I have first hand experience with this, although in Australia. My first job was working for a IT development and solutions shop (this is over 17 years ago) where they won the bid to rollout the internet and network gateways across a large number of Australian government schools.
We were doing similar work for private school at the same time, and the process for the public and private school could not be more different.
For eg. in the tender process, which I was part of, for private school we would use cheaper Taiwanese routers. For the public schools it 'had to be Cisco'. The only time we ever used Cisco, outside of large enterprise clients with 1000+ seats, was with public school tenders. The private school would get a $500 white-label router, the public school s would get a $6-15k Cisco router with additional VPN module costs.
We would charge a higher consultant rate on the Cisco jobs, and would bill 3 days instead of 1. We won the contract because we were 50% cheaper than the other tenders who all wanted to install 3 and 5-series routers. How we got to the point of being able to even tender is another story that involves somebody in our organization sleeping with somebody at the government organization. The other tenderers were accustomed to dividing the work up amongst themselves at inflated prices, they didn't even know who we were and we received a lot of abuse for breaking up their little scheme.
(Edit: a further idea of how this worked, the 3 people in the gov office responsible for tenders all had very nice cars and holiday homes while the rest of the office was working away on below-average wages. You could see what was going on just by looking at the car park)
So a dozen of us roll out hundreds of these routers in public schools and after a month we find that we rolled out the wrong version of IOS, one that was vulnerable to a simple security attack. Instead of forcing us to upgrade all the routers remotely, or out of our own pocket, we instead won another few-million-dollars worth of work to send a person out and apply the upgrade to each router (which took 5 minutes, we charged a full day plus travel).
The routers weren't even being used properly - the topography was net connection -> cisco router -> internal server -> switches. The internal server would do all the DHCP and everything else. These expensive routers were being used as bridges, although they were pitched as having 'forward compatibility' incase the school wanted to implement features such as user accounts (they did, although again they used a custom server, not the router).
When these projects are audited there is nobody who is technically competent enough to make an argument against who would be on the side of ditching or shrinking the projects. Some of the smarter teachers knew what was going on but didn't mind since they got access to fancy equipment (we would create user accounts for them).
My first, and not my last, experience with government bureaucracy and budgets. I would estimate that the private schools got more out of us at a tenth of the cost. Since then I had an even worse experience with the government health department, where 6-figure invoices were written and paid for goods that didn't exist (that department has since been broken up and the subject of a large corruption enquire). No surprise that I became very anti-government size and spending.
Edit: to add, we were so 'disruptive' to the backdoor deals that we were uninvited from conferences, kicked off panels, not invited to the mixer events where gov buyers met providers, a couple of years later we lost our accreditation temporarily until we appealed to the Government Minister. On site we would be locked out of network cabinets, not given IP information for the net connections, etc. Our jobs were made difficult by competitors and others because of our pricing and methods. They couldn't figure out how they didn't get rid of us, because they didn't know that one of our guys had a solid relationship with somebody at the government (that person wanted to clean things up). Usually we wouldn't have been allowed anywhere near these projects and if we did win one we wouldn't be allowed back in for not playing with the system.
 'accreditation' for government tenders needs to die, it is a formal method used to keep honest operators out of what is essentially a cartel. The Australian government is getting better in this regard, they now have an open tender website but I believe it still requires some form of accreditation that has a person in a department standing between application and approval.
 although not too much better. NBN Co., a government owned company that is building a $40 billion nation-wide fibre network recently suspended tender process because every single bid came in over the expected price:
You get similar stuff at private companies too, though few private companies are large enough for corruption like that to be able to reach the same scale without getting too big to go unnoticed by auditors for long enough.
The number of times I've had potential supplier hint at extra perks or "return favours" is fairly high, and I've not even been in positions of very substantial purchasing power.
It's often not even direct exchanges that are being hinted at either, but "simply" seemingly innocent networking: Buy from the "right" well connected sales guys and make it clear you're "flexible" about requirements, and they know they benefit from exploiting their network to the max helping you get lucrative jobs in big companies where you can spend more with him.
It's often only morals that prevents it from happening - I've been in plenty of situations while where my budgets were not huge, nobody knew enough to second guess my decisions, and I could've easily spent a lot more than I did without anyone batting an eyelid. Especially since just the very act of bloating your budget in many places makes you look more impressive and important and translates into status (and looks good on your CV...)
This was my 2nd-hand impression growing up with a father who worked for a large oil company. The extent to which nobody was really at the wheel in these kinds of negotiations was fascinating. As far as I could tell, many things sort of worked, when they did, because engineers had a cultural desire to "get it right", mostly for their own satisfaction. But the company itself didn't seem to either have an effective way of policing it, or maybe even really an interest. Somewhat as in government, low- and mid-level contracting didn't excite anyone in management, who were focused on issues that really "moved the needle", like securing and overseeing new exploration deals, not how much someone spent on a piece of equipment that wasn't even in the 6-figure range anyway.
A lot of the time people also think they can get away with a lot less than they can, because they assume that "someone" must be looking after these things. It's when you get insight into how things are run and see the boss rubber stamping expenses it starts to get scary. And someone decides to take advantage.
I went with a friend a few years back, to get a helicopter ride with someone he did consulting with in the forestry industry. He told me about how the people he worked for expensed a helicopter to go for coffee sometimes... Just for the heck of it. Nobody asked.
