National Security

Protest delays FBI’s huge sole-source deal with Motorola

Some of the different radio systems available to public safety agencies on November 30, 2013. At left is the Motorola APX 6000.
Some of the different radio systems available to public safety agencies on November 30, 2013. At left is the Motorola APX 6000. MCT

A protest by a small two-way radio manufacturer has stalled an FBI plan to hand a sole-source contract worth up to $500 million to emergency communications giant Motorola Solutions Inc., mainly to upgrade the bureau’s 30-year-old network.

FBI contracting officials contend that proprietary features embedded in their existing Motorola network preclude its interaction with non-Motorola products.

Citing a 15-year-old estimate that replacing the entire system from another vendor’s product would cost $1.2 billion, they said in a formal notice this month that they can save $300 million in equipment by continuing an exclusive relationship with Motorola.

The bureau circulated the proposal two weeks ago, just as three senior House Democrats asked the Department of Homeland Security’s internal watchdog to investigate whether Motorola’s contracting tactics have led state and local governments to squander millions of taxpayer dollars on its pricey equipment.

RELM Wireless Corp., a Florida-based radio manufacturer with $30 million in annual revenues, promptly challenged the FBI proposal on grounds that it “unjustly bars competition” for the sale of radios.

The firm sells walkie-talkies with the same functions specified by the FBI for about $1,700, compared with Motorola’s average price of $4,200, said Ken Klyberg, RELM’s vice president for sales.

He said in a telephone interview that RELM is preparing to file a formal protest with the Government Accountability Office.

Bureau spokesman Chris Allen said that “the FBI is reviewing the sole-source” proposal to determine whether it’s warranted. He declined to comment further, but a person who was unauthorized to speak for the record said that RELM’s protest prompted the review.

The FBI proposal is the latest development showing that Motorola still maintains an advantage with many public safety agencies, despite efforts to standardize manufacturers’ equipment designs so that every first responder’s radio can interact with all others.

While standardization has invited increasing competition, Motorola has found ways to hold onto its estimated 80 percent share of the U.S. market.

Besides financing a nationwide system upgrade, the FBI’s proposal would allot up to about $170 million to agencies within the Homeland Security and Justice departments for purchase of Motorola equipment, as needed, over the next five years.

Klyberg said that the proposal would “severely impact” his company’s sales, 70 percent of which go to federal agencies.

Other vendors also voiced strong objections to the decision to keep them from bidding on the FBI upgrade, saying that technology exists to connect Motorola’s older system with their own equipment – if Motorola cooperates.

“This seems like a bunch of baloney,” Larry Emmett, director of bids and proposals for Texas-based EF Johnson Technologies, said after reading the FBI’s five-page “Justification for Brand Name Only Acquisition.”

“Just saying there is no other option and going down the sole-source path is not justifiable,” said Karthik Rangarajan, the company’s vice president for sales.

Motorola’s largest competitor, Florida-based Harris Corp., has “advanced technologies to interconnect legacy, current and next-generation solutions across multiple vendor systems,” even those with proprietary software, said company spokeswoman Victoria Dillon.

Steve Koman, who served as an emergency communications consultant for the city of Charlotte, N.C., called the FBI proposal “half-baked” and said it adds to “the risk to the public that they will continue to overpay for public safety radio communications equipment.”

Tom McMahon, director of corporate communications and government affairs for Illinois-based Motorola, said it is the company’s policy “to not comment on active federal procurements.”

On July 15, Reps. Henry Waxman and Anna Eshoo of California, along with Colorado Rep. Diana DeGette, asked Homeland Security Inspector General John Roth to investigate findings in a recent McClatchy series delving into Motorola’s dominance.

The series detailed how Motorola, with help from state and local officials, has outmaneuvered competitors in nearly all of the nation’s 20 biggest cities, in many cases through noncompetitive contracts, slanted bid specifications and proprietary features in existing systems.

