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Jan. 19, 2009

The state of New York says it has cancelled a multibillion-dollar contract it awarded to M/A-COM to build a statewide wireless network for public safety use.

The state of New York said M/A-COM has largely failed to adequately deliver on most of its contract obligations towards the state.

A document released Friday by a state's manager showed excessive equipment failures after testing, including radios with stuck volume controls, "black screens" that render the devices unusable and sluggish microphones that randomly turn on, unintentionally transmitting audio.

According to the state, testing done last November showed that M/A-COM failed to repair 16 of the more than 20 deficiencies described in an earlier complaint made by the state. But M/A-COM is disputing all charges.

M/A COM said in a public statement "we believe that M/A-COM has fulfilled all its contractual obligations and delivered a state-of-the-art system that would benefit the residents of all of New York. We recognize that the state's current priorities may no longer support the construction of a statewide network and we have made several attempts to address this amicably with the State. M/A-COM will take all necessary steps to protect the company's rights under the contract."

In March of 2004, the state of New York awarded the contract to M/A-COM over its only competitor, Motorola. By the end of last year, New York State had spent $54 million on the project, and it claims it still has nothing to show for it.

If the state can overcome M/A-COM's challenges, it expects to get its money back. Terms of the original contract called on M/A-COM to put $50 million in an escrow account that the state could draw from in the event that the company defaulted on the contract or went bankrupt, said Angela Liotta, a spokeswoman with the state's chief information officer and office for technology.

In its statement Friday, the state said it had demanded payment from the escrow account. The contract also required M/A-COM to replenish that account with another $50 million for the state to recoup additional costs if there should be any.

In addition to the $54 million already spent, the state may find that it made additional expenditures, such as the cost to police who participated in testing the system, said Liotta.

However, the state of New York still hopes to build the network.

"By simply canceling the contract it doesn't mean we're canceling our commitment to the residents of New York State," Liotta was quick to point out.

But this will certainly take more time to accomplish. Issuing a new RFP (request for proposal) to find another suitable vendor could take up to a year-and-a-half, Liotta said.

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Source: The State of New York.