The assumption was that if they chartered a helicopter, it was for surveying, so any helicopter expenses were pretty much by default evidence they were doing their job, rather than slacking off and costing the company a fortune.
One of my favorite anecdotes along the rubber-stamping lines is that due to a miscoding in the software that auto-pre-filled expense reports (it pre-populated fields from company credit-card statements), my dad once accidentally filed an expense report with a 2-week hotel stay put down under meals, as a single $2500 dinner on the check-in date. He didn't notice the mistake until after submitting, and assumed someone would flag it, but he got the reimbursement and nobody ever asked. It's possible it did get flagged, and someone manually reviewed and realized that it was really a hotel stay, but it seems at least as likely that it just got rubber stamped, and he could've gotten away with $2500 dinners (at least occasionally) if he had been the type of person to do so.
I "lost" a contract (to use http://www.elmalabarista.com/bestseller) with a big company in my country. To make it short, they choose the company of a "friend of a friend", that use a outdated tech (windows mobile) with absurd-costly mobile devices (and they object our use of iOS! their devices cost 4x), that NOT work at all, that was collecting dust (literally) in a sub-company.
I tell the guy that manage the sale: "Hey, fine if don't choose us, but if you choose them you will lose ALL the money, for sure". The answer? "We don't care about lose money".
Waste in terms of inflated costs is more likely a function of size more than public/private dimension. 20k $ is literally not worth lowering down to get the money in some industries I have witnessed. I have yet seen obvious examples of corruption, and incompetence + incentive is the prevalent explanation: the bigger a project is, the better it is for the people at the top of it obviously, and enough bureaucracy to make it a local optimum.
One typical example I had is not receiving a replacement laptop when working for a bank because replacement hw is too expensive, so I could not work for essentially one month. My consulting rate would have paid for a top of the line laptop in 2 days. But those are of course two different cost centers, so it will never surface.
One main difference is that public companies are required by law to have independent auditors.
Government departments are not.
In Australia independent audits rely on the Australian National Audit Office, which is profoundly and deliberately underfunded because of its annoying habit of discovering embarrassing incompetence and wastefulness.
Big companies can persist for decades with endemic corruption.
In public sector, the audit process is incredibly painful, and you're going to end up losing a career and pension over malfeasance. I've seen it happen a few times. Once you start operating outside the lines, you're likely to escalate and will get caught.
More offensive to me are the folks who understand the system intimately and waste time & treasure legally. I've seen cases where a government used a big govt contractor to install PCs -- at cost of $120/hr for two guys and a truck. Offensive? Yes. Illegal? No.
Australia isn't that badly off - at least the governments have to do accrual accounting. Most countries don't, because it's too much work.
As a consequence, when most countries release their budgets, expenses can be hidden for the next guy to reveal. And lazy assets don't burn a whole in spending. Imagine if the US government had to admit how much it was "spending" on rent (taking up land which could otherwise be used by the private sector). A $20,000 router isn't an "investment", it's a burn of $4,000 a year over the 5 years it's in use.
The reason accrual accounting is used in large companies is, when ownership and management is separated, you need to ensure the managers give an accurate picture of what they have spent.
That's not actually as important as the key main difference.
Governments spend YOUR money, companies spend their own money.
On top of that, companies are subject to competition and, as cynwoody pointed out, they can go out of business. This means that the incentives for reducing fraud are greater in private business and companies that have high levels of fraud that are easily reigned in by obvious solutions will be at a huge competitive disadvantage and more likely to simply go away.
That's true, but it doesn't change the fact that a corporation is not spending its own money either. That money belongs to the shareholders in the same way that tax receipts belong to citizens.
Actually you would expect taxpayers to be even more vociferous in pushing audit requirements on government departments than shareholders are in ensuring their portfolio companies are correctly audited.
This is misleading. Becoming a shareholder is a one-time event. Taxes occur continuously. Governments get nearly all of their income from citizens on an involuntary basis. Enterprise gets a one-time infusion of funds from investors, and then nearly all of their income is from customers, all on a voluntary basis.
And if you discover that a company is not doing enough to prevent fraud then you can divest yourself of that company. This in itself is another form of negative feedback which exists much more strongly for corporations than for government. Because individuals divesting themselves of a public stock company will result in the stock price dropping which will have a negative impact on the company, encouraging it to do something about the problem.
Yes, it is easier to switch ownership of companies than it is to move between countries. But that does not change the fact that the closest thing to citizens a company has is its owners.
And as pointed out in another reply a huge difference between companies and most governments is that countries tend to get the vast majority of their funds from taxes while companies hopefully should get their money from customers. But there are exceptions to this rule, some countries do not have any taxes.
Sometimes I feel like the only long-term Australian (state) government-employed IT professional reading HN that doesn't regularly witness widespread corruption, incompetence and overspending. Seriously, in almost ten years, the very worst thing I've seen is someone being fired over stealing an old desktop PC instead of disposing of it via proper channels.
I've always worked with people that, even if not cutting-edge geniuses, are generally more than competent. They don't accept dodgy tender because they know the value of what they're buying, and they certainly don't overspend on gold-plated crap because our budgets are always stretched to the limit.
I would genuinely like to work for one of these mythical government departments where money flows like water. In my experience, the budget is always barely enough to fulfil our role and all these stories about profligate government waste are little more than hearsay.
Then again, I've never worked in the Health or Mining industries.
