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Anatomy of a Cisco bid rigging

"Five proposals were publicly opened and read by the purchasing department on October 10, 2013... in what has been called 'bid rigging' - started adding costs to the bids."

Hummelstown, PA:   Wed, 3/19/14 - 11:59pm    View comments

Update 4/29/2014:

Niagara Falls Reporter:

Consultants Want More for Botched Helwig Telecommunications Fiasco

Update 4/7/2014 - 10:19pm:

The Buffalo News:

Niagara County has decided to drop plans to seek its own bids for a new telephone and data network

This week a Cisco bid rigging scandal made the following headline news on a front page of a New York newspaper, Niagara Falls Reporter.

Niagara Falls Reporter Front Page

Niagara County GOP-Led Legislature To Admonish One of Their Own

"In an unusual move, the Republican-led Niagara County Legislature will admonish one of its department heads, the Niagara County Director of Information Technology, Larry L. Helwig (contact info and LinkedIn profile), also a Republican, for his handling of an RFP for installation of a cabling network for phones and a computer system for the county. 'The poor performance demonstrated by (Helwig)...has impeded and complicated what should have been a clearly defined process,' the admonishing resolution, sponsored by freshman legislator Randy R. Bradt (R-North Tonawanda), reads.

"Bradt charges that Helwig did not go with the lowest bid for products and services, failed to protect taxpayers, and his efforts were 'driven by personal preferences or comfort levels.'

"Five proposals were publicly opened and read by the purchasing department on October 10, 2013. Advance 2000 of Amherst had the low bid of $605,184, for the new phone and data network. But Helwig, aided by his consultants, ECC Technologies and Cannon Design - in what has been called 'bid rigging' - started adding costs to the bids.

"There were eight additions to Advance 2000's bid made by Helwig and two changes to IPLogic's bid. After adjusting the bids, adding more than $200,000 in costs to the Advance 2000 bid, the revised totals inverted the two low bidders making the bids $761,773 for IPLogic, which would use Cisco Systems equipment, versus $816,862 for Advance 2000, which uses Alcatel Lucent Technologies equipment."


Frank Parlato, Publisher and Editor in Chief of the Niagara Falls Reporter, provided the following documentation.

Documenting the anatomy of a Cisco bid rigging

Exhibit 1

The original bids as obtained via the Freedom of Information Law (FOIL).

Advance 2000 bid for non-Cisco equipment, total cost $689,638.48

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IPLogic bid for Cisco equipment, total cost $894,439.52

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Exhibit 2

In-house "worksheet" prepared by Larry Helwig and presented to the Niagara County Public Works Committee that inflates the Advance 2000 bid until it is significantly higher than the IPLogic bid.

It also bears noting that the RFP only asked for maintenance costs through the 2nd year; the additional costs listed here were irrelevant to the RFP.

This document was prepared prior to November 22, 2013.

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Exhibit 3

The resolution prepared by Larry Helwig and Niagara County Budget Office personnel for presentation to the Niagara County Public Works Committee to award the bid to IPLogic.

This document was prepared prior to November 22, 2013.

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Exhibit 4

Document prepared by Larry Helwig in response to guidance from Public Works Chairman Dr. John Syracuse to justify the higher costs of awarding the bid to IPLogic after the Public Works Committee did not act on the previous resolution.

This document was prepared prior to November 22, 2013.

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Information determined in relation to Exhibit 4 above

1.Not true. Apparently, there is a distribution source in Toronto.
3.The need for this particular spec was later dismissed during discussions before a joint committee meeting of the Legislature's Public Works and Administration committees.
4.Again, with the proprietary Cisco.
5.Nothing from that stress test indicates that Cisco, alone, provides a solution.
6.This is a determination from Helwig and the ECC/Cannon consultants. However, Advance 2000 has repeatedly stated they will stand by their bid price; it's not clear why Mr. Helwig is so concerned if they find they have not compensated themselves adequately.
7.Cisco also has undergone significant downsizing:

Cisco Systems to lay off 4,000

8.Advance 2000 put in writing they would provide the requested support.
9.This is the most problematic item, because it's completely untrue. Legislator Bradt contacted Nassau County and spoke directly with the individual who oversees their networks. This individual offered nothing but praise for Advance 2000 and disputed the claims found here.

Exhibit 5

Updated resolution presented by Helwig et al.

Note that the resolution states that they had "Disqualified" Advance 2000.

This document was prepared prior to November 22, 2013.

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Exhibit 6

Email exchanges between Niagara County Purchasing and Advance 2000.

Note that the email from Purchasing states:

"No decision has been made as to a disqualification of any proposal submitted by a vendor for the VoIP-Enabling Data Network Upgrade RFP."

This is in direct contradiction to the resolution above, that was prepared before this email was sent.

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Exhibit 7

Document prepared by Helwig and consultants prior to the Niagara County Joint Committee meeting.

Note that it inflates the costs of the Advance 2000 bid; most peculiar was the decision to increase the cost of the Advance 2000 bid by the difference in cost between the higher end Cisco 3850 and the lower end Cisco 2960, which is the comparable system to the Lucent 6450.

The two are comparable but incompatible.

For this to be valid math, they would have had to lower the cost of the IPLogic bid by electing the lower-end Cisco product; there is no valid basis for this math.

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Exhibit 8

Updated document for follow-up meeting.

Still attempts to inflate the Advance 2000 price.

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Related documents:

Niagara Falls Reporter: 22-page bid documentation

Related stories:

Auditor: Cisco sneakily used legally unauthorized purchasing process to outlandishly overprice 1,164 routers to take advantage of West Virginia

Cisco internal email addresses $100 million overcharge on $22 million California State University RFP

Did Cisco's new sales culture ripoff the State of West Virginia?

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