On Tuesday, November 17th, the Brevard Board of County Commissioners voted 3-2 to extend a contract with AT&T that didn’t expire until August of 2010 for an additional three years at a cost of $3.2 million per year – a $400K per year decrease from their current contracted rate of $3.6 million per year. They did this without going to bid and in spite of competing vendors sitting in the audience showing cost savings of 40-70% were available on many of the services provided by incumbent vendor AT&T.
I cried foul, sending letters to the editors of both newspapers and calling in to the local Conservative talk radio show, Bill Mick Live (listen to the phone call here). A couple of days later Commissioner Bolin responded with a letter to the editor to Florida Today stating my facts were wrong, I had left out important details, and that the board’s decision was a wise one.
Now the so-called “Watchdog” reporters of Florida Today have jumped on board playing the part of lapdog for the county, and in their usual fashion, not bothering to fact check anything. Reporter Jeff Schweers couldn’t even get the company I work for right (see the original article here). I work for Verteks Consulting, not ShoreTel. ShoreTel is one of the brands we sell.
Before I delve into all of the reasons why this was such a poor decision and a horrible deal for the taxpayers of Brevard, I want to clarify that I *was* presenting to the board as a salesperson, but as an equipment vendor on a separate agenda item for $334K, not as a service provider on the AT&T contract. Contrary to the accusations made by Commissioner Bolin and others, I never had any financial stake whatsoever in the outcome of the $3.2 million AT&T agenda item. The county will be going out to bid for new equipment, but only after going out to bid for a telecommunications consultant to write an RFP at a cost of between $100K-$150K to the taxpayers, which is a whole different discussion for another day.
I commented on the AT&T contract because at a basic common sense business level it didn’t make sense to make that kind of long term commitment given the economic uncertainty facing the county. Not to mention the fact that implementation of newer phone technology would make some of the AT&T services being contracted for simply go away.
In spite of what some of the Commisioners and staff would have you believe, this is not a complex, rocket science issue that requires a $100K consultant to figure out; it’s a basic business decision that only requires a rudimentary understanding of Return On Investment (ROI) and the application of some basic common sense.
About a month ago I called upon Commissioner Infantini to speak with her about the county’s antiquated phone system and the possibility of replacing it with new state of the art technology made by a company called ShoreTel. I inquired as to how much the county was spending on its phone services and she showed me how to access the public records portion of the county payables system. After reviewing the cover sheets for several different invoices, it became obvious the county is spending a staggering amount per year on voice and data services with AT&T – about $3.6 million, in fact.
According to Brevard County IT Director Jon Sellers, the county has 3,200 employees, 1,800 of which use PCs, and a total of 3,800 handsets (phones) deployed county wide across approximately 110 facilities. This means the county is spending an average of $1,125 per person per year to provide them with computer and phone access. According to page 5 of the IT Department’s own 2009 budget overview, they maintain 5,241 phone lines at an average cost of $211. More on that later.
On Thursday, October 29, in order to get the specifics I needed to put together a cost analysis , I did a public records request through the new county manager, Howard Tipton, for all the information I would require. He promptly forwarded it to Mr. Sellers, who then contacted me to discuss my request. I was told that some of the information I had requested could not be provided to me because of “security concerns”, but the rest would be provided within a week or so.
Staff and AT&T circle the wagons for November 10th Board of County Commissioners Meeting
You can imagine my surprise when I learned on Monday, November 2nd – less than a week after I made my request – that an item to spend $334K to upgrade the county’s existing Nortel system and an item to extend AT&T’s contract for an additional three years had been added to the November 10th BoCC meeting agenda. As Commissioner Infantini pointed out – an amazing coincidence!
I was notified on Friday, November 6th at 4:43pm that my CD was ready for pickup, too late for me to go pick it up at that day. I was out of town the following Monday, and thus wasn’t able to pick up the CD until the morning of November 10th, where I would be asking the board to hold off on pulling the trigger on these two items in order to allow them time to research their options and to give me time to put together my cost analysis. I gave a three minute overview as to why they should hold off, and after some spirited discussion they agreed to table it for a week to the November 17th meeting. Here is the video clip of the November 10th equipment and service discussions:
During the discussion the Cisco Voice over IP (VoIP) phone system implemented five years ago by Clerk of Courts Scott Ellis came up, and Mr. Sellers stated the Clerk hadn’t saved any money – that the installation of his Cisco VoIP phone system “was not a great win for him”. You can see the Clerk’s e-mails that contradict Mr. Sellers’ claims to the Commissioners here. Note that the Clerks’ costs went from ~$20K per month down to ~$5K per month – the Clerk’s office is now spending aproximately 25% of what it was prior to the implementation!
I spoke with Mr. Sellers after the meeting. He acknowledged he had heard of ShoreTel and that the county network needed to be reviewed, but moving forward with the Nortel upgrade and AT&T contract extension was what he wanted. He told me if I thought I could get three of the five commissioners to do something different I should “knock myself out”. So I did.
