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MATrHEW R. BETIENHAUSEN SECRETARY
CALIFORNIA EMERGENCY ~ANAGEMENT AGENCY
October 14, 2010
Laura Phillips Executive Director
Bay Area Urban Area Security Initiative 10 Lombard 8t Suite 410
San Francisco, CA 94111
Dear Ms. Phillips:
The Bay Area Urban Area Security Initiative (VASI) asked the California Emergency Management Agency (Cal EMA) to review the method and process by which the VASI and the Alameda County Sheriffs Department used in signing a "Cooperative Agreement" with a private vendor to submit a federal grant application. on behalf of the ten county region. In addition, Cal EMA will review the process by which the UASI awarded funds to complete "Project Cornerstone" which is a related but separate project funded by United States Department of Homeland Security Grants administered by Cal EMA. This particular review deals with the «Cooperative Agreement" that was entered into by the Alameda County Sheriff ostensibly on behalf of the entire region that is covered under the Bay Area Regional Interoperability Communications System (Bay RICS).
The U AS1. in conjunction with representatives of the Bay Area Urban Area Region, set about to find a way to partner with an entity that would be willing to submit an application for a National Telecommunications and Information Administration (NTIA) Broadband Technology Opportunities Program (BTOP) grant The process that was used resulted in the signing of a "Public Private Cooperative Agreement for Bay WEB" (Agreement). This Agreement was signed by the Alameda County Sheriff on behalf ofthe Bay RICS Policy Group and Motorola. Inc.
The most important factor to consider when reviewing this agreement is the actual federal rules that govern the use of "Cooperative Agreements" and the acquisition/purchaslng rules and standards that apply to these "Cooperative Agreements," Many of the relevant definitions for the federal procurement process are found under Title 48 Code of Federal Regulations (CFR), Chapter I, Subchapter A, Part 2. This section defines acquisition as:
The acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated. and evaluated. Acquisition begins at the point when agency needs are established and includes the description of requirements to satisfy agency needs, solicitation and selection of sources, award of contracts, contract financing, contract performance, contract administration, and those technical and management functions-directly related to the process offulfilUng agency needs by contract.
3650 SCHRIEVER AVENUE ,- MATHER, CA 95655 (916) 845·8506 • (916) 845-8511 FAX
According to this definition of acquisition there is a requirement that it include appropriated funds and a contract to expend those funds. The same section defines a contract as:
A mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders. under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C. 6301. et seq.
Thus, a contract requires a seller to furnish supplies or services and the buyer to pay for them. In the same eFR. the term contracting is further defined as:
Purchasing. renting, leasing; or otherwise obtaining supplies or services from nonfederal sources, Contracting includes description (but not determination) of supplies and services required, selection and solicitation of sources, preparation and award of contracts. and all phases of contract administration. It does not include making grants or cooperative agreements.
Finally, Cooperative Agreements have different meanings throughout government, but for the purposes of this analysis the accepted federal definition will be referenced. The standard definition at the federal level is derived from Title 31 of the United States Code (USC), section 6301, et seq, which states:
An executive agency shall use a cooperative agreement as the legal instrument reflecting a relationship between the United States Government and a State, a local government. or other recipient when -
(J) the principal purpose of the relationship is to transfer a thing of value to the State, local government, or other recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, orbarter) property or services for the direct benefit or use of the United States Government; and
(2) substantial involvement is expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.
Applying the same standards to state and local government procurement processes when they are using federal funds is a big portion of ensuring adherence to federal rules while in a grant relationship. The federal funds can be received from the federal government directly or through a State Administering Agency (SAA) that is implementing federal grants. Application of federal procurement rules and state/local procurement policies if they happen to be more stringent than the federal rules is at the heart of adherence to all federal government procurement guidelines. With this in mind it is important to note that the Federal CFR and USC do not define "Cooperative Agreements" as contracts, In fact, in the USC definition cited above, it specifies that a cooperative agreement is to transfer a thing of value for a "public purpose of support or stimulation ... instead of acquiring (by purchase. lease. or barter) ... " Therefore. the general standard for utilizing cooperative agreements depends on whether the cooperative agreement meets the definition in the USC and whether the signatories to the agreement exercise "due diligence." Tbe Merriam-Webster's Dictionary defines due diligence as: the care that a reasonable person exercises under the circumstances to avoid harm to other persons or their property,
The Agreement as signed by both the Alameda County Sheriff and Motorola, Inc. is termed a "Cooperative Agreement" by the signatories but the requirements of the Agreement will dictate whether
or not it fits the federal cooperative agreement definition. The following section details major portions of the agreement to determine if it fits this definition.