There seems to be something very broken with contracting in the US, which seems more specifically US government operations than government in general. If you look at something where you can compare prices between countries, like per-mile subway construction costs, the U.S. is a huge outlier, with procurement costs much higher than Europe.
If you look at something where you can compare prices between countries, like per-mile subway construction costs, the U.S. is a huge outlier, with procurement costs much higher than Europe.
The higher-than-Europe comparison I had not heard before. The higher than private industry cost of United States government contracting (and contracting by local units of government when they spend federal funds) is dictated by the Davis-Bacon Act,
European labor is pervasively unionized, though, and typically well-paid on construction projects, but the total cost comes in not just slightly cheaper, but at small fractions of the price. Other things involved: there are fewer overlapping transit and government agencies involved in European projects, approvals are faster, contractor billing/profits seem to be more carefully scrutinized, and there is less scope for anyone to file NIMBY suits over the projects, because the courts aren't involved in those kinds of infrastructure-policy decisions.
Madrid comes in at $58m/km, Paris and Berlin at $250m/km, and anything in the USA at over $1 billion per kilometer. NYC at $1700m/km. Some of those differences have legitimate explanations, but that's a 30x difference between Madrid and NYC. The Copenhagen metro, with quite expensive Scandinavian unionized labor, also cost a mere $150m/km, and the current expansion seems to be clocking in around $200-250m/km.
> (Not arguing with your basic premise that US costs are over-expensive, but a lot of that 30x difference can be explained away).
A bit of it can be, the 5x difference between Madrid and Berlin/Copenhagen/Paris seems acceptable by the differences in environment (Copenhagen's lowest point is 1m above sea level) and costs of living or complexity of the city's "cellars". The 6x increase on top of that is harder to justify.
HSR is much cheaper than metro: you don't have to dig and you don't have to deal with all the shit which is already in the ground under the city, or with the structural risks of the dig.
The french LGV Est, also rated for 350km/h, cost ~€4b (up from an original 3.125m estimate, excluding trains) for 300km, or ~€13m/km -> $~17m/km. Including all costs (trains &al) according to the 2007 SNCF report the line cost €5.5b, €18m/km, ~$24m/km.
If you don't want it, ship it to Melbourne! We've been gagging for a light rail link to the airport, which is about that distance away. Unfortunately the too-powerful taxi cartel and the Melb airport corporation keep blocking it because they're making too much moolah.
The fact that the government is not competent to spend taxpayers' money wisely seems like a good reason to be anti-government. After hearing enough anecdotal evidence on this topic (which very few people have both the capability and desire to thoroughly investigate in order to properly quantify it, thus the reliance on anecdotal evidence), it starts to appear as if such incompetence is an integral feature of all governments once they reach a certain size.
I think it's an integral feature of all organizations that reach a certain size without sufficient level of audits at lower levels. And given enough large organizations, there will be problems.
Given the number of large government entities, there's a lot of room for bad oversight.
But on top of that there is also often a lot more openness when the auditors does their jobs in government departments and these things are discovered, and even if not, the press often has a lot more access (e.g. freedom of information requirements).
In a lot of companies, a lot of borderline behaviour will instead just lead to people getting fired, especially when there is no evidence.
A new CTO at a company a friend does work for "decided to part ways" with his company a while back, for example, after migrating a substantial part of their service to a new, totally over-engineered and untested platform that failed spectacularly after they'd very publicly spent a massive amount of money on it. Incompetence or corruption? Probably impossible to prove.
And to the public there was no real sign anything was wrong: The launch was highly publicized by the company, and they never told anyone about the negative effects later. Only people with insight into internal sales numbers until they made emergency changes to revert some of his more harmful decisions would know.
And for him it likely doesn't even matter that he was effectively fired: He's either a useful fool, or a useful accomplice, for someone who will happily make use of their network to help him land somewhere else. And many potential hirers will only remember the positive press attention prior to the launch and will have no way of knowing about the problems.
There are a lot of stories like that in private business too.
If you don't like this kind of behaviour you are doing yourself a disservice by describing it in as simple a manner as you have. Having had similar experience it is surprising that they were allowed to tender that offer at all.
I've seen examples of this all over the UK as well, when ever it's a Government tender the quotes were always much higher than they need to be, and they always HAVE to have the most expensive, 'enterprise' equipment, whether they need it or not.
I've never understood it myself. Governments are funded by tax money, and the people involved in these companies that love overcharging the Government pay taxes. Congratulations on ripping yourself off.
> I've never understood it myself. Governments are funded by tax money, and the people involved in these companies that love overcharging the Government pay taxes. Congratulations on ripping yourself off.
Any additional taxes are diluted amongst the general population, while my sales commission is mine and mine alone...
Off-topic comment but it seems like some kind of trend to intentionally use double negatives in comments. I understand that sometimes using the double negative could be an important distinction, e.g. "not uncommon" does not necessarily mean common, but in this case I think one has to go out of the way to say "not infrequently." Maybe it's just me but I had to re-read that sentence to be sure I understood what was said.
Could just be regional idioms; I think I picked that phrase up from some British folks who made a habit of understatement. It isn't especially friendly to the reader, I'll admit (there, I did it again!).
In my experience, the govt. schools themselves have extremely limited IT admin resources available to them to help with this sort of thing. A senior high school I know a little about only has one person doing IT admin, over 1500 students, each with their own email and network login, and is running a combination of Macs and PCs/Windows.
