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It looked in the summer of 2011 as if electronics giant Raytheon Corp. had gained a major foothold in the U.S. emergency communications market long dominated by one company: Motorola.
Raytheon had been selected as the prime contractor for a sprawling, $600 million communications system connecting Los Angeles Countys public safety agencies with those of Los Angeles and more than 80 other cities in the county, two school districts and UCLA via the latest in two-way radio and high-speed broadband technology.
Raytheons negotiating team only needed to work out the design details with a joint government authority.
Yet two years later, the two Way Radio contract belongs not to Raytheon but to Motorola Solutions Inc., the Illinois-based firm that inherited public safety communications arm as part of its parents breakup in 2011. Motorola is also the only company vying for a now-separate broadband deal.
The contract size was sure to prompt a tussle between these two corporate giants. Instead, it was a slugfest.
Rather than signaling a new burst of competition in a taxpayer-financed market, the outcome is another reminder of how difficult its been for competitors to overcome Motorolas dominance.
Like large urban areas across the country, Los Angeles County spent years working to meet a drumbeat of interoperability edicts from Washington. The goal was to unite local first responders in a seamless communication system that could withstand a terrorist strike, an earthquake, a wildfire or some other disaster.
In 2010, the newly formed Los Angeles Regional Interoperable Communications System, or LA-RICS, solicited bid proposals for a two-way radio system and a new broadband network while the countys congressional delegation hustled to obtain $154 million in federal grants.
Raytheon assembled a team including Motorolas biggest two-way radio rival, the Florida-based Harris Corp.
Motorola hooked up with defense contractor General Dynamics, among others.
The bids were still being evaluated in early December 2010 when Motorola recruited William Bratton, a former police chief in Boston and New York and, from 2002 to 2009, the head of the Los Angeles Police Department, to its corporate board. Bratton also had served as LA-RICS vice chair while it framed plans for the new networks.
Over the last three years, until he recently accepted a second tour of duty as New Yorks top cop, Bratton received roughly $750,000 in cash and stock from Motorola, according to company filings with the Securities and Exchange Commission.
In a phone interview, Bratton described LA-RICS officials as pretty assiduous in terms of outside influence. He said he never discussed the radio and broadband contracts with them.
Other than being on the board and briefed on it, (I) played no role in it, he said.
Motorola also had for several years retained the Los Angeles lobbying firm of Englander Knabe & Allen, one of whose principals is Matt Knabe, son of County Supervisor Don Knabe. The firm says theres no conflict of interest because Matt Knabe avoids lobbying his father.
For its part, Raytheon hired Michael Bostic, a former assistant L.A. police chief who had overseen two-way radio purchases.
Connections aside, Raytheons team easily won the bidding with a price of more than $600 million for the complete package, while Motorola bid was at least $100 million more, with the radio system alone pegged at about $550 million, according to documents obtained under the California Sunshine Act.
Raytheon and the joint powers authority were in a final exclusive bargaining period when things got tangled.
A Los Angeles County attorney declared that the procurement violated an arcane state law because it bundled the radio and broadband systems with the construction of towers in a single turn-key contract. Under the law, construction projects had to be bid separately, the attorney reported.
Patrick Mallon, the executive director of LA-RICS, said in a phone interview that if the authority had proceeded, construction bids would have had to have been taken for each of 300 towers, posing astronomical risks if anything went wrong.
Motorola, however, had for years built turn-key projects in California that mingled tower construction and radio electronics.
The state legislature rushed a legislative fix into law, but LA-RICS started the process anew anyway, breaking the radio and broadband networks into separate contracts.
At an Aug. 9, 2011, meeting of the county board, Supervisor Michael Antonovich remarked that the decision really doesnt pass the smell test and fretted about back-door manipulations that could be taking place.
Round two hadnt gotten far when Raytheon cried foul.
In a May 4, 2012, letter to the county, a copy of which was obtained by McClatchy, an attorney for Raytheon wrote that bid evaluators selected for the radio contract lacked technical expertise.
The Raytheon attorney also cited a Motorola letter sent to the county after the 2011 bidding, but just obtained by Raytheon, asserting that Motorola could extrapolate Raytheons first-round bid because LA-RICS had shared its procurement scoring formula.
LA-RICS executive director, Mallon, said he believed both sides knew the formula, but LA-RICS attorney Amanda Drukker said she wasnt so sure.
In the final round, the radio system was revised to end Los Angeles use of a commercial television band width and shift to a 700-megahertz band set aside for emergency communications. Motorolas winning bid was a jaw-dropper: $280 million, or about half of its first-round bid and $135 million below Raytheons price of $415 million.
Mallon said hes proud that the agency ran a procurement that was totally objective.
The question is, will contract modifications raise Motorolas price?
For example, public records show that LA-RICS subject matter experts concluded that many of Motorolas towers exceeded government height limits, a characterization that Mallon disputed.
If shorter towers must be built, more towers costing up to $1 million each will be required, because their signals dont extend as far. The authority has agreed to hold Motorola responsible for no more than $2 million of any additional tower costs.
Raytheon didnt formally protest the outcome.
In a Sept. 3 letter to the county, it complained that LA-RICS evaluation process does not appropriately . . . adjust the bids of those whose proposals fail to comply with the project specifications.
Raytheon also announced that it was dropping out of the broadband competition and left empty handed.
Read more here: http://www.kansascity.com/2014/03/29/4915523/how-motorola-bested-raytheon-and.html#storylink=cpy
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