The Agreement states that: "The Sheriff of Alameda acting on behalf of Bay RICS and Motorola. inc. agree to the following:
I. The Sheriff as the Region 2 Coordinator of mutual aid is interested in completing a regional 700 mhz wireless broadband network known as Bay WEB and bas selected Motorola to design, deploy, own. operate, and maintain the network.
2. The Sheriff and Motorola both wish for the Network completion to be funded in principal part with NTIA Broadband Technology Opportunities Program (STOP) Funding.
3, BTOP encourages grant applicants to form "public private cooperative agreements" for the
purposes of the projects.
4. The cooperative agreement describes the roles and responsibilities of the parties.
5. The CA is intended to be consistent with and supportive of the BTOr grant application.
6. If the BTOP grant application is successful, then the parties intend to enter into one or more additional agreements.
The Agreement contains four major joint responsibilities of both parties:
\\ . The Parties will work together to submit a BTOP application for funding and together with grant matches these funds should fund the completion of the design, deployment, operation and maintenance of the system.
• The SheriffwiIJ review and approve the BTOP application. but Motorola will serve as the BTOP grant applicant.
• Both parties will promote the success of the BTOP application and if successful will promote the compliance with applicable laws,
a If the BTOP funds are approved the parties will negotiate in good faith and enter into additional agreements.
The Agreement contains multiple requirements for Motorola. The following is a listing of the types of activities Motorola agreed to complete:
0/ Retain a firm to provide BTOP grant expertise. ° File the BTOP application as grant applicant.
o Design the network and ancillary systems that will use a minimum of 150 existing shovel ready sites,
e Negotiate and enter into a teaming agreement with Verizon Wireless and other Internet Service Providers to promote greater broadband access within the region,
• Develop a subcontractor plan for use concerning the design and deployment.
.. Provide the equipmentand software for the network and ancillary systems if the application is successful.
• Commit in the BTOP grant application to provide a grant match of at least 25%.
111 Motorola will own, operate, and maintain the Network and ancillary systems for the life of the systems subject to allowable transfers under the aTOP grant program.
• At some point in time of mutual agreement between both parties: Motorola will transfer ownership of the Network and ancillary systems to the Sheriff or some other representative of the Bay RICS Policy Group,
e During the aTOP grant term, Motorola will use project income as authorized in the BTOP grant award.
The Sheriff as the Region 2 Mutual Aid coordinator, agreed to the following responsibilities, and in the context of this agreement intends to fulfill these terms through the support of the other Bay Area counties and the Bay rues Policy Group.
0.. The Sheriff'will facilitate, through the Bay RICS Policy Group. site access and continuous use of a minimum of the 150 "shovel ready" sites.
III All licenses shall be provided at the cost and expense of the Sheriff (e.g. FCC licenses and PSBL licensing agreements).
III The Sheriff will provide network "backhaul" to each site so that Motorola may operate the network
(It Staff from the Bay Area UASllnteroperabiJity Team will support the BTOP application by garnering letters of support from various government authorities and community anchor institutions,
<) The sheriff through Bay RleS Policy Group must provide Network operation specifications.'
.. The Bay RICS Policy Group will coordinate the billing to the various network users and collect the network fees, so that the remittance can be made to Motorola in one monthly payment for aggregated monthly network user fees.
The guiding principles that determine how we view the requirements associated with this Agreement are such that the Agreement must meet the federal standard for what constitutes a cooperative agreement and the agreement must not be a contract as defined in the CFR. To determine if this is a contract there are a series of questions based on the contract definition that must' be answered.
1. Is the Agreement a mutually binding legal relationship obligating the seller to furnish the supplies or servicestlncluding construction) and the buyer to pay for them? Answer: No, there is not a relationship between the parties in the Agreement that make one a seller and one a buyer. The parties agree to perform tasks that are mutually beneficial to further their goals, but that is done without a buyer-seller relationship.