The company has cashed in on a gusher of grants from Washington aimed at avoiding a recurrence of communications breakdowns that cost lives after the terror attacks of Sept. 11, 2001, and Hurricane Katrina’s battering of the Gulf Coast in 2005.

The quality of Motorola’s radio equipment, widely recognized for its durability and reliability, is not in question. Rather, it’s the price of its products – cities have paid as much as $7,500 for a single handset – and the stunted competition that have drawn consternation.

In response to a recent inquiry from McClatchy, Motorola said that it has abided by “all applicable laws and regulations” and that it offers products “that achieve cost savings for the taxpayer.”

While McClatchy’s stories focused on Motorola’s state and local contracts, the company is also king of the federal walkie-talkie market, where rival vendors accuse the firm of similar marketing tactics even since the new design standards, known as P25, to improve communications between disparate radio equipment took hold around 2005.

In contrast to the FBI, the U.S. Secret Service took a much different approach in administering the procurement of tactical communications upgrades for its agents and more than a dozen other Homeland Security agencies beginning in 2012. It qualified 30 vendors to compete for a series of contracts for up to $3 billion in “mission critical” radio equipment.

One of the P25 standards requires each manufacturer to develop electronic gateways that can overcome proprietary features and connect their systems with other P25-compliant systems.

That’s a key issue at the FBI, where bureau officials have faced mounting pressure to update their antiquated system.

Since 2008, the FBI said, parts of its network have violated a deadline from the National Telecommunications and Information Administration, a Commerce Department unit that regulates federal emergency communications networks, to narrow the bandwidth used by its older radios.

Anytime that FBI agents make “wideband” transmissions that interfere with another agency’s “narrowband” communications, the FBI said, the bureau could be directed to end use of that frequency within 180 days.

“Therefore, every location where the FBI continues to operate wideband communications is at risk,” the procurement team wrote.

The proposed contract, they said, gradually will eliminate wideband transmissions and employ Motorola equipment that can interface with the bureau’s current blend of a 1980s-era Motorola SmartNet network with newer, P25 equipment.

Switching to a different contractor, they said, would cause “significant disruption” to communications, risk emergency failures and require the bureau’s “over-tasked” staff of technicians to maintain two systems until the new one is ready.

But staying with Motorola, they said, would save $300 million in equipment and extend the system’s life by 10 to 15 years. They did not explain how they derived their equipment valuation.

Further, the FBI officials said, such a change would mean that the bureau’s 420 electronics technicians would each have to undergo 200 hours of training on the new system.

“After 32 years procuring radios from only one primary vendor,” they wrote, “changing that business model would create significant funding, logistical and training challenges.”

On its face, the bureau’s justification “sounds reasonable,” said Joe Boucher, chief technology officer for Connecticut-based Mutualink, a firm that uses software gateways to interconnect two-way radio networks. “But it’s impossible to tell without knowing the supporting details.”

One problem is that while manufacturers have committed to sell customers gateway devices to their systems, there are no price restrictions.

Boucher said that Motorola is well known in the industry for making it “prohibitively expensive” for a customer to acquire software that can join its Motorola system with another vendor‘s. Providing such a hookup “would be inviting competition,” he said.

If Motorola provided such gateways to the FBI’s system, “pretty much anybody on the planet can sell them radios for that,” said EF Johnson’s Emmett.

However, he said, one feature in the FBI system may be “difficult to overcome:” Motorola’s SmartNet software version that enables special agents to periodically change, over the air, the codes for their encryption programs that ensure secure communication.

Both Emmett and RELM’s Klyberg scoffed at the bureau’s estimates of how long it would take to retrain the FBI’s technicians on another vendor’s system.

Klyberg said “they didn’t blink an eye” when they had to train agents on use of Motorola’s latest radio models.

The bureau seems to be basing its decision on the need to buy Motorola “to keep continuity.”

“The federal government’s not supposed to be allowed to do that,” he said. “They’re supposed to get best value for the taxpayer dollars.”