Tuesday, December 14, 2010

Alert: San Jose City Council Asks Feds to Reallocate $50 Million BayWEB Stimulus Grant Away from Motorola

Council Member Who is Former Prosecutor Calls for "Public Corruption Case" 12/14/2010 -  The City Council of San Jose, CA, deliberating this morning on the increasingly controversial $50 million federal broadband stimulus grant awarded to Motorola, Inc. (now Motorola Solutions, Inc.; NYSE: MSI) for an advanced public safety network project, passed an item asking the federal government to reallocate the grant from the firm to the city governments it is proposed to serve.  The vote by the legislative body representing the largest city in Northern California is the first of its kind for any award under the $7.2 billion broadband stimulus program of the Obama Administration.

During the 90 minute discussion on the matter, a sitting councilmember who is a former federal and state prosecutor said that a "public corruption case" was warranted for the so-called BayWEB project.

The action came as the Council voted unanimously to support two recommendations proposed by staff of Mayor Chuck Reed.  He and Santa Clara County Executive Dr. Jeff Smith are the leading area officials strongly questioning the budgetary, ethical, and procurement aspects of BayWEB. The project is proposed as one of the first 700 MHz LTE broadband networks in the nation, and is funded by the National Telecommunications and Information Administration (NTIA) of the U.S. Department of Commerce. The grant is part of agency's Broadband Technology Opportunities Program (BTOP). 

The lead recommendation voted by the Council asks "the National Telecommunications and Information Agency to reallocate the funds to the Bay Area cities and counties," thus moving the $50.6 million federal grant from Motorola, to the governmental jurisdictions the funds are intended to support. Mayor Reed stated during the meeting that NTIA Administrator Lawrence Strickling has already told him in direct conversation "the money goes back" to the U.S. treasury if awarded funds are not disbursed to Motorola.

Councilmember Sam Liccardo, a former state and federal prosecutor, said during deliberation on the BayWEB item that if he were still serving as a prosecutor, "I would have cleared my desk for a public corruption case," given the appearance of improper activity alleged to surround the BayWEB award.

Liccardo's statement marks the first time an elected official in California has suggested in public a criminal investigation into the mounting allegations and questions about the project.

This morning's action by the council was triggered by a demand of last week issued by NTIA Program Manager Lance Johnson for public sector partners in the BayWEB effort to express verbally and in writing their "intent" to move ahead with the project, or otherwise.

Today's vote demonstrates that BayWEB is increasingly a severe public relations and business development challenge for Motorola as it attempts to show first mover status in the growing broadband wireless sub-sector of the public safety communications equipment marketplace.

We will follow this Alert with detailed reporting on the escalating events of the past week around BayWEB as they continue to develop here in the Bay Area and in Washington. 

The BayWEB Examination is our compendium of information on the project. We believe it is the most comprehensive such collection available. We have assembled links to all media coverage of the issue, to online documents secured by us from confidential and open sources, to documents secured by others and by this publication under federal and state public records filings, and to our own published reporting.

Note on awardee identification: The project grant was applied for by, and subsequently awarded to, the entity Motorola, Inc., formally traded as (NYSE: MOT). Motorola, Inc. was split into 2 new and separate companies, which both began trading on January 5, 2011.  The network infrastructure side of the business, all public safety equipment lines, and the network integration / management services divisions became Motorola Solutions, Inc. (NYSE: MSI). We have retroactively re-tagged our BayWEB stories with the MSI ticker symbol. 
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