2. Does the Agreement include any types of commitments that obligate the Government to an expenditure of appropriated funds and except as otherwise authorized, are these requests in writing? Answer: Possibly. under parts of the Agreement funds. may be paid by Bay RICS, but those funds would not be paid to the other signatory in a contractor type relationship, The funds paid may be used to pay for licenses or to meet the obligations of the Bay rues in the Agreement, but those payments would not be made to Motorola. The traditional buyer-seller relationship is not evident in this contract, in that no immediate demands can be made of the Bay RIGS project in the typical fee for service mode that this question encompasses.
3. Does this Agreement include any typical bilateral contractual instruments (For example: awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders. under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications)? Answer: No, this contract does not contain any of these types of arrangements and presumably it will not for the foreseeable future since there is no inherent buyer-seller relationship built into this agreement.
The Agreement does require further agreements that can be ratified at such time as the BTOP grant is awarded or in the event that further agreements are needed to better deflne the evolving relationship of the parties. Since these possible agreements are futuristic they cannot be reviewed at this time. The next test for the Agreement is to see if it meets the federal requirements of being a cooperative agreement. The federal rules require that a cooperative agreement meet two requirements:
J. Is the principal purpose of'the relationship to transfer a thing of value? Answer! Yes. One of the prlnclpal purposes of the Agreement is to work as a partnership to create a broadband system that IS funded by BTOP funds. Once that is created. it is the intent of the Agreement to transfer ownership of the new broadband system to the "Sheriff or some other representative of the Bay RICS Policy Group." as long as the federal rules allow for it.
2. Is substantial involvement expected between the public agency and the other recipient when carrying out the activity contemplated in the Agreement? The Agreement specifically states that the parties will work together to submit a BTOP application for funding and together with grant matches and these funds should fund the completion of the design, deployment. operation and maintenance of the system, The beginning of the Agreement assumes a public-private partnership where there will be substantial involvement of both parties to successfully win the BTOP award and then complete the BTOP project. The individual responsibilities included in the
, Agreement further strengthen the argument for partnership by requiring both Motorola and the Sheriff to contribute towards the overall success of the project. For example, it requires the Sheriff to secure the network operation specifications and access to sites and it requires Motorola to provide the team to write the BTOP application and commit their own funds to match the BTOPaward,
Because the Agreement meets the test above, it is a cooperative agreement according to the federal
defin ition of such agreements. As discussed earlier, cooperative agreements are not contracts and therefore are held to a different standard as far as how they can be entered into by a public agency.
Rather than a mandatory bidding process, cooperative agreements can be entered into if they meet the "due diligence" standard because they do not facilitate a buyer-seller relationship, As discussed previously. a cooperative agreement represents a mutually beneficial relationship that is entered into when certain conditions exist. The Agreement would only need to meet the lower due diligence standard since it is not a procurement/contract, however the Sheriff and Bay RICS did more than meet the due diligence standard in their efforts to secure a grant proposal partner.
On behalf of the UASl1nteroperable Team, the City and County of San Francisco issued a Request For Information (RFI) on September 29, 2009. This RFI requested respondents to reply with their ideas for how a regional 700 megahertz Wireless Mobile Broadband Network could be implemented in the Bay Area. These RFI responses were due approximately 60 days later. Using the original paperwork that was submitted as part of the RFI process, on February I, 2010, the UASI thru the City and County of San Francisco, issued a Request For Proposal (RFP) to all of the interested respondents to the RFJ. This RFP requested proposals from the RFI respondents who might be interested in partnering with the VASI and Say RICS team to submit a BTOP grant proposal as partners.
The VASI and Bay rues received 8 proposals .. Of those eight proposals, four were found to have completed all of'the necessary requirements and were sent to a review panel where the respondents were asked to give oral presentations. The respondents asked to give presentations were; Alcatel-Lueent, Motorola, IP Wireless, and Harris Communications. The review panel consisted of telecommunications professionals from around the area and a non-voting member of the VAS!. The members were: Ahsan Baig, City of Oakland; Shelly Nelson. Marin County; Bill McCammon. East Bay Regional Communications System Authority; Morris Tabak, City of San Francisco; Steve Dupree. San Mateo County; Mike Casten. Contra Costa County; and Teresa Serata, Bay Area VASI (non-voting), This process allowed for the proposals to be reviewed by a panel of experts and out of that review Motorola was selected as the winning proposal. As the winning proposal Motorola was asked to sign the Agreement that started the process of'them applying for the BTOP award.
