New York Terminates $2B SWN Tyco Contract (1/15/09)
Thursday, January 15, 2009 | Comments

The New York State Office for Technology (OFT) has elected to terminate its $2 billion Statewide Wireless Network (SWN) contract with Tyco Electronic Wireless Systems because the vendor failed to deliver a satisfactory and acceptable public-safety communications network and is in default of the contract, according to state officials. As a result, the state has exercised its right to terminate the contract for cause and presented a demand notice for the payment of a $50 million Standby Letter of Credit (SLOC) to the state without delay.

The 700/800 MHz network was first announced in 2005 and underwent a series of tests and evaluations. Operational testing conducted by OFT in November 2008 revealed M/A-COM failed to satisfactorily remediate 15 of the 19, or 79 percent of the deficiencies, as outlined in the Aug. 29 default letter, rendering the network unacceptable for public safety use.

“We are extremely disappointed M/A-COM has failed to demonstrate the reliability of their OpenSky technology, especially its network and subscriber radios, which are the core of the system,” said Dr. Melodie Mayberry-Stewart, chief information officer (CIO) and director of the New York State OFT. “Per the terms of the contract, we have given M/A-COM every opportunity to remediate existing deficiencies. However, the state’s testing concluded M/A-COM is unable to deliver a system that meets the needs of New York state’s first responders as stated in the contract.”

As part of the contract award, M/A-COM was required to furnish the state with an irrevocable SLOC in the amount of $50 million. Based upon M/A-COM’s failure to cure its default under the SWN contract, the state has presented a demand notice to the financial institution for the payment to the state without delay. Further, after any draw down, M/A-COM is required to replenish the account to its full value of $50 million and the state may continue these draw downs up to $100 million in total. Since notice of contract award to M/A-COM in April 2004, the state has incurred more than $54 million in project operating expenses.

Additionally, Federal Engineering, the independent validation and verification firm hired by the state to assure the network meets contractual technical, functional and operational requirements, and coverage requirements revealed similar unsatisfactory remediation results per the SWN contract.

“We believe that M/A-COM has fulfilled its contractual obligations and delivered a state-of-the-art system that would benefit the residents of New York,” said Victoria Dillon, senior director of communications for Tyco. “We recognize that the state’s current priorities may no longer support the construction of a statewide network and we have made several attempts to address this amicably with the state. Tyco Electronics and M/A-COM will take all necessary steps to protect the company’s rights under the contract.”

According to state officials, they remain committed to delivering a public-safety communications network with statewide coverage providing interoperability that allows for sharing voice and data communications between and among first responders and jurisdictions. CIO/OFT is beginning to research and develop contingency plans and will continue to work in partnership with state agencies and public-safety first responders to provide a communications network that meets the high standards of performance required by the state.

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