days of Racom’s letter and more criticism from lawmakers, on May 18, Administrative Services pulled the contract.

Hunter said the RFP complied with the requirements of the law, but was released inadvertantly before it had received “final clearance, final sign-off” from one of the agencies.

“We brought that one back in just to make sure everyone was comfortable,” Hunter said. “As you’re aware, this is a high-profile bid.”

But Racom CEO Miller suspects it was pulled because his company had caught the agency again trying to skew the bid in Motorola’s favor.

“No one has ever publicly given a reason for it to be pulled, but you have to assume that some state officials realized that this RFP was not written in a truly competitive way.”

New questions raised

In September, Administrative Services released yet another request for bids, this time to provide radios for the Iowa State Patrol, the Department of Transportation, DNR and corrections.

It mirrored in many ways the request offered and pulled in May, but included far less detailed technical specifications.

Still, the vendor community found issues.

Racom wrote a letter dated Sept. 27 containing, among other complaints, a contention that the new RFP still didn’t meet the requirements Branstad had signed into law in June.

In an Oct. 12 letter, Houston-based radio supplier Tait Communications also accused the state of slanting its request in one vendor’s favor.

“We have determined that the RFP is not intended to award a contract through the competitive bid process,” the company wrote, “but instead is limiting the response to a particular vendor or vendors based upon a pre-determined set of proprietary features.”

Lawmakers excoriated the RFP as well. McCoy, the Democratic state senator, signed on to a letter with Sen. Bill Anderson, R-Pierson, sent to Boeyink, Branstad’s chief of staff, accusing Administrative Services of failing to follow Senate File 2316.

“This RFP seems to be written as if the language conditioning our appropriation never existed,” they wrote. “It makes no reference to the requirements we put in place, and contains no scoring mechanisms or objective measurements of whether the radios to be procured maximize coverage and interoperability.”

Two more senators, Kent Sorenson, R-Milo, and Steve Sodders, D-State Center, sent similarly critical letters to Administrative Services Director Mike Carroll.

In an addendum to the RFP dated Oct. 5, the agency’s purchasing agent Karl Wendt responded that the contract offer did, in fact, meet the requirements of the new law and rebutted other critiques.

Ultimately, Racom and Motorola submitted bids on the RFP.

As of Friday, a decision to award the contract was still pending. Hunter said the department could not comment on open RFPs.

Investigation vowed

Meanwhile, key senators pledge they won’t let the question of contract fairness drop.

Senate Government Oversight Committee Chairwoman Janet Petersen, D-Des Moines, said several aspects of the contracting process “did not pass the smell test” and promised that her committee would examine the issue soon.

“Oversight will be taking a look at the issue,” she said. “Most certainly, the Senate will be looking at it,” she said.

Sorenson, the ranking Republican on the committee, said he would welcome an investigation.