[1st-mile-nm] Sandoval's Network a High-Tech Debacle

[Richard Lowenberg]

The following long series of articles were forwarded by subscriber
pete at ideapete.com

Though I have followed the Sandoval County Broadband Project for the past
year, have posted information about it on this list and on the 1st-Mile
web site, and personally know or have met some of the noted players, there
are no ties between us.   I agree that the consequences of this project
are and will have many very unfortunate consequences.
rl
------

I'll say no more ( read below ) this contract is imploding and a total
embarrassment to all the good players in the industry and first mile needs
to cut the ties and say why.,

 Its a perfect text case of how NOT to develop a broadband project

 I printed out the whole article as well as the html because it is a
subscription site

 Sad sad day for broadband

 ) : ) : pete


Sunday, July 15, 2007

http://www.abqjournal.com/news/metro/578656metro07-15-07.htm
Sandoval's Network a High-Tech Debacle

By Colleen Heild and Sean Olson
Copyright  2007 Albuquerque Journal; Journal Investigative Reporter;
Journal Staff Writer
 Where did the county go wrong?
  That's the million-dollar question now that the county is poised to
resuscitate its lifeless wireless system with another influx of taxpayer
dollars.
  The answer, based on interviews and records obtained by the Journal:
right from the start and at almost every step along the way.
  A recent consultant's report says the $1.2 million it cost to design and
build an affordable broadband network essentially bought "vaporware." An
estimated $950,000 will be needed to get a network up and running.
  The county has spent more than $2.6 million on the project since 2004,
but officials say not all the money has gone down the drain. They say
subcontractors have come up with related educational and health programs
that have value even without a countywide wireless system.
  "It was never just about building a backbone," said County Manager
Debbie Hays.
  But, for the most part, the initiative has been an embarrassing bust
that is attracting the wrong kind of attention for county officials who
once hyped the project and said it would bring national accolades.
  For the past several months, private investigators hired by the State
Auditor's Office have been conducting interviews and poring over project
records.
  There is plenty to pique their interest. For example:
  The man hired to write the county's bid specifications for the project
master plan was allowed to bid on and ended up winning the master plan
contract a practice banned by the state and many local government
entities.

 The county only put $300,000 of the project to competitive bid a process
designed to ensure the best work for the best price. And that piece of the
project is arguably tainted by the fact that the winner wrote the specs.

 The county paid thousands of dollars up front rather than waiting for
detailed bills in effect, loaning contractors money to do work, some of
which wasn't performed.

 The county didn't require the primary contractor to post a performance
bond to ensure the job would be completed as promised. Liability insurance
for the project wasn't purchased until last September, a year into the
implementation.

 The county shelled out more than $50,000 to set up a private company,
Sandoval Broadband, to oversee the project a move that allowed the hiring
of subcontractors and disbursement of public dollars to be shielded from
public scrutiny.
  Sandoval County had $3 million for the project, of which $2 million came
from the proceeds of a revenue bond deal it approved for Intel. The state
kicked in another $1 million.
  Now the county is seeking to recoup some of its costs after design
engineer Dewayne Hendricks of the California-based Dandin Group walked off
the job in May.
  The Dandin Group was paid $1.2 million to design and build the network,
but county officials have estimated that the equipment installed is worth
about $80,000 and the project will have to start over practically from
scratch.
  The county spent another $300,000 for a master plan. Other money went to
consultants, travel, public relations and other expenses.
  "New Mexico had a chance to leap frog and to really be in the game,"
said Marshall Monroe, a Corrales consultant who created Gov. Bill
Richardson's strategic plan for film in New Mexico. He believes the
ambitious project in the right hands can still be salvaged.
  Monroe chairs a communications task force for the National Intelligence
Science Board, which advises the director of the CIA.
  He said he worked on the Sandoval County project in 2005. But he bailed
within months.
  "They had a little team and that's where it just started to smell," he
said.
  Former County Commissioner William Sapien said, "There have been some
challenges that should have been addressed as we went along and they
weren't. I think if the oversight had been closer, a lot of these things
would have been caught beforehand.
  "Pretty much the commission was left out of it, certainly in speaking
for myself," he added.
  Hays, who refers to the Sandoval Broadband project as her "baby," called
the shots and signed off on payments.
  Looming over the project is an inquiry by State Auditor Hector Balderas,
who told the Journal last week that he has decided a special forensic
audit is now needed.
  Balderas said the special audit will make recommendations on how to
improve accountability and ensure lawful conduct.

