Contract ‘bad deal,’ expert says

BOISE – A nationally recognized information technology expert calls Idaho’s multimillion-dollar, multiyear contract for Wi-Fi service at its high schools “ridiculous” and “just a bad deal.”

Leon Kappelman, a professor of information technology at the University of North Texas and an expert on IT management practices, said the state is unwise to pay a fixed price for service to all its high schools, regardless of how many participate; and to give the vendor ownership of all the equipment it installs, including miles of cabling, and require it all to be removed if the contract ends.

“The state allows themselves to be locked in with a very high switching cost and an uncertain purchase quantity,” Kappelman said. “It doesn’t sound like a very good deal even if every school takes it, because there’s very little maintenance on these things once they’re in. You put in the hardware, and it’s there.”

The professor, consultant and author said, “This has weakened the state’s ability to make fair deals. … Let’s assume the vendor is perfect, has great technology, everything else is fine – it’s just not a good deal. It takes away all the bargaining power of the state, and makes their switching costs just ridiculous.”

He said, “Technology is simple. People are complicated.”

The Texas professor, who was asked to review the Idaho deal by The Spokesman-Review, said, “I deal with a lot of government IT managers. Government often operates on (what) feels good and that it is perceived well, rather than what is actually best practice, what is actually most cost-effective, or what is actually best for the citizens of the state that are actually paying for something.”

The Idaho State Department of Education maintains the contract is the most cost-effective way to provide high-quality wireless networks at all the state’s high schools, though many of them already have wireless. It issued the contract last week based on a one-time state appropriation for the coming year of $2.25 million; the contract with Education Networks of America calls for a fixed price of $2.11 million per year for five years, with options to renew for up to 15 years and up to 5 percent price increases at each five-year renewal. If lawmakers don’t fund it in future years, the contract would be canceled.

Tom Taggart, director of business and operations for the Lakeland School District in Rathdrum, said his district has decided not to opt into the state contract; Coeur d’Alene schools earlier made the same decision.

“We already have wireless in all our buildings that we paid for ourselves,” Taggart said. “It’s probably not as robust as what the state would put in, but we’re in a position to upgrade those as we can.”

He said, “I think the idea that it’s all or nothing has really thrown some people, the fact that if only half the schools choose to do it, they’re still getting the same amount. That’s odd to me.”

Ken Loftus, director of technology for the Emmett School District, said school districts across Idaho are capable of operating their own wireless systems, with the exception of only a few small ones that don’t have IT staff. “My perspective is I can do it for less, and I don’t have to call somebody outside my district to manage my wireless,” he said. “Why should we pay a private company?”

Kappelman said he wasn’t surprised that ENA is a politically connected company that has donated to the campaigns of the state school superintendent, the governor and numerous legislators, and that it hired a former state Department of Education official as its top Idaho staffer. “That’s definitely a part of the game,” he said.

Asked about the prospect of the Legislature cutting off funding in a future year and forcing the networks to be pulled from the schools, he said, “With as much ongoing margin as this vendor is going to have, because all their cost is going to be up-front, they can afford to buy a lot of legislators.”

Loftus said, “If the state would quit sucking up all our money for these big projects, we could do it for less, because we’re more efficient – because we’ve been doing it for less for years.”

If Idaho’s contract runs the full 15 years, it would cost the state $33.3 million.