I’d like to pause here and point out that contrary to Chairwoman Bolin’s assertion in her Florida Today letter to the editor that I “failed” to show the county what savings were possible in my two appearances before the board, the only information I had been able to review before the November 10th meeting was what was available on the budget web site and a handful of AT&T invoice cover sheets – only enough to give the most high level of overviews in regards to potential cost savings. Even with what little I provided, Commissioner Infantini was able to confirm the savings were real – Commissioners Bolin, Fisher and Nelson simply chose to ignore the only board member that didn’t see fit to be spoon fed information by staff and AT&T.
On the morning of Wednesday the 11th (Veterans Day), I left a voicemail and sent e-mail to each of the County Commissioners asking them for a face to face meeting prior to the next meeting. Commissioners Anderson and Infantini made time for me, Commissioner Fisher gave me a 15 minute phone appointment, Commissioner Bolin said she couldn’t fit me in (see e-mail here), and Commissioner Nelson didn’t reply at all. I also e-mailed County Manager Howard Tipton, who didn’t reply until the morning of Monday, November 16th, a day before the meeting (see his e-mail here).
Brevard County taxpayers lose big at November 17th Board of County Commissioners Meeting
Mr. Sellers led off at the November 17th Tuesday meeting with a PowerPoint presentation explaining why they wanted the money for the upgrades and why the county should extend the contract. He had unlimited time, and the support of the incumbent vendor AT&T, who paraded no less than four different sales people in succession before the board, one of them speaking almost exclusively about how many employees they have living in Brevard and how they attend many of the same social events the Commissioners do(!).
With only enough time and information to do a high level cost comparison, I gave a five minute PowerPoint presentation to the board as to why they should vote no, or at least hold off on for another month or so, on the agenda item to spend $334K to upgrade the aged Nortel system.
Here are the highlights (you can view the actual list of questions I gave the Commissioners to review here):
1) The Nortel systems in use by the county are completely outdated (IT Director says so himself in first video at 58 seconds). Using the same $334K the county could replace roughly 15 percent of it’s entire phone system with newer technology that seamlessly integrates with the existing Nortel and provides dramatic cost savings by eliminating recurring monthly services, decreasing power consumption, greater ease of management and improved productivity for employees.
2) Nortel declared bankruptcy in January of this year, and even though a deal to purchase its Enterprise Business Division is pending by competitor Avaya, it isn’t scheduled to close until next month, and even when it does the future of the Nortel product line is unclear. Spending $334K in upgrades on outdated equipment whose manufacturer has declared bankruptcy just doesn’t make sound business sense.
3) Even prior to its bankruptcy, independent research shows that Nortel ranks dead last among all major VoIP phone vendors in every category. Leaving aside the bankruptcy, why would the board embrace the long term strategy of moving to a Nortel VoIP platform when competitors like ShoreTel get more done at a fraction of the cost?
4) Data from independent research firm Nemertes Research shows that in an installation the size of Brevard County, the average total cost of ownership per year for a ShoreTel system is $11 per handset. The average total cost of ownership for a Nortel is $324 per handset. This means the county would save almost $1.2 million per year by replacing the Nortel with a ShoreTel. Commissioners were provided with reports from Nemertes Research and case studies from the City of Oakland and Hidalgo County of Texas to back this claim up. Only Commissioner Infantini researched the issue and called the references.
5) The argument put forth by the IT Department and AT&T that the entire system must be replaced at one time is false. The ShoreTel can be implemented gradually and incrementally alongside the Nortel. Commissioners were provided the following material to document this fact. Commissioner Infantini confirmed this as well, and told the other board members of her findings.
As you can see, the Commissioners were provided with numerous reasons to postpone the AT&T contract extension decision, including documented cost savings by the Brevard County Clerk of Courts that backs up the figures provided by yours truly and other vendors. Why they chose to ignore all of the information given them and instead chose to listen to arguments made by staff and incumbent vendor AT&T is something only they can answer, but the situation reminds me of this quote from Atlas Shrugged:
Thinking is man’s only basic virtue, from which all the others proceed. And his basic vice, the source of all his evils, is that nameless act which all of you practice, but struggle never to admit: the act of blanking out, the willful suspension of one’s consciousness, the refusal to think—not blindness, but the refusal to see; not ignorance, but the refusal to know. It is the act of unfocusing your mind and inducing an inner fog to escape the responsibility of judgment—on the unstated premise that a thing will not exist if only you refuse to identify it, that A will not be A so long as you do not pronounce the verdict “It is.”
– Ayn Rand, Atlas Shrugged
This is exactly what the Commissioners that voted for this contract extension did. They blanked out the facts provided them and shifted the responsibility of judgement to staff, who is clearly very tight with incumbent vendor AT&T. Last I checked, the Commissioners are there to set policy and direct staff – not the other way around.