Phone system bid causes row
Jefferson County Administrator Robert F. Hagemann III's job is being threatened by a county legislator who alleges the county's chief executive is rushing to buy a $1 million phone system that local companies couldn't bid on.
Mr. Hagemann defended his actions, saying the recommendation to buy a system from a dealer in Rochester came after 45 days of study by county officials.
But Legislator Scott A. Gray, R-Watertown, said in an e-mail Thursday, "If Bob Hagemann thinks blindsiding approximately half of the board of legislature with a nearly million dollar resolution that has received no direction from the board or any lead in presentation to the board, then he is sadly reached a point of rendering poor governance and ought to begin looking for another job."
Mr. Hagemann disagreed that legislators have not been kept informed.
"I'm hurt, disappointed and genuinely surprised at Scott's remarks," Mr. Hagemann said. "I take great pride in what we do at the county on behalf of both the legislators and the residents we serve. I have also worked very hard to ensure to the fullest extent possible that legislators are kept abreast of what is going on, and I think my record speaks positively to that fact."
Mr. Hagemann defended the bid process, saying the county was pressed between its deadline and a desire to give the current phone vendor a chance to respond.
"The 45-day time period is running out and it's possible it can't be extended, so we may have to go back to bid again, and in that case, the bids could go higher," he said.
ISSUE'S ROOTS ARE MONTHS DEEP
The phone bid saga started in the fall, when the county Department of Employment & Training moved from the campus of Jefferson Community College, Watertown, to the former Redwood National Bank, 1000 Coffeen St.
The department received a federal grant, supplemented by the county, for a phone system at The WorkPlace.
"The grant would've gotten us a basic, low-level system that couldn't be upgraded," said Gregory C. Hudson, county director of information services.
After looking at different systems, the county purchased a system from Cisco Systems Inc. The cost of the system, and the amounts of the grant and county contribution, were not made available Thursday.
"Cisco generally had a very, very solid reputation in the industry," Mr. Hudson said. "We've known clients of other systems who weren't as happy with them."
But as it turned out, the former bank had a Nortel Networks system packed away in boxes. So The WorkPlace used that system, while the Cisco system was taken to the historic courthouse and some offices in the county office building.
"It didn't make sense to leave it on the shelf," Mr. Hudson said. "So we started testing and implementing it."
A recent audit said that move was OK, he said.
The county had already begun looking at ways to improve the 28-year-old phone system through the ad hoc technology committee, which Mr. Gray chaired. But a Voice over Internet Protocol phone system, like the Cisco system, was only one of several options considered.
"It had been a conceptual discussion," Mr. Hagemann said. "But the system was very, very good; we were quite impressed. It more than met our expectations."
DISCREPANCIES OVER PRICE
During ad hoc efficiency committee discussions at the beginning of the year, Mr. Hudson said that moving to a VOIP system county-wide would cost more than $200,000 per year.
The system was included as a recommendation from the committee. That committee's report has yet to be approved by the full board, but individual items have been considered.
In the spring, the county took the phone system out to bid, and many vendors came to a walk-through of the system. The system covers all county buildings.
"By the end, it was obvious there was no way we could have a one-size-fits-all bid," Mr. Hudson said. "We wanted the system to interface with the system we had."
Then, the county offered the bid packets to those on a state contract who peddled Cisco systems. Mr. Hudson said that more than 40 companies are eligible.
"We have no control over who participates or not on the state bid," Mr. Hagemann said.
He said while "we are always sensitive to local vendors and local businesses," this is one of the very few instances" when the services being sought can't be provided locally.
The bids are valid through today.
The low bidder, CDW-G, which has a representative in Rochester, is willing to wait until Tuesday.
"But for another 30-plus days, for our cycle, the answer is likely, 'No,' which is not that unusual," Mr. Hagemann said.
The final analysis of the phone system cost, completed Thursday after pressure from Mr. Gray and questions from the Times, was held up while the county's current phone vendor challenged the bid figures, he said.
LOCAL COMPANIES WANT IN
CREG Systems Corp., Watertown, which installed the system in 1982, updated it in 1992 and has maintained it all along, said it could provide all of the features of a VOIP system without the huge capital outlay.