Utah man takes charge
  Jonathan Mann came to the Sandoval County broadband project as a
business consultant from Salt Lake City in 2004.
  He had no background in wireless technology but was put in charge of a
cutting-edge broadband venture and said he earned an estimated $350,000 by
the time he walked away two years later.
  Hays said she hired Mann and his one-man firm, AQV Communications, in
October 2004 after getting his name from Intel government relations
manager Terry McDermott.
  Hays said she never considered anyone else for the task, in part because
she hoped Mann could bring private funding to the project through his
business contacts and acumen.
  Mann's initial assignment was to write the request for proposals for the
broadband master plan, for which he was paid $5,000.
  His RFP didn't award points for a company's experience and didn't
require references.
  A model request for proposals published by the New Mexico Public
Procurement Association says a minimum of 30 calendar days should be given
between the date an RFP is issued and proposals are due.
  The county RFP written by Mann gave companies just 11 business days to
respond.
  Mann himself bid on the project, stating in his proposal that he would
coordinate a team that included Intel, the University of New Mexico "and
10 to 15 other interested parties" in developing the master plan. The 10
to 15 parties weren't identified.
  A review by four county employees, including Hays, rated Mann's proposal
better than those of four other firms some with national experience in the
field.
  Mann's proposed cost of $300,000 was higher than all the other bidders.
  The state Governmental Conduct Act bars state agencies from accepting
bids on a project from anyone who had direct or indirect involvement in
developing the specifications.
  New Mexico counties aren't technically covered by the act, but
contractors and government officials interviewed said the prohibition
makes sense.
  "If you write the specifications, the same company should not be allowed
to bid on it. It's good practice is what it is. It would be a conflict of
interest," said Ramona Gutierrez, president of the New Mexico Public
Procurement Association.
  Peter Baston of Ideas Inc. of Albuquerque came in second in the
competition to create the master plan. Baston told the Journal he talked
with county officials about a broadband project before Mann came on the
scene.
  He said that, at Hays' request, he met with Mann in October 2004.
  Baston said that, during the meeting, Mann told him he would see to it
Baston got the master plan contract if Baston would hire him and several
people who were "close to county government."
  "I felt like I was being shaken down," said Baston.
  Mann met with Baston, according to an e-mail obtained by the Journal.
But in an interview with the Journal, Mann disputed Baston's account of
the conversation.
  "That's a lie," Mann said. "There were no commitments made to Peter
Baston of any nature."
  Baston said he told investigators for the state Auditor's Office about
the meeting with Mann and passed a polygraph they asked him to take.
  Balderas said he couldn't address specifics of the inquiry but said his
office is using a "vast amount of tools ... to make sure we're getting
accurate information."

No-bid project
  In 2005, the project went from a master plan to a $2 million
implementation without ever going to another public bid.
  Instead, the county created a private company to develop the system and
named Mann's company to oversee it.
  Monroe, former creative executive for The Walt Disney company, said the
Sandoval Broadband project was "an enormously sophisticated technology
challenge.
  "One of the main problems is that the county gave a no-bid $2 million
contract to somebody with no technical background," he said.
  Hays contends the implementation phase didn't need to be put to bid
"because we had competitively bid it in the beginning."
  But the 2004 request for proposals for the master plan didn't require
contractors to bid on implementation costs.
  One unsuccessful bidder on the master plan proposed a national RFP to
find candidates to build the system.
  To retain Mann for the next phase of the project, the county in 2005
rolled 11 new duties into his old contract by issuing addendums.
  Such a practice is often frowned on in government procurement circles,
said Gutierrez.
  "That's a really gray area. Normally, we don't allow it," she said.
  A July 2005 addendum said AQV would be paid $250,000 a year plus a stock
option to act as "executive director" for the private company. Initially
called Olla Grande, the company was later renamed Sandoval Broadband.
  Mann retained his former business associate, Betty Anne McDermott of Rio
Rancho, and Hendricks to work for the new company. Both had helped on the
earlier master plan.
  A November 2005 addendum stated that AQV "is now providing oversight to
all the development and deployment efforts to facilitate completion of the
broadband project and is now incurring expenses."
  It added: "It is necessary for the county commission to now authorize
expenditure of $2 million infrastructure funds to reimburse the Contractor
for the costs."
  Sapien, commission chairman at the time, said he didn't recall anyone
asking whether the county should go to bid for the $2 million portion of
the work.
  "I think we were relying on Debbie Hays' recommendation that what was
taking place was the right thing to do," he said.
  Monroe said he was assured by county officials that Mann wouldn't
continue to lead the project after the master plan was submitted in July
2005.
  Mann said he never intended to stay on but said Hays talked him into it.
  Monroe said a number of people in New Mexico were qualified to build the
system.
  "And keep in mind," Monroe added, "there is a global stampede in this
area to roll out municipal wireless infrastructure."