This all stems from the outsourcing mania of the 80s which was driven by the idea you could save money by firing your internal IT people and outsourcing everything. It's been a boondoggle throughout the western world.
Also, the same employer had an extremely low-rent situation going on at the only train station in Sydney I ever witnessed a commuter straight out punch a ticket inspector in the face at. They under paid as well. One learns quickly that in capitalism, it's whatever you can get away with...
IT Director to Sales Guy: "We just got $20M in grant money for getting broadband across the state. Can you get me some numbers?"
Sales guy to engineering team (partner or internal): "Hey I need lots of boxes. They've got 1300 sites."
Engineering team: "Ok.. what do they need?"
IT Director: "Pretty sure my network guy says everything has to have redundant power supplies and at least 1 ethernet connection. To do a survey for each site would take over a year due to bureaucracy, and I've got 3 months on this grant"
Engineer to Sales guy: "Ok I built out those routers. Do they really need redundant power supplies everywhere? 3900's seem big."
Sales guy: "Ya, that's what they said. Anyways this came out below budget. Thanks!"
IT Director: "Looks to be under budget, meets our needs, thanks!"
.. meanwhile IT management/engineers aren't involved. Somewhere, someone didn't slow this project down to do due diligence. That or somewhere buried in some document is a requirement for redundant power supplies, but that sounds less likely the case.
That is also a valid point - if the way your system is set up, it would cost more than the difference to send someone out for the survey to verify a cheaper model is enough, just throw in the higher model. Though in this particular case, it's clearly not what happened.
I'd like to know how much of that $5 million savings would have been burned up in the capacity studies. My guess is a lot.
Given the choice between a fixed cost and an unbounded cost (being the capacity study referenced throughout the article) I'm not surprised they went with the fixed cost.
I'm not saying WV didn't get swindled, but I can sure see how this might have happened:
WV Rep: Do we really need these $20k routers for all our locations?
Cisco: We really couldn't say what your exact needs are without a proper study.
WV Rep: What will that cost?
Cisco: It's really hard to say. We'll have to visit all of your locations and speak with the IT Manager there. We'll have to measure average and peak load. Of course, we'll want to plan for future growth so we're not at this same point in two years...
The real crime is that they didn't open the RFP to multiple bidders. A little bit of competition can go a long way.
- How many users do you have?
- What is the total size of the community you serve?
- Do you need new equipment?
That would have quickly revealed that many of them had so few users that these routers were total overkill, and had so few potential users that even 100% simultaneous usage in some cases would not max out the capacity, and that some of them did not have a need for new equipment.
I agree with you that multiple bidders would be essential. But a tiny little bit of due diligence and investigation on the behalf of WV would have gone a long way.
That said, sometimes this is what backfires too: I've seen a government contract recently where a lot of extra work was carried out to meet the requirements of a "security consultant" that refused to sign off on a system because of "issues" that were clearly generated only to ensure that he could pad his list of "problems" he identified to help justify his fees.
Wouldn't the central procurement already know the max capacity of the lines (DSL, fibre, whatever) that had been installed, already know what routers/switches were in use and already know the populations being served? That's pretty basic audit information that I'd expect could be pulled up from a central database lickity-split.
Eyeballing those figures should be all you'd need - but yes if there was no central record of past procurements an email survey (or better yet online using a survey system) would apparently be pretty quick.
Actually, the real crime is that they don't sue Cisco to be allowed to exchange the original routers for new ones with appropriate capacity along with a refund in the price difference, with Cisco eating the depreciation and the legal fees.
The grant implementers should also be fired for cause, to wit, incompetence).
Capacity study? Hahaha Like they're going to go to the schools and someone there will "know" how much internet they need. They can't even go to the schools and get a good estimate of how many students they expect to be attending in 10 years, almost all the schools in the US are reactive to that sort of thing, they build new ones when the old ones are either so broken down that they can't fix them or they are over capacity. If you go to the schools you get one of two things: 1) a tiny internet straw that 2000 kids share and it's useless or 2) an OC48 to a tier one peer that 163 kids and teachers use for email.
There is something more fundamental, there were probably schools that had nothing close to reasonable internet access. (Likely a lot of them were in places where they can't get great internet at home either.) The masses were fed up with it, especially as they thought their kids were being left behind so they beat on their representatives and they just got a blob of cash to fix it, costs be damned. You think it was going to make the parents happy when they announce that it's going to take 7 years to get DSL to their child's school?
It's a monster of our own creation. No idea how you solve it... the people that doll out the money have no idea how to do the work or how to estimate if an estimate is good or not; they're just too far away it and the public's memory is too short term.
They probably did open an RFP to multiple bidders.. That's just game theory though, you think the bidders want to leave money on the table? Every where I've seen government bids produced, they increase the costs.
Oh, the FCC E-Rate program. So much corruption, so much waste. There were people who would purchase something for a school with the most % of kids on free or reduced price lunch, since that was used to set the "FCC match" percentage. So, if 90% of the kids were on that plan, we'd only pay 10% of the actual cost.
So, they'd order something for the school with the highest percentage and would then park that equipment there for a year (to fulfill the requirement that it must be used there). A year later, they'd move it somewhere else.
