The findings come shortly after California State University concluded that Cisco's bid $100 million more than the winning $22 million bid to refresh the university system's 23 campus network. Indeed, the West Virginia report cited the CSU findings in its own conclusions.
And in 2004, Cisco was found to have written portions of an $8 million bid to upgrade San Jose City Hall's network. The contract was withdrawn by city officials after the discovery.
The West Virginia auditor found that the State Office of Technology used a purchasing process which is unauthorized by West Virginia statute or legislative rule to purchase the Cisco 3945 routers under the Broadband Technology Opportunity Program (BTOP) grant. The Office of Technology used a "Secondary Bid Process" on an existing contract approved by the State Purchasing Division, instead of a competitive bid process open to non-Cisco vendors, as required by law.
In addition to using the legally unauthorized secondary bid process, the contract used to purchase the routers was inappropriate, the report stated. The 2007 IPT07D Contract with Verizon Network Integration was a statewide contract for a "simple expansion" of telephony; however, the 1,164 Cisco routers have the capabilities to support between 814,000 and 1.39 million VoIP telephones, significantly more than the state needs, the report concluded.
"The 2010 branch router purchase was inconsistent with the specific requirements of the purchasing statute," the report states. "Had this purchase been competitively bid, the Purchasing Division would have administered the bidding process and provided contract management. In addition to exempting purchases from Purchasing Division scrutiny, the secondary bid process, as applied to the BTOP router purchase, appears to have the effect of limiting competition for future purchases to only those vendors on the original contract."
The original IPT07 contracts specifically requested bids for "Cisco name brand product(s), "or equal," the report states. The release document for the 2010 purchase, however, stated that the "IPT07SWC [statewide contract] specifies Cisco equipment only."
"Accordingly, it appears that, in addition to limiting the pool of bidders to those holding an IPT07 contract, only those bidders who could provide Cisco products were eligible to bid on the (2010) release," the report states.