Entrusting Cisco could cost you

Pattern of bid influence and involvement results in millions spent, loss of buyer cred

The State of West Virginia wasting millions by buying way more router capacity than needed; California State University saving $100 million through a competitive bid while San Jose State pays more for its own network than the entire university system through a non-bid contract; the City of San Jose canceling an $8 million upgrade after discovering the vendor's penmanship all over the contract.

These are examples of a pattern of the curious amount of involvement and influence Cisco has in actually defining the bid for its customers. And there are likely scores more in all of the contracts "awarded" to Cisco between 2004, when San Jose determined that Cisco actually wrote portions of the contract for the $8 million City Hall upgrade, and this month, when West Virginia auditors blasted the vendor and state officials for the bloated $24 million investment in model 3945 branch routers.

West Virginia concluded Cisco showed "a wanton indifference" to the public interest in allowing - even encouraging - the state to buy millions of dollars more router juice than it needed. The seized bounty was a large chunk of federal stimulus funds West Virginia received for a broadband buildout.

State auditors also scolded West Virginia officials for using a "legally unauthorized" purchasing process and a reliance on Cisco "goodwill" to enable the drastic overcharge/spend.  The auditors determined that a competitive bid process, like that enacted by California State University last year, may have resulted in a much more cost-effective and fiscally responsible outcome.

Cisco essentially said the state auditors were missing the point by failing to recognize "the forward looking nature of (West Virginia's) vision."

Cal State ended up awarding Alcatel-Lucent a $22 million contract to refresh the networks of its 23 statewide campuses. Cisco bid $123 million, according to CSU. But that still didn't stop San Jose State University from bucking the university system and handing Cisco and a reseller a $28 million deal to, according to numerous CSU and SJSU networking insiders, actually define and implement the school's "Next-Generation Technology Project" without much of any input from university IT.

Publicly, Cisco wouldn't comment on the CSU situation. But privately, it took issue with the findings of the largest four-year university system in the country.

In San Jose in 2004, a city official actually lost his job after it was discovered that Cisco wrote portions of the bid to upgrade the San Jose City Hall network for $8 million.  

Who's at fault for the extravagance which, in these three examples, came at the taxpayers' expense? The buyers, obviously, for allowing the vendor to overly influence, be involved and in some cases actually write the bids for the work; and for not bidding out the project.

But does Cisco bear some blame? Should Cisco have a moral obligation to do what's right for the customer (and taxpayer)? Or to sell as much of its own equipment as possible even though it's overkill or overly expensive for the project at hand...

Such are the entrapments of entrusting a vendor as a "trusted advisor". Too much trust can lead to laziness, corner-cutting and abuse. And perhaps a sub-optimal solution wasting millions of dollars.

Caveat Emptor.

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