Probably going against the grain here, but what about the operations staff who are charged with supporting these 1,164 routers? What about warranties and parts replacements? There is a price for standardizing on a piece of hardware at such a large scale. When you standardize, sure there is going to be hardware overkill in some places, but in the big picture this is just a price of doing business at this scale. What is the price of service calls out to this location when the hardware is down? You have a tool-chain that supports this hardware, you have experts supporting the network (security, patching, etc), and you have contracts in place to make sure it is operational.
If you have 5 office buildings with 50-500-500-500-2000 people in them (respectively), then standardising is probably a good idea since now you can use the same company to fix problems in all the builds and not have to take special care with the small building.
However. If you have 30 builds with 5 people in each. Sending a new, preconfigure, router by fedex is so much cheaper.
That is how my phone company treats me. If my home router dies, or has an odd problem that they can't figure. They just send me a new router by mail and I switch it out with the old one and send that one back.
I am one of those charged with maintaining this equipment. Spread throughout our state, there are 8 Education Services Agencies that manage their region's networks. I personally installed ~115 of these routers...
What's the price?
Not a lot.
We are state employees, and as such, are paid state employee wages. I am compensated for mileage, but beyond that, there is no charge to the individual districts. Part of the cost of these routers was a 4 year Cisco Smart Care plan which replaces the hardware within 24 hours at no additional cost. What that really means is, they ship it to me and it's my responsibility to replace and return the failed part. Much of what I do is remote configuration changes and very little on-site time.
Cisco was acting in their own commercial interest, which would be fine if their counterparty weren't either corrupt or incompetent.
It's reasonable for an enterprise deployment to try to standardize on some components, which costs something in size-inefficiency. It's ok to spec a 2-5x bigger product for some sites if most other sites are bigger, and if the big/small products are wildly different, etc. But that's clearly not the case here.
Arguably the state should have had in-house competence to spend money on the taxpayer's behalf, or should have engaged a contractor with fiduciary responsibility to design/spec the work (and excluded from bidding).
""Everybody had to comply with this spreadsheet," he said. "Every campus had two border routers, two cores, and two server farm switches. All the vendors had to propose exactly the same solution" based on the average number of servers deployed at each CSU campus. "All of this is based on exactly the same data to all of the vendors. It's exactly the same formula for all of the vendors.""
I am related to an ex-sales exec at Cisco UK. They are a bunch of shysters who will desperately oversell anything to anyone. The person in question was responsible for selling such kit to managers who didn't even know what it was but they apparently needed it. You know the sort who populate senior positions in the public sector. They are rife in the healthcare and council sectors in the UK. Incompetent morons waiting to be milked for our cash.
The asshat is now selling VoIP and video conferencing solutions to medium sized businesses (via their executives) which is the next cash cow he can milk.
Cisco may not have anything to do with it. It may be down to a salesman in the middle who is on commission. I once saw CCTV cameras deployed with Jena lenses, I guess for similar reasons. The auditors (if there were any) weren't knowledgeable enough to know better.
edit: After further reading, Cisco did in fact shamelessly participate in this gigantic boondoggle.
Well there is something to be said for know-little middle management types seeing a name brand on something and then throwing the whole budget at it because they don't know what the hell they are doing. That's not even a shot at Cisco's products, just that tons of people buy Cisco hardware solely on the brand name than actually investigate what their needs are. Microsoft is the same way.
They can hire all the competent people they want, the system itself has become broken. There's too little representation and too much gerrymandering. There needs to be profound systemic reforms to even begin to address what's wrong with the US government.
Doing antisocial things for money is corruption in the public sector. The same grade of evil in the private sector is fiduciary duty and entirely acceptable, regardless of how high the cost to third parties.
I was surprised how much blame this article lays at the feet of Cisco. What did they do except sell the customer what they wanted? Sure, they might have been more noble if they put on the breaks in the name of the taxpayers, but that could hardly be expected.
It takes a lot of nerve for someone who just wasted my money (federal dollars) to try to blame it on the other party for fulfilling the order.
Did we read different articles? The one I read says "The report finds plenty of blame to go around. The ultimate cause of the fiasco, it says, was the fact the grant implementers did not conduct a capacity or use study before spending $24 million." This does not place the ultimate blame on Cisco.
You say "what [West Virginia] wanted", but the article shows how Cisco was unable to show that they knew what WV wanted. For example, Cisco claims that WV specified internal dual power supplies but there is no record that WV ever had that requirement. Instead, "what WV wanted" is defined only as being whatever WV signed off on at the end.
As to if Cisco's behavior is expected or not, the Ars article says: "[Cisco] had a moral responsibility to propose a plan which reasonably complied with Cisco's own engineering standards" but that instead "Cisco representatives showed a wanton indifference to the interests of the public in recommending using $24 million of public funds to purchase 1,164 Cisco model 3945 branch routers."
Ars even links to section 5A-3-33d of the West Virginia Code. The likely relevant clause is "(B) Performance in violation of standards established by law or generally accepted standards of the trade or profession amounting to intentionally deficient or grossly negligent performance on one or more public contracts;", and the auditor's report shows examples of how Cisco's actions were likely in violation of their own published standards.
This is not a crime. As the article says, the strongest remedy regarding Cisco is that Cisco might be "barred from bidding on future projects."
"Cisco was unable to show that they knew what WV wanted"
Yes, they have a contract. That is the best indication possible that the customer wants what you are selling.
If I trust someone else with my money, and they transfer that trust over to a salesperson, then they have violated my trust.
