Poetic justice for Cisco in San Jose City Hall deal

Posted by: Peter Burrows on March 16

OK, there’s no comparing this to the Bernie Ebbers’ conviction, or even to Congress’ pursuit of baseball’s bigshots in the steriod scandal. It may pale even next to that other obvious outrage, that the flick “Sideways” pretty much struck out at the Oscars. But by granting a closely-watched networking equipment contract to Nortel on March 16, I say the folks in in the city government of San Jose, Calif. struck their own blow for fair play. That’s because the winner was not networking giant and hometown favorite Cisco Systems.

Here’s why. Back in 2003, IT officials in San Jose city government wrote a request-for-proposals for a cutting-edge new network to be installed in a fancy new City Hall now under construction. Rather than create a level playing field, the document specified the use of 18,000 Cisco products—no surprise, given that a city investigation later showed that Cisco had had a major hand in writing up the specs.

When the scandal broke in mid-2004, San Jose's city council decided to cancel the $8 million contract that had been awarded to Cisco, and rebid the deal. That brings us to the news of the day, in which Nortel was named the winner--and with a bid that will cost the city $1 million less than it would have spent with Cisco. What's more, a spokesman in the mayor's office says that in the end, all this fuss won't delay the date at which city workers can move in to their new digs. That's because Nortel has committed to have the job done by June 9--or else pay $20,000 a day in penalties until it is.

Now, I'm not saying Cisco is guilty of anything. They were, in fact, never accused of wrongdoing. Indeed, some officials were quick to praise Cisco for being extremely helpful in the investigation. If guilty of anything, they say, Cisco's only crime was having too good and too proactive a sales team--one that took advantage of an opportunity created when a government sector customer agreed to skirt proper procurement laws. Indeed, Cisco says it investigated the incident, and found no reason to take any disciplinary action on any of its own.

Still, in a week in which justice seems to be on the march in the good ole USA, I can't help but think that Cisco deserved to lose this one. For as well-managed a company as Cisco is, someone there should have known they were treading dangerously close to the edge of good ethics on this one. Too close, in my estimation.