Paid in advance
  State law generally bars government from issuing checks for any purchase
of services, construction or tangible personal property unless it has
actually received them and they have met specifications.
  Yet the county frequently paid contractors in advance.
  County records show that during the last six months of 2006, more than
$500,000 was paid in "anticipated costs" for engineering, equipment and
administration.
  Mann said he was reimbursed for roughly $125,000 he personally spent
before December 2005 but was later advanced funds to distribute to
subcontractors.
  Hendricks in a Journal interview said his company never had to shell out
a dime for any work on the project.
  Hays has said the county wasn't looking for immediate results with early
invoices and payments. She said the county was prepared to spend $3
million for a finished product and wasn't as concerned with the process.
  She signed off on many early invoices that contained little or no detail
about where money was being spent, explaining that line-item detail would
have been technical jargon she would never understand.

No performance bond
  William Bridges, owner of RITE Brain consulting of Littleton, Colo.,
worked for Mann in 2005, investigating the costs of setting up a trial for
the broadband network.
  He said that, after he submitted the plans, Mann told him "to take a
hike," leaving the Dandin Group as the primary engineer.
  Bridges said government agencies usually require performance or surety
bonds on public projects in case contractors don't finish the job. The
contractor is supposed to pay for the bond.
  "There is not a single RFP that I have seen in the last five years for
any wireless network where the municipal government didn't require a bond
and/or some equivalent," he said.
  The city of Albuquerque, for instance, plans to deploy an affordable,
wireless broadband network. One requirement of the city's RFP is that the
winning contractor obtain a performance bond.
  Mann's contract and the addendums contained no such requirement.
  Hays said through a spokesman that there was no need for a performance
bond because Sandoval Broadband had insurance.
  But invoices show that a commercial liability insurance policy wasn't
purchased until more than a year into the project. Sandoval Broadband
bought two policies in September 2006 at a cost to the county of $23,300.
  Hendricks said his firm wasn't required to provide proof of insurance
because Sandoval Broadband was insured.

A private company
  Sapien said he understood that the purpose of the county setting up a
private company was so "that when the project got up and running, there'd
be a private company that would come in and buy it and take it over."
  Mann told the Journal that the private company wasn't obliged to adhere
to government standards.
  After Mann resigned in August 2006, Hendricks became president of
Sandoval Broadband.
  In response to Journal inquiries, Hendricks refused to produce receipts
and records of how money was being spent. He refused to name anyone else
working on the project.
  Mann said that, after he left, Sandoval Broadband paid him $50,000 as
part of the transition.
  But Hays told the Journal she knew nothing about the payment because it
involved the private company.
  During the investigation by Caswell Investigations of Albuquerque
earlier this year, the county lacked detailed records about how project
money was spent. So the state auditor went to court to obtain subpoenas
requiring the documents from Mann and Hendricks. By that time, both men
had resigned.
  Today, the private company Sandoval Broadband has no CEO, board of
directors or employees. It also owes money to vendors.
  Bridges said he's saddened to hear how the project deteriorated.
  As part of his work for Mann, he proposed creating an oversight team
representing county government, the private firms involved and an
independent member who wasn't associated with any of the parties involved.
  "You have to have oversight," Bridges said. "There has to be reporting."