I don't want to hear about "blame to go around" and "the salesman should have sold us less stuff". Maybe apply some shame or sanctions to the salesperson, I suppose, but I really don't care unless there was some kind of kickback involved.
Allowing the stewards of your money to redirect blame onto Cisco for selling too much stuff seems so overwhelmingly naive that I don't know where to begin.
This is a modified version of the Prisoner's Dilemma. If there is trust then overall costs go down and the number of sales goes up. This is a net win for both sides.
If one side does not follow standard business practices, which the auditor argues happened here, then that one side may get better benefits. But this is actually an iterated prisoner's dilemma, and the standard tit-for-tat strategy of the Prisoner's Dilemma makes good sense. That is, shut out Cisco from future contracts for a period of time.
This encourages future vendors, who want repeat business, to stay in a regime of trust and relieves WV of having to pay for staff with full domain expertise on all contract-related matters. A role of the auditors is to identify these problems after the fact and use debarment as a way to disincentivize this vendors from this behavior.
If I go to an Apple store and buy a $3,000 computer is it apple's fault that I only needed an iPad? Hell no. I'm the one that ordered a $3,000 computer, signed off on the agreement, and forked over the cash.
Cisco acted like a business, you can't blame them for that.
> Cisco acted like a business, you can't blame them for that
Any time someone on hn complains about some business ripping them off, some variant of this comment usually gets posted. And it completely misses the point.
The point isn't moral blameworthiness. It's sharing of information. Some people may prefer to buy from a company they believe they can trust to give good advice about which of their products will meet their needs best. Others may not care about that and will buy just on the basis of the product. A company happy to sell products they know are overkill is making a business decision, to increase profit in the short term at the risk of losing the former kind of customer in the long term.
So reacting to criticism of a company overselling by defending their right act that way in a market is confused. The goal isn't armchair moralising, it's sharing information about them so that people can make more informed choices about who to do business with.
Gosh, it seems like state bureaucrats can't figure out how best to spend money, and don't care to hire anyone who can. How might one's political preferences change in response to this shocking revelation?
Well, think about it economically. What's the incentive for those who are skilled and capable to go into the public sector instead of private enterprise. Elections suck, the press sucks, your fellow public servants suck, having to deal with the general public, etc. etc.
Some days I wonder how we don't seem to encounter tons more corruption and incompetence at all levels of the U.S. government.
I agree! I strongly suspect that if I lived in Denmark I would support the Danish system: clearly it's working well for them! When I lived in e.g. Singapore and Japan I witnessed those (different) systems working better than ours in many ways, to their credit. The few relative drawbacks I noticed I attribute to the different preferences of the populations (i.e. they aren't really drawbacks in the citizens' estimations). Just as clearly, our system of public officials and lobbyists does not work very well. Most Americans would claim to prefer that there be less wasted money. We just can't get there from here.
Caveat Emptor. Cisco is out to make as much money as they can, they have no duty to save the government money. West Virginia's procurement process was irresponsible and wasteful and now they want to shift the blame to Cisco in order to cover their own incompetence. If you overpay for something, it's your fault.
I grew up in West Virginia. I also was pretty involved in the computer operation at my high school. The "head" of IT was a math teacher they suckered into doing all the work.
Anyhow. I remember when they decided they needed a domain server. What they eventually came back with was a two year old model HP tower server that ran over $4k. It was insane. They could have gotten something new for much much less, but all the explanation I could get was that they had a contract and had to buy the items listed in that contract.
There is a culture of corruption and it is prevalent in not only the public, but also the private sector.
Another story is when I was in a diner years later and heard my old social studies teacher asking for a bribe from someone to get a job in the coal mines. I felt pretty bad because I believe he got his money and thus his power from years before when I told him to buy Google and others stock.
> Getting any of the money back seems unlikely at this point, but the legislative auditor does have one solid recommendation to make. The State Purchasing division should determine whether Cisco's actions in this matter fall afoul of section 5A-3-33d of the West Virginia Code, and whether the company should be barred from bidding on future projects.
Cisco is a public company with a fiduciary duty to make money. You should assume that companies are going to try to fleece you whenever possible. Unless they committed some kind of contractual breach or fraud, they're not the problem.
The fault here is clearly with one or multiple people in the government. This is the kind of gross misconduct for which it feels like firing isn't even close to enough -- this kind of managerial incompetence really deserves at least a short stint in a white-collar prison somewhere.
This makes me sick to my stomach. The worst part is that there's nothing we (the taxpayers whose hard earned money went to to pay for these things) can do about it, nor is there much we can do to prevent it from happening in the future. I really really hate to admit it, but that's the truth.
Did you consider any of the tools of democracy? Although it can take time, that should work just fine if most people actually agree on what to do.
If you are in a minority of the population which wants to unilaterally impose its will on everyone else because they are more important, however - then I guess that democracy is no good and only an armed coup will do. Let's hope that people don't start thinking that way, because then we are all in trouble.
What's worse than overpaying millions for a few routers? Overpaying billions.
At the federal level, specifically to prevent such things from occurring, there's this huge byzantine procurement process. A process that is literally worth tens of billions of dollars to game.
So if you have product foo and want to see a zillion copies of it to the feds instead of some freeware or cheaper solution? 1) Convince somebody on the inside of the procurement system that yours is the best product, 2) they write up the specification so that no other products will qualify (many times just copying directly from your brochure) even though it's technically an "open" bid, and 3) have somebody with lots of procurement knowledge help guide the paperwork through the system. At the end of the day, it's all just paperwork, no matter how much money is involved.