Through this process, the VASI and Bay RICS met and exceeded the due diligence standard needed to sign a cooperative agreement. In fact the process that was engaged in is similar to a typical procurement
that would have been done in the standard contractual buyer-seller relationship. It is the conclusion of this review tbat the Bay Area VAS1 and Bay RICS met every federal requirement for establishing the cooperative Agreement with Motorola, Inc. to apply for BTOP grant funds to build a mobile broadband solution for public safety.
BRENDAN A. Director of Grants Management
County of Santa Clara
City of San Jose
(!M'lT.U. (IP ,at~l£iOl \l:U-UW
October 15, 2010
Sent Via E-mail
Matthew R.' Bettenhausen, Secretary California Emergency Management Agency 3650 Shrlever Avenue
Mather, CA 95655
RE: Review of Bay Area Urban Area Security Initiative/Alameda County Sheriff Procurement Process
Dear Secretary Bettenhausen,
. We are in receipt of the California Emergency Management Agency' s review of the "method and process by which the UASI and the Alameda County Sheriff's Department used in signing a "Cooperative Agreement' with a private vendor to submit a federal grant application, on behalf of a ten county region."
Clearly, Cal EMA staff failed to understand some critical facts. We can understand how this may have happened given the complexity of this issue and the misrepresentations that have occurred to date.
First, the agreement Signed between the Alameda County Sheriff and Motorola on March 15~ 2010 represents that the Sheriff is /; acting on behalf of the Bay RICS Policy Group." On March 15r the Bay rues Policy Group did not exist. It first met on July 7, 2010.
As recently as Tuesdey, October 12, the Alameda County Sheriff convened regional stakeholders to hash out governance issues for the federally funded project called BayWEB. In that meeting, both the Sheriff and UASI General Manager clearly stated
Review of Bay Area Urban Area Security Initiative! Alameda County Sheriff Procurement Process Secretary Matthew R. Bettenhausen, California Emergency Management Agency
October 15; 2010
that there was not a governing body in place to implement the broadband project and one needed to be created.
Second, the agreement goes on to state Bay rucs Policy Group "is the governing body of the shared San Francisco Bay Area Interoperability Communications System" leading one to believe this non-existent group had some governing authority. There is no Memorandum of Understanding, Joint Powers Authority, or other arrangement under which the Bay rues Policy Group or Alameda County Sheriff were granted the authority to contractually obligate the cities and counties of our region.
The Bay RIeS Policy Group/Alameda CO'JlUty Sheriff had no authority to enter into any agreements with a private contractor on behalf of our ten county region.
There is a Memorandum of Understanding between the Bay Area" s largest cities and counties to work collaboratively on urban area security issues through the UASI.That agreement vests power and decision-making in the UAS} Approval Authority, The
. Approval Authority must agree to procurements and partnerships of this type. The Approval Authority learned of the Motorola partnership after the grant application was submitted,
The General Manager of the UAB1 and her staff exceeded their authority in pursuing this partnershipwith Motorola; The creation of a new governing body is outside the authority of the General Manager, UASI staff, or the Alameda County Sheriff,
Finally, and perhaps most important, no public vote was ever taken to partner with Motorola. Not by the non-existent Bay RICS Policy Group, not by the UASI Approval Authority, nor by any local city and county. At the October 12 meeting, the UASI General Manager confirmed that no one voted for this partnership or to select Motorola.
Given the above, it is preposterous to think that this "process met or exceeded the due . diligence requirements" as Cal EMA states.
Staff from the South Bay region met with Cal EMA staff and made them aware of the concerns we had and what we were looking into. At the time those meetings took place, VASI staff had not provided us with the Public Private Cooperative Agreement. Had we had access to the document at the heart of Cal EMA's review, we likely would have brought the above issues to Cal EMA's attention.
Review of Bay Area Urban Area Security Initiativel Alameda County ShetiffProcurement Process Secretary Matthew R. Bettenhausen, California Emergency Management Agency
October 15, 2010
Oversight ofUASIs resides with Cal EMA, acting on behalf of the federal Department of
. Homeland Security, and Cal EMA holds the tie-breaking seventh vote on the Bay Area UA$I Approval Authority. We ask that you rescind this report and take another look at the serious issues that have been raised about this project and the ongoing problems at . theUASI.
