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Legislative auditor starts inquiry into $24M router purchase

CHARLESTON, W.Va. -- The West Virginia Legislative Auditor's office is examining the state's $24 million purchase of more than 1,000 "enterprise-class" Internet routers.

In a recent letter, state Legislative Auditor Aaron Allred asked Homeland Security Director Jimmy Gianato to explain why he and other state officials bypassed formal bidding procedures and selected a single type of high-end router manufactured by Cisco. Allred also wants Gianato to reveal who took part in the decision.

As part of a broadband-expansion project funded by the federal stimulus, West Virginia is removing routers that cost as little as $40 at public facilities and replacing them with $22,400 routers.

"It's $24 million in government funds, so we're looking at this as part of our duties at the Legislative Auditor's office," Allred said Tuesday. "The answers we get will determine what additional questions we'll have."

Allred asked Gianato to respond to the auditor's letter by Thursday.

Gianato would not say Tuesday how he planned to answer Allred's questions.

"We will be responding to the letter by the date requested," Gianato said in an email. 

The Legislative Auditor's office started its inquiry on Aug. 2, after House Minority Leader Tim Armstead, R-Kanawha, grilled Gianato about the routers during last month's legislative interim meetings.

Allred also said Tuesday that the U.S. Department of Commerce inspector general recently contacted his office. The federal inspector general started a review of West Virginia's broadband stimulus spending last month.

"We're cooperating with them as well," Allred said.

In 2010, West Virginia received a $126.3 million federal stimulus grant to expand high-speed Internet at 1,064 "community anchor institutions" -- schools, libraries, state agencies, 911 centers, county courthouses, health-care clinics and other public facilities.

West Virginia used $24 million from the grant to purchase the high-end routers. The state is installing the pricey equipment primarily in schools and libraries, even though the Cisco 3945 series routers were designed to serve college campuses, major medical centers and large corporations.

Every public facility -- no matter the size -- is getting the same large router.

In his letter, Allred said a comprehensive bid process "would have allowed the bidding to be opened up to other manufacturers such as 3Com [Corp.], and it could have also allowed the opportunity for different sizes of routers to be offered for the various locations throughout the state."

Instead, West Virginia officials -- Gianato and three others on the state's "broadband grant implementation team" - selected the Cisco routers and executed the $24 million purchase through the state's "secondary bid process," using an existing 2007 statewide technology equipment contract.

The contract didn't specify a maximum-dollar purchase limit. 

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

At the state broadband team's request, the state Office of Technology 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 Hebron, Ky.-based Pomeroy -- were qualified to bid on the routers under the state contract. Verizon was the low bidder and sold the Cisco routers to the state.

This isn't the first time Gianato has had to answer questions about the Internet routers.

In June, the chairmen of two U.S. House Energy subcommittees requested information about West Virginia's router purchase.

In a June 28 letter to U.S. Reps. Greg Walden of Oregon and John Shimkus of Illinois, Gianato responded that the state used a "Request for Proposal," or RFP -- a formal and comprehensive bidding process -- to purchase the 1,064 Cisco routers.

"The RFP dictated that Cisco routers were to be provisioned by the winning entity," Gianato wrote. "Since only 1,064 had been planned for in the project, that number was specified in the RFP."

The Gazette previously obtained documents that chronicle the router purchase. The documents don't include an RFP. 

Gianato would not comment Tuesday on whether the state solicited bids for routers through an RFP.

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 devices in some public facilities with only a few Internet connections. Seventy percent of the routers wound up in schools and libraries. Internet routers funnel data, such as email and websites, from one computer network to another.

Earlier this year, the state Commerce Department hired a Virginia-based consultant, ICF International, to examine West Virginia's use of the $126.3 million in stimulus funds to expand broadband across the state.

Gianato has said the Cisco routers are the appropriate size for all public facilities that have received the devices. He also has said that the broadband grant implementation team decided to purchase 1,064 routers of the same size to save the state money.

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


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