And that's just what I've observed in IT. I'm guessing IT is the worst, since all the products somewhat look alike. But I'm not sure. Quite frankly, its way too depressing to think about much.
BTW, the best way to do #1 is simply hire people retiring out of the procurement system. Yep, there are laws against direct hires, so you hire somebody from DoD to help shepherd a Commerce Department contract, or a DHS procurement expert to help with a DoD job, and so forth. If you do this correctly, the poor schmucks left handling the paperwork will be so happy that you can offer extensive support in making sure everything is done correctly that this is another huge plus in favor of your getting the bid.
The trouble is that you actually do need some of this flexibility in the procurement process. If your department needs Photoshop, you don't want some goofy non-technical auditor telling you that he googled around and thinks GIMP will do just fine. Or you want one particular contractor because just last year they did an amazing job on something that was pretty much exactly what you need.
'The auditor's office sent off a fairly testy e-mail to Cisco noting that the 3945 routers were not appropriate for most West Virginia deployments—even according to Cisco's own literature. "I would appreciate an explanation as to why you believe the 3945 routers are not oversized and misconfigured for hundreds of locations," the auditor concluded, "and, thus, a significant over expenditure of millions of dollars for Cisco equipment."'
Did I miss some part where they contracted Cisco to visit every location and assess it's needs and build an order according to that?
If you order a bunch of 3945 routers then why is it Cisco's fault for selling you a bunch of 3945 routers?
Having worked on a government contract before, this doesn't surprise me at all.
They were going to spend all the money the feds gave them. Whether they spent it on over powered routers or "consulting" or something else, it was all going to be spent by the end of the project.
There are enough projects overbudget that being on budget looks really good. And there's always a concern with being under budget that next time the feds won't hand out so much money, and you might really need it then.
> the legislative auditor concluded that the company "had a moral responsibility"...
Since when do corporations have any kind of responsibility, other than to make as much profit as possible? Expecting anything else is futile. If something needs to be fixed, it is in mechanisms to restrain this kind of behaviour where it is in the public interest. Demanding that corporations have morals is not the solution.
This could have been executed by the process "Wired RFP". just look for the this term and you will see references where government RFPs are wired to specific vendor. In other sense, no other vendor may qualify to bid based on the RFP requirement.
For e.g RFP bidding/winning criteria is based on point system.
1. Price accounts for 25%
2. Referrals from similar orgs 40%
and so on
you see, when the price in the RFP accounts less then it is an indication that the RFP is wired to a specific vendor.
A small business who is just starting may or may not have 3 or more referrals from a public school or university.
In one of the RFP process I sat, the RFP had a typo where they had literally spelled out the name of a competitor company. I pointed out this in the pre-bidding call and the personnel acknowledged that it was a mistake.
Government RFP are a waste of time because it is the last step the government does in their purchasing process. They have already chosen the vendor and most of the time the vendor helps them write the RFP.
Fixing the RFP process may eliminate some of the overspending.
I saw the exact same thing with Cisco in the NY public school system. They gave my high school something like $50,000 of equipment in a rack to support two machines that submitted grades. We stripped it for parts and put it to better use, it had some really nice switches in it. But it was clearly misspent public money. At least we did put it to use in classrooms, though not as they intended.
"The auditor began digging, speaking to many people in West Virginia state government who had been involved with the project. The Department of Education told him that it "did not request or require that the routers for the state's schools have internal dual power supplies. Education would not have made this requirement because unless a school has two power sources the feature of dual power supplies would have no use." A network engineer for the Department of Education confirmed that he had not requested such a feature."
Education would not have made this requirement because unless a school has two power sources the feature of dual power supplies would have no use.
Oh is that how redundant power supplies work? You need two power sources, eh?
Although I've got a good war story on that one too, I had a machine with redundant PSUs emit a stream of smoke from one of the PSUs. It was happily up and serving while smoking out the machine room until the operator (rather sensibly) grabbed both power leads and pulled, at which point both fire and ssh went out ...
It is if you are in a situation in which the building power source is much, much more likely to fail than the power supply is, which is definitely the case in a rural school or library. You have to get to a pretty high level of sophistication (i.e. backup generators with automatic failover) before a redundant power supply has any value.
It would kinda be like buying a really expensive 24 port router and then just using 2 ports.....oh wait....that's what they did already.
Dual power supplies is a bit overkill. Although I remember my high school admin got a central router with dual power supply, but when you plugged both in at once (from the same source) they drew too much power on a reboot and flipped the fuse after every blackout.
Well, just another me-too story. When I was somewhat younger I had to "deploy" one Cisco product which was definitely a result of an "incentivized" sale. That sweet sweet setup involved login-password authorization (assisted by a Cisco router) where the user had to type in "public" and "1" as a password because... the enterprise actually had no end-user accounts and absolutely no possibility to introduce them...
As far as I understand, such an incentivized sale was a common practice. Once the management somehow achieved consensus (i.e. the right balance of risks, benefits and favors), engineers were left with making things appear OK.
I am inclined to think that Cisco made a strong bet on this kind of a business model at some point.