Chuck Reed Mayor
c: Honorable Gary Locke, Secretary of U.S. Department of Commerce Honorable Todd Zinser, Inspector General
BAUASI Approval Authority Members
Emily Harrison, Deputy County Executive
CAPITAl Ol'SCLICON VALLEY
Ms. Laura Phillips. General Manager
San Francisco Bay Area Urban Area Security Initiative (VASI) 10 Lombard Street, Suite 410
San Francisco, CA 94111
Subject: Project Cornerstone and Broadband Technology Opportunity Program (BTOP) Dear Ms. Philips,
I am writing to express significant concern on the part of the City of San Jose regarding recent developments in the administration of the "FY2009 Urban Area Security Initiative (VASI) grant project a.k.a, Project Cornerstone, as well as the recent award of $50.6 million to the San Francisco Bay Area as part of the Broadband Technology Opportunity Program (B~OP).
The City of San Jose has been a national leader in developing the BTOP process and helped secure the federal funding that supports the program. Over the last several years, City staff have dedicated countless hours to represent .not only the needs of the City but of the entire
Bay Area in the halls of Congress.
As one of the three Bay Area cities to petition the original FCC 700 MHz waiver, it is exceptionally noteworthy that the City of San Jose has been excluded from this project despite letters and documents sent to you from the City indicating our desire to participate. As the largest city in the Bay Area and the io" largest in the United States, the participation of San Jose is essential to the eventual success of this effort.
In November 2009. the VASI Approval Authority voted to set aside $2 million for each of the core cities (Oakland. San Jose and San Francisco) to support broadband communications development. Subsequent to that action, you chose to reassign those funds to Project Cornerstone without consulting the Approval Authority 01' seeking its approval.
The Memorandum of Understanding governing the UASI program clearly identifies the responsibility of the Approval Authority and states this board is responsible for " ... approving all UASI-funded projects and programs and making final decisions on allocation and distribution ofUASI Program funds." Citing time constraints, you did not inform the Approval Authority of this action. Nor did you seek board approval as required.
The process used to select the vendor for Project Cornerstone does not reflect our standards for acceptable procurement practices. The use of the Request for Interest model rather than a true competitive bid process is difficult to understand given the sizeable grant award to a vendor.
Laura Phillips, General Manager Sept. 3~ 2010
I would direct your attention to the minutes of the September 10,2009 UASI Approval Authority meeting in which the leadership role of San Jose is acknowledged as well as the commitment that the Approval Authority would be kept informed of developments in the BTOP program. At this same meeting} the RFI was presented as a mechanism for preparing for the 2nd round ofBTOP and not as a vendor selection process for the FY09 VAsr funds. The City of San Jose expressed support and a desire to participate in the 2nd found ofBTOP.
The approach taken by the UASI management team in developing both Project Cornerstone as well as the participating in the BTOP program challenges the Bay Area's history of successful regional partnerships and unity. I have discussed my concerns with the Honorable Mayor Gavin Newsom. In order to address these issues and restore confidence in the administration of these programs, I request that you take the following actions:
1. Cancel the BTOP/ Project Cornerstone media event currently scheduled for September 10th;
2. Administratively support an external inquiry into the selection process; and,
3. Present to the Approval Authority a plan to re-open the selection process incorporating standard procurement processes including opportunities for other vendors to compete for the contract.
I would appreciate the favor of a written response by September 7, 2010.
Chuck Reed Mayor
CC: Honorable Ronald V. Dellums, Mayor, City of Oakland
Honorable Gavin Newsom, Mayor, City and County of San Francisco Jeffrey V. Smith, County Executive, County of Santa Clara
Debra Figone) City Manager, City of San Jose
Dan Lindheim, City Administrator, City of Oakland Ed Lee, City Administrator, San Francisco
Renee Domingo, Director of Emergency Services, City of Oakland Scott Frizzie, Director of Regional Operations> CalEMA
Vicki Hennessy, Director, City of San Francisco DEM
Kirstin Hoffman, Director of Emergency Services, Santa Clara County OBS Rich Lucia.Undersheriff Alameda County Sheriff's Department
Monica Fields. Deputy Chief of Administration, City of San Francisco Fire Department
Teresa Reed, Assistant Fire Chief, San Jose Fire Department
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