"I'd like the chance to bid no matter what the county does," said Kris W. Allen, chairman of the board at CREG. "But we've been excluded from this."
The bid was $926,131 for the phones, switch and other equipment. Phone service would be $28,800 for local and regional calling through Time Warner and $5,000 for long distance, according to figures from county administration.
In the county's calculations, staff anticipate a six-year payback for the Cisco system. But Mr. Allen thinks the payback would be more like 28 years.
The county said the maintenance cost for the current system was $53,779 in 2009. Mr. Allen said his services ran beyond phone service maintenance, which ran $35,387.
They say current long-distance and local phone service through AT&T and Verizon cost $172,603 in 2009.
Mr. Allen balks at the number for the new service.
"I've never seen a time when another vendor comes in at 18 percent of what you're paying now," he said.
Mr. Gray said he talked to a Time Warner representative, who said there was no proposal for phone service at $28,800 and the cost would depend on how much it is used.
But county officials said the offer was in writing.
In total, the county staff said the county now spends $242,245 per year on the phone system. With the new system, it would spend $954,931 in the first year, followed by $84,374 in the following years, except every third, when it would spend $117,117 for licensing fees.
The county also claims an $8,000 savings in energy cost and $12,863 savings from cutting 911ai, or "additional information," service.
"We are fully prepared to back up these numbers," Mr. Hagemann said. "We understand it's a big investment and a big investment in the future."
Much of the money needed is in a capital account for computer improvements, which sits at $920,000, Mr. Hudson said.
Originally, staff had said the payback would be four years, but after Mr. Allen raised issues, the numbers were investigated further.
"We've talked about a Band-Aid on the current system," Mr. Hudson said. "Maybe we can do this or that for cheap. But the system is old and we'd be putting more money into it."
Eventually, the VOIP system could lead to other savings, including no cell phones in sheriff's department vehicles — deputies could use their computers instead.
But Mr. Allen and Mr. Gray said the process was flawed.
"It comes to having the opportunity to propose a system that will likely be less expensive than what we're seeing," Mr. Allen said.
Mr. Gray said he's not going to bat for CREG.
"I want to make sure a fair process is in place so they can sell their product," he said.
Now he wants to see an independent assessment of the county's telephone system needs and the cost for different fixes.
TIMELINE CAUSES URGENCY
Mr. Gray is angry about the late timeline, but Mr. Hagemann said the contract consideration comes late because CREG was given the opportunity to respond.
"Our decision to meet with the local vendor took a lot more time than originally anticipated," he said.
The meeting with county administration, some legislators including Mr. Gray, and Mr. Allen happened July 22. The Finance and Rules Committee, which has jurisdiction over Information Technology Department and budgetary items, met Tuesday.
But the county's additional financial analysis was not complete then, so it was not considered.
"I will lobby against it for nothing more than taking a $1 million proposal from a department that's under Finance and Rules and bypassing it," Mr. Gray said.
Mr. Gray called the move to bypass "typical games" and said he would resign as committee chair if the bypass vote were approved and the project proceeded.
He cited the 2008 consideration of Jefferson Community College's master plan and the payment-in-lieu-of-taxes agreement for Galloo Island Wind Farm late in 2009. He almost didn't take the chair this year.
"I told Ken, 'If you want someone to strictly be a "yes" person, that wasn't me,'" Mr. Gray said, referring the Kenneth D. Blankenbush, chairman of the Board of Legislators. "If this process goes through, they'll need to find someone else to fill this chair."
On Tuesday, the legislators would be forced to vote to bypass Finance and Rules before it could vote on the capital outlay.
Legislators the Times spoke with on Thursday recognized the pressure, but would prefer to maintain the committee process.
"It should go to Finance and Rules," Mr. Blankenbush said. "It makes no difference whether our approval comes in August or September — I hope there can be an extension."
He and others said a special meeting for Finance and Rules could be called at any time with proper notice. But Mr. Gray needs to be on board for that to happen and he said he would refuse.
Mr. Blankenbush said, "If the deadline runs out and we need to re-bid, that's not my concern. My concern is that the Board of Legislators gets to look at all the facts so it can make an intelligent decision on it."