Just nit picking but there are several places in the article that are incorrect such as
"The West Virginia legislature at peak times can have over 600 internal users and numerous guests accessing "multiple Web servers, up to eight simultaneous live audio webcasts, multiple SQL servers, and multiple Google search appliances located in the Legislature's server farms." Despite all this, the legislature doesn't even use a router but instead runs a cheaper Cisco switch... and it has never exceeded capacity."
It's pretty clear that not only does the author not know networking basics, his sources don't either.
Why is that clear? Cisco sells plenty of "layer 3 switches", they are switch hardware with basic routing functionality available in the IOS. It is entirely likely that the quote is referring to a catalyst 29xx or something which is like 1/10 the cost of the routers the article was talking about.
Since the sequester is really just a reduction of an increase and not really a cut, how is it ineffective? Seems like it's the only thing that even kind of looks like a cut that might go into effect in our lifetimes.
Funny how the Feds were fine with a 2% increase in payroll taxes for consumers but a 2% cut in the increase of their budget is going to bring on Armageddon.
I don't understand why people speak so fondly of things like education cuts. Reducing the absolute size of the budget and increasing revenue are both important for continuing to reduce the deficit. But almost every real problem with government is caused by the relative allocations of funds and how departments are managed, not the mere existence of funding for things like education or public health.
Reminds me of new EU members. Joining the EU was advertised as source of funds for development and catching-up with the West and now a benchmark of politicians' "performance" is how much funds are they able obtain for their electorate - the more is spent, the better.
In extreme cases one didn't even have to bribe officials to get bogus contracts because if the city didn't find a way to spend all the money it was offered, it would simply get less.
This is bullshit. They could have put the network engineer from the Department (the guy who confirmed he had not requested dual power supplies) on this for a week, and he would have had a solid estimate for far less. Put him on it a month and he could have had an itemized order with the exact models to order from Cisco or from any of its competitors. If he were busy with other duties, any other network engineer in the state's employ could have done the same. If they were all too busy, a consultant could have been hired on for a month's engagement at two to three times the FTE cost.
Agreed - it sounded like the Cisco guy just spec'd up the absolute maximum needed for one or two locations, then just decided to roll out the same spec across all 1000+ locations, obviously trying to maximise sales. Cisco was probably shocked when the government approved it all.
Oh how I wish it worked like that. And who knows, perhaps out in WV it can. But I was once an appointed advisor (one of three) to a committee that was in charge of reviewing the qualifications of a similar outside consultant and making a short term contract recommendation to the department that would approve the hiring. I'm here to tell you...
I suppose when I say, "they could have" I mean that some appropriately-empowered decision maker who had an interest in making the right decision could have either assigned his own network engineers to do the work, or could have assigned such an engineer to hire someone else to do the work. I probably shouldn't assume that such a decision maker does exist.
That's nonsense the article shows pretty convincing evidence that even the largest IT department in the state, the state legislature, didn't need equipment this powerful. Even if they did want to standardize on one device across the state to gain administrative efficiency they should have picked something cheaper.
"did not request or require that the routers for the state's schools have internal dual power supplies. Education would not have made this requirement because unless a school has two power sources the feature of dual power supplies would have no use."
What if one power supply fails? I expect better from ars.
Because Microsoft is just as happy to sell overpriced packages of unnecessary functionality to clueless or corrupt government employees as Cisco is, and they have the extra property of arguing fervently against the use of free/open source software that competes against their offerings and would save even more.
I don't have a source handy, but around 2004-2005 Steve Ballmmer came in a short visit to my country (somewhere in Eastern Europe), he had a even shorter meeting with the Prime Minister of that time and sure enough not 6 months later a Government programme was launched and all the schools and public libraries in my country had to be equipped with Windows machines. This was around the time when people thought that tools like Open Office actually had a chance of toppling the MS Office suite.
30 years ago, why would anyone have bothered to use MS Word when nobody used it in the workplace? Everyone used WordPerfect or WordStar.
If you had a generation of kids who have experience with openoffice, it'll be much more likely that openoffice would be something that would be adopted over time - newly formed companies using it, gradual shift away from MS Office, etc.
MS knows their history, and will continue to seed generations of users with low-cost/free stuff to keep their dominance going. If they quit doling out free copies, something like openoffice would gain a larger foothold in schools and eventually businesses in < 10 years. Would MS Office be entirely replaced? Of course not, but it would not be the default/automatic choice for everyone without question.
well, I am happy that some people might realize this was a bad idea after that auditors report showing approximately all $5 million was wasted. And also that Cisco's claim that "the state had reviewed his spreadsheets and not objected" is not a reasonable excuse.
"For those keeping score at home, this means that 75 $20,000 routers are depreciating in a state police warehouse somewhere in West Virginia." So we should be seeing 74 Cisco 3945 routers on eBay very soon. (My commission for this idea is 1 Cisco 3945 router.)
Before I read the article, I was hoping for a feel-good piece about how someone hacked together a massive WiFi system using such a router to supply Internet to some isolated community in rural West Virginia. It didn't turn out to be exactly that.
Didn't read the entire post - is there some reason the state or local municipalities can't sell this stuff on ebay, get lower-powered hardware to match their needs, and pocket the diff for the locality's coffers?
This should surprise no one. This sort of nonsense is the entire reason cisco exists as a company. Their products are underpowered, overpriced, and their software is incredibly unreliable. Scamming big entities with closed bid processes into buying millions of dollars worth of equipment is cisco's bread and butter.