Sunday, July 15, 2007

http://www.abqjournal.com/news/metro/578659metro07-15-07.htm
Intel Exec's Wife Played Key Role

By Colleen Heild
Copyright  2007 Albuquerque Journal; Journal Investigative Reporter
 The wife of Intel government relations manager Terry McDermott had a key
role in the Sandoval Broadband project and was paid nearly $220,000,
records show.
  Betty Anne McDermott was chiefly involved in public relations,
educational and communications work, invoices show.
  She was also one of three shareholders in Sandoval Broadband, the
private corporation the county formed in the fall of 2005 to develop the
system that has been plagued by delays and is not yet operational.
  None of Betty Anne McDermott's work was put to competitive bid including
$80,000 in educational services the county paid for via the prime
contractor who resigned months earlier.
  Betty Anne McDermott, of Rio Rancho, was originally hired by AQV Inc., a
Utah-based consulting company owned by Jonathan Mann of Salt Lake City.
Mann worked for Betty Ann McDermott in New Mexico in the mid-1980s.
  Mann was hired for the project after County Manager Debbie Hays got his
name from Terry McDermott.
  The county launched the initiative with $2 million from the proceeds of
a revenue bond agreement with Intel.
  As part of the deal, Intel pledged a total of $85 million to the county
and agreed to give technical advice on a wireless system in exchange for
approval of a $16 billion industrial revenue bond.
  Hays said there was no "collusion" involving the hiring of Mann and
Betty Anne McDermott.
  The McDermotts, she added, "are two incredible New Mexicans that are
incredibly devoted to improving the state."

Word of mouth
  Terry McDermott said his wife was out of state and couldn't be reached
by telephone or e-mail.
  He confirmed that Mann and Betty Anne McDermott knew each other from
working for a New Mexico video production company called Sunrise Video
West.
  The two had kept in touch over the years as business associates, Terry
McDermott said.
  Hays said Mann's name came up during a "hallway discussion" she had with
Terry McDermott at a county function in 2004.
  "I told him what I wanted to do is provide free connectivity for the
schools, for health initiatives, for emergency services. He said, 'I know
someone who has been incredibly successful in getting grants.' ''
  Hays said she didn't get the idea the McDermotts and Mann were social
friends but said Terry McDermott told her he had incredible respect for
Mann.
  "He said, 'Jonathan is the kind of person, quite frankly, if something
happened to me, I would want him to raise my children, he's that ethical
of a person.' ''
  Mann and Hays talked for the first time subsequent to that conversation.
  In a recent telephone interview, Terry McDermott had a somewhat
different account, saying Hays never mentioned the broadband project at
the time.
  He recalled that Hays talked about a movie studio project and "she
wanted to know if there was somebody that I could help her with that could
bring more companies to the table."
  Though he never worked with Mann, McDermott said he knew of his work as
a business consultant.
  Both Mann and Terry McDermott say there was no "quid pro quo" for Mann
to hire his wife.

$220K in invoices
  Mann resigned from the Sandoval County broadband project in August 2006,
and, weeks later, the county formally removed AQV Inc. from the contract.
  About the same time, Betty Anne McDermott formed a company called
Sandoval Broadband Educational Services.
  "The county began working with Betty Anne directly because the county
was pleased with what she had done," Mann said.
  Financial documents on file with Sandoval County show that checks
written for the benefit of Betty Anne McDermott, Sandoval Broadband
Educational Services or McDermott Enterprises totaled $219,880.
  Terry McDermott said he didn't have the invoices but knows his wife
hired a number of contractors and subcontractors and didn't put the entire
$219,880 "in her pocket."
  Documents show at least $10,000 was reimbursement for supplies and at
least $13,500 went to fees charged by technology companies.
  Mann said Betty Anne McDermott "wasn't paid excessive at all for what
she did."
  Mann said he checked with Hays before hiring her and was told there was
no conflict of interest.
  Hays in an interview said she couldn't remember that discussion but said
McDermott's employment posed no problem.
  Hays said Betty Anne McDermott was initially hired as a spokeswoman for
the project and was Mann's "point person in Sandoval County since he was
actually out of Utah."
  Betty Anne McDermott eventually moved on to a role assessing the
computer needs of Sandoval County schools and "having meetings with
principals in helping to pull the initiative together," Hays added.
  Hays said the educational component of the broadband project is separate
from building the network and doesn't necessarily rely on the county's
planned high-speed Internet system to be up and running.
  The $80,000 bill involving McDermott's company was for work that could
someday allow students to take handheld computers home to further their
education.
  Hays said the handheld computer program is "still under construction."

