Motorola has thrived virtually without competition as Charlotte’s emergency radio company, scoring more than $60 million in no-bid contracts over the last decade.
The latest sole-source deal, approved by the Charlotte City Council last October, will cost the region’s taxpayers up to $32 million.
Charlotte’s recent handling of its radio contract mirrors a pattern in many cities that have long been loyal clients of Motorola, the Illinois-based firm that dominates the public safety communications market. It also reflects a recent Motorola marketing tactic of fighting off growing competition with long-term deals to maintain and upgrade equipment.
But experts say that when governments fail to invite competition on large contracts, they often pay too much. And with each contract renewal In Charlotte, the company’s grip has narrowed city officials’ options.
“The taxpayers of our region are getting burned,” said Steve Koman, a former emergency communications consultant who assisted Charlotte from late 2011 to early this year.
Koman contends the city failed to exercise due diligence by awarding the recent Motorola contract without soliciting competition – and without asking independent experts whether it was the most cost-effective option. Instead, Motorola helped craft the contract, which will allow the company to continue a practice of embedding proprietary features into the system _ a tactic that could prolong the city’s dependence on the company, he said.
By May, he’d grown so concerned that he notified the FBI.
In another sign of Motorola’s supremacy: Agencies in Charlotte and surrounding Mecklenburg County were advised in 2011 that they could purchase radios from any of four qualified vendors, but that didn’t change their buying habits. Indeed, over the last 10 years, all of the roughly 5,000 radios they’ve purchased are Motorola models.
City officials say they’ve acted in the best interests of taxpayers and public safety agencies. They say shifting to a new company would be expensive and that the city has received discounts by signing the recent multiyear contract with Motorola.
Money, city officials say, is not the only factor. Motorola’s two-way radios are widely considered the gold standard for public safety performance. Police and firefighters have come to trust the company’s equipment, they say.
A recent McClatchy investigation detailed an array of tactics used by Motorola to elbow out competitors and prolong its decades-long dominance.
In response to those stories, three senior Democrats in the U.S. House of Representatives have asked the Department of Homeland Security’s internal watchdog to investigate whether Motorola’s contracting tactics have led state and local governments to pay so much for their radio systems that they’ve wasted millions of federal grant dollars.
Charlotte’s latest Motorola deal is similar to a number of recent maintenance-and-upgrade contracts in which the company has protected its market share despite the adoption of uniform standards for the design of two-way radio equipment. The standards, which were aimed at ensuring that all brands can interact, also have increased price competition.
However, the noncompetitive deals are helping Motorola limit shrinkage of its estimated 80 percent share of the U.S. public safety radio market.
In 2012, the inspector general for Palm Beach County, Fla., faulted the county for the sole-source purchase of a new Motorola master controller, or switch, that ties together equipment purchased as far back as 1998 with the company’s newer systems. Buying the switch “will likely provide a continued sole-source justification for future equipment” that can connect with proprietary Motorola hardware, the report by Inspector General Sheryl Steckler said.
Steckler chided county officials for signing the deal before conducting a comprehensive study of all replacement strategies and for plowing $41 million into the current system without exploring “whether a compatible and less expensive system could have been acquired.”
Like Palm Beach, Charlotte did no such study before awarding the $32 million contract.
Illinois-based Motorola, known as Motorola Solutions Inc. since 2011, when its parent split, says it has a “robust compliance practice to ensure it follows all applicable laws and regulations.” The company says it competes fairly for its customers’ business by offering them “superior products and solutions.”
Motorola had a special opportunity to cultivate brand loyalty in Charlotte.
During the 2012 Democratic National Convention, Motorola loaned the city about 3,000 radios for use, free of charge, by visiting law enforcement agents.
Company officials have also made smaller gestures. For instance, they periodically spring for pizza for those who work in the radio room, according to Danny Lovett, the city’s service area manager for public safety communications.
While he said he had no direct evidence of wrongdoing, Koman, the former city consultant, said he’d told the FBI the city wasn’t reaching out to other vendors or seeking outside expertise on the latest radio contract. An FBI spokesman declined to comment, and a spokeswoman for the city, Sabrina Colon, said there had been no indication that the FBI had opened an investigation.
While Motorola has a reputation for building reliable equipment, its radios tend to be priced higher than those of competitors. The lack of competition in many markets has propped up prices, experts say. Public safety agencies in Mecklenburg County have paid up to $5,000 apiece for some Motorola radios. Some other companies sell radios with the same functions for as little as $1,700.
Chuck Robinson, the Charlotte official who played a key role in recommending radio contracts before he retired last December, said that several factors made it hard to open the project up for competition. A key issue was that almost all of the equipment in the city’s radio network is proprietary to Motorola, meaning that only the company or one of its licensed partners could maintain the system.
He said that many first responders had developed a love-hate relationship with Motorola.
“They really love the product,” said Robinson, who until December worked as the city’s shared services director. “But they really wish they had some other options.”
The Harris Corp., a multibillion-dollar company based in Florida that’s the leading supplier of tactical radios to the U.S. military, offers one such option.
Harris spokeswoman Victoria Dillon said she couldn’t guarantee that her company could have done the Charlotte work for less money than Motorola had. But, she said, “a competitive process tends to drive companies to the lowest price and the highest value.”