NY Statewide Wireless Network

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December 6, 2006

Costs for State, Local Governments to Access

Statewide Wireless Network May Total $790 Million

System Hopes to Improve Communication with

Emergency Personnel Statewide

The State and local governments may have to spend as much as $790 million to acquire the equipment needed to access the $2 billion Statewide Wireless Network (SWN) being established to improve communications among public safety entities, according to a report issued today by State Comptroller Alan Hevesi. Neither the State Office for Technology nor the vendor has provided a firm estimate of how much it will cost government entities to acquire equipment to access the SWN.

State costs are projected to total $260 million, including $160 million in financing costs, and local governments’ costs are expected to total $530 million, including $330 million in financing costs. The $790 million of additional costs is an estimate based on figures the manufacturer provided to the Comptroller’s office. Until now the only public estimate of the cost was “more than $100 million”, provided by a representative of M/A-COM, the vendor developing the network’s infrastructure, at an Assembly hearing held nearly three years ago.

At this time, the equipment will all have to be purchased from M/A-COM and Hevesi called on the Pataki administration to take immediate steps to have the company fulfill its contractual commitment to license its technology to other companies.

“The Statewide Wireless Network contract, approved more than a year ago, required M/A-COM to license its technology to three other equipment manufacturers to force companies to compete for local governments’ business and provide taxpayers with lower costs. But that has not occurred to date,” Hevesi said. “If our $2 billion investment in SWN is to be worthwhile, then equipment must be made more affordable to encourage government entities to use the system.”

During its review of the $2 billion contract, the Comptroller’s office required the manufacturer to lower its proposed financing rate of eight percent to a more appropriate market rate of 6.5 percent. The contractor subsequently provided the Office of the State Comptroller with an estimate of financing cost savings for the State and local governments of as much as to $29 million based on the probable number of users of the system This estimate of savings allowed the Comptroller's office to calculate the $790 million in total additional costs.

At the time the $2 billion contract was approved, Hevesi and others raised concerns that not enough was being done to encourage local governments to commit to use the network. The lack of involvement by local first responders would limit the benefit of a statewide system in an emergency. Hevesi released a briefing document for State officials detailing the award of the contract to M/A-COM and its terms, and highlighting ongoing concerns about the development of the SWN. The need to replace the State’s current communications infrastructure was identified by the New York State Police in 1996 and awareness was heightened after September 11, 2001. The State twice tried unsuccessfully to enter into agreements with single vendors to develop the system before initiating a competitive procurement in 2002 that resulted in the award of the contract to M/A-COM, which was approved in September 2005.

Hevesi also released an audit which found irregularities in existing separate M/A-COM contracts for public safety telecommunications equipment with the Division of State Police (State Police), Department of Transportation (DOT) and Department of Correctional Services (DOCS). According to auditors, M/A-COM was paid for maintenance services it has no evidence were provided, continued to receive monthly fees from State Police and DOT after leases expired and the equipment was fully paid for, and charged varying and excessive financing rates for equipment leases.

The audit, like the letter from the Office of the State Comptroller to the Governor’s Office regarding SWN, notes that consistency in contracting and savings could be achieved by allowing multiple agencies to acquire equipment from a single statewide contract. Despite discussions with the Executive before the audit was released to the agencies in September, no centralized contract has been put in place.

According to the audit, during the fiscal year ended March 31, 2004, State Police, DOT and DOCS paid M/A-COM $17 million in contract expenditures including monthly lease payments, user fees, buy out costs and monthly maintenance agreement payments and for repairs not covered by monthly maintenance agreements.

The audit, which examined the structure and associated costs of long term contracts, identified $35.3 million in excess costs and potential cost savings, including $14.5 million that auditors identified as excessive and inappropriate charges already incurred and for which the auditors recommended that the agencies recover or negotiate contract concessions with M/A-COM. M/A-COM disagreed with some of the audit findings but did credit the State with $158,462 in overpayments and has agreed to improved contract terms going forward. The contracts began with State Police, the Department of Transportation and the Department of Corrections in 1960, 1985, and 1998 respectively. As of February 18, 2005, agencies had spent $126 million pursuant to these contracts.

The Statewide Wireless Network is a project to replace the obsolete communications infrastructure for the State with a radio network for public safety and public service agencies that works statewide. The SWN is intended to facilitate interagency and intergovernmental communications, allowing emergency personnel to communicate with each other, and is being designed to have the capacity for 65,000 users. The first phase of the regional implementation plan involves Erie and Chautauqua counties and is expected to meet its June 2007 anticipated completion date. The contract also provided for retrofit of the State Police Metro-21 system in New York City, which is expected to be completed this month.

The SWN contract is a lease-purchase agreement, wherein the State is not obligated to make payments to M/A-COM until a regional section is completed, tested and accepted. The Office of the State Comptroller has committed to ongoing oversight of the project through a series of audits and payment reviews.

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Click here for a copy of the Comptroller's Report.

Click here for a copy of the Comptroller's audit.

Albany Phone: (518) 474-4015 Fax:(518) 473-8940

NYC Phone: (212) 681-4825 Fax:(212) 681-4468

Internet: http://www.osc.state.ny.us

E-Mail:press@osc.state.ny.us

[Guest WolfEMT]

Not to detract from the topic at hand, but Alan Hevesi should be the LAST person to author a report in which any type of cost is detailed.