Payment arrangement
  Contracts of $30,000 or more are required to be put to competitive bid
under the state procurement code.
  But Sandoval County instead paid McDermott in April by making the
$80,000 check out to Mann's consulting firm, AQV Inc.
  A March 20, 2007, invoice related to the work shows the letters "AQV" at
the top.
  It also states "work directed by SBES (Sandoval Broadband Education
Services), submitted within AQV contract with Sandoval County at the
request of the County."
  That was despite the fact that AQV Inc. had been formally removed as the
primary contractor on the project six months earlier.
  Mann said in the phone interview that he "didn't invoice the county for
that money. I was simply not involved at that point."
  He referred a reporter to Betty Anne McDermott and Hays.
  Hays said the payment arrangement was a means to pay Betty Anne
McDermott for work she had done. The invoice shows some tasks were still
in progress.
  The invoice listed $41,300 as administrative fees.
  Asked why the county didn't issue a separate contract to Betty Anne
McDermott, Hays replied: "Not for that amount, not without going out to
bid."
  Why was the check made out to AQV, Mann's company?
  "Because, quite frankly, she (McDermott) didn't want to go under Dandin
at that point," Hays said. "There were already problems with Dandin."
  Dandin is owned by Dewayne Hendricks, a California wireless design
engineer who headed the project after Mann left.
  The county contends Dandin is now in breach of his contract on the
project after he resigned in early May.
  Hays said she didn't know Betty Anne McDermott very well before the
broadband project.
  But Hays said she is "an incredibly talented woman who has been mostly
home raising kids, but she's had her own contractual services and work for
the television stations previously.
  "I can tell you Betty Anne didn't make any money on this project by the
time it's all gone out with regards to taxes and a number of other
things," Hays said.


Sunday, July 15, 2007

http://www.abqjournal.com/news/metro/578658metro07-15-07.htm

Broadband Project Players Weren't Vetted

By Colleen Heild
Copyright  2007 Albuquerque Journal; Journal Investigative Reporter
 The consultant who once headed the county's complex $3 million wireless
broadband project doesn't have a Web site.
  "I'm wonderfully low tech," said Jonathan Mann in a recent telephone
interview.
  Governments and many private sector businesses often perform "due
diligence" inquiries before hiring contractors.
  County Manager Debbie Hays told the Journal she researched Mann's
credentials and found they were "impeccable."
  Mann owns a Salt Lake City business consulting firm, AQV Inc.
  When asked for Mann's resume, county spokesman Gayland Bryant said the
county didn't have one and referred a reporter to a proposal Mann wrote in
2004 to create the county's broadband master plan.
  Mann spent 18 years as an "advisor/consultant to CEOs and business
owners" and listed six clients including Intel, the proposal said. The
five others were out of the country. No dates of work, phone numbers or
contacts were listed.
  It gave a number of New Mexico companies, but no dates or details about
the assignments.
  Mann also listed work in television and video production, including
winning an MTV Music Video of the Year. No dates or details were given.
  Mann's proposal gave no information about his education.
  Bryant said the county also had no resume on Dewayne Hendricks, a
California design engineer who replaced Mann on the project in 2006.
  Bryant said the county went to the Internet to check on Hendricks and
found he had worked on a wireless project in Tonga and serves on a Federal
Communications Commission advisory council.
  Hendricks resigned as head of the Sandoval Broadband project in May amid
a state auditor's inquiry into the project's finances. The county claims
Hendricks is in default of his contract.
  Hendricks, under the company name of Tetherless Access, is now helping
design a $12 million wireless broadband system for a group of 16
communities along the Vermont-New Hampshire border.
  Project manager Tom Joyce in a recent phone interview said Hendricks
started earlier this year and has fulfilled his commitments.
  "He has a big reputation, he's one of the best in the world for building
wireless systems," Joyce said.
  But heading up an entire wireless project?
  "I'd put my dog in charge of an operation because he'd bite you if you'd
stepped out of line. I wouldn't put Dewayne in there. He's nice," Joyce
said recently. "I'm the jerk that tells you it's due yesterday ... and
he's not that guy. He couldn't do that. I never thought of him that way."
  Joyce said it doesn't make sense to put someone living outside the state
in charge of a long-term project.
  "We would never hire a consultant or a contractor that's got other jobs
around to run a project. It's a 24/7 job."
  Hendricks did get an unusual plug from a former colleague at Sandoval
Broadband, Betty Anne McDermott of Rio Rancho.
  On the project's Web site in an article dated a year ago, she stated:
"Dewayne brings savoir-faire cutting edge. Without him there would not be
a Sandoval project."