Mississippi's governor fought back hard from one of Hurricane Katrina's more exasperating blows – a knockout punch to emergency radio systems that forced rescue workers along parts of the Gulf Coast to communicate with hand-carried notes.
Seizing on the walkie-talkie failures, Gov. Haley Barbour set one of the nation's poorest states on course to leapfrog past the other 49 into the forefront of emergency communications technology.
Within months of Katrina's 2005 devastation, Barbour enlisted Mississippi's two powerful senators, fellow Republicans Thad Cochran and Trent Lott, to divert $100 million in federal disaster aid toward a new statewide digital radio system.
Later, with construction underway, Barbour announced plans to vault Mississippi into the vanguard by building a second, $70 million, next-generation network that could flash data and videos via broadband to cops, firefighters and medics.
Motorola, the company that for decades has reigned over America's public safety radio market, was poised to capitalize on another flow of taxpayer money.
The company, whose emergency communications arm was spun off as Motorola Solutions Inc. in 2011, left little to chance.
Motorola captured both of Mississippi's mega contracts, which promised to generate more than $300 million in sales, with initial bid prices so low that competitors were dumbfounded.
The firm's low-ball bids offer a case study in how some of the company's myriad marketing tactics have warded off competition and helped preserve its estimated 80 percent hold on the nation's emergency telecommunication business.
The industry behemoth has seemed to have a strategy for every scenario in landing most contracts in the multibillion-dollar-a-year business that grew after the communications foul-ups of Sept. 11, 2001, and from the onslaught of Katrina. In some cases, Motorola has charged that its company secrets were leaked to rivals. It has threatened lawsuits. It has gone to court to jealously guard its pricing schedule.
In Mississippi, Motorola locked up the radio project with a bid price of $221 million, $90 million below that of rival M/A-Com Inc. Although Motorola had the least experience of three bidders for the broadband network, its price of $56 million over the system's 10-year life was $33 million lower than that of runner-up Alcatel-Lucent.
Despite the appeal of savings in Motorola's bids, one of the new networks has been scrapped and Mississippi lacks the funds to operate the other.
The broadband project, which gave Motorola bragging rights for building the nation's first statewide high-speed data network for first responders, was nearly constructed when the board of a new U.S. Commerce Department unit voted in December to kill its funding. Mississippi state officials and the new agency, known as FirstNet, had reached an impasse in negotiations over a required lease of space on the federal wireless spectrum, which FirstNet now controls.
Several industry experts also say the Mississippi network was grossly short of the number of towers needed to perform as advertised, perhaps helping to explain Motorola's low bid.
Barbour, who left office in 2012 and whose political profile got such a lift from his aggressive response to Katrina that he flirted with a presidential run, dismissed criticism of the tower layout as premature. In an interview, he also contended that FirstNet "canceled our grant for no reason" because "they want to take over the system."
As for the newly completed radio network, state officials say it performs well in every corner of the state. But they lack the $13 million per year needed to operate it.
Democratic state Rep. Tyrone Ellis, a former longtime chair of the House Public Utilities Committee who attended key decision-making meetings on the new systems, is worried.
"This has been a disaster for Mississippi," he said.
What occurred in Mississippi isn't an aberration.
In DuPage County, Ill., west of Chicago, a $7 million, noncompetitive contract with Motorola wound up costing more than $28 million.
California's Riverside County awarded Motorola a $148 million contract for a new land-mobile digital radio system that was to be activated by July 2009. It's been delayed by more than four years because of technical glitches, including busy signals on would-be emergency calls. The cost has risen to $172 million, said Kevin Crawford, the county's information technology chief.
Raytheon Corp. appeared to have won a $600 million-plus deal to serve as prime contractor for new radio and broadband networks connecting agencies in Los Angeles County with more than 80 of its cities, including Los Angeles, after underbidding Motorola by more than $100 million.
But the deal never closed, and after a series of unusual events, Motorola Solutions won a contract for a modified radio network last fall by cutting its initial bid price by half, to a lowball $280 million, according to documents obtained by McClatchy under the California Sunshine Act.
Irked Raytheon executives withdrew.
Motorola Solutions declined to respond to specific questions about its contracting practices. But it said in a statement that it was an early participant in drafting Project 25, or P25, uniform design standards for public safety radios and faces vigorous competition from "more than 14 vendors."
It's true that more companies are vying for public safety radio dollars now that P25 has taken hold. The standards limit Motorola and other firms from embedding proprietary features in their equipment so that it cannot interact with radios made by other manufacturers, a practice that for years froze out many competitors.
Vicki Helfrich, executive director of the Mississippi Wireless Communications Commission, said that in her state, the P25 standards have driven down radio prices from more than $4,000 each to as low as $1,300.
But the goliath of the emergency radio business continues to collect the bulk of billions of dollars that city, county and state governments spend each year to create "interoperable" public safety communications networks, in which every first responder's radio interacts with the others. Motorola's latest annual financial statement, for the year ending Dec. 31, 2013, said that more than 70 percent of its business, or $6 billion, came from sales to governments. The company does not break out sales to state and local governments, but $3.9 billion of its government sales occurred in North America, including those to federal agencies.
Democratic Rep. Anna Eshoo of California, who has monitored the government's expenditure of $80 billion a year on information technology, said that Motorola has had "a lock" on the public safety radio market "for a long, long, long time."
"It's a system that's entrenched," she said. "They know the individuals. They've been selling to them for a long time. . . . Once they have successfully secured a contract, they will play absolute hardball" to retain that market.
In a number of deals, Motorola has followed its initially low bid prices with "change orders" that significantly raised the final cost of a system or by reaping a windfall with additional orders for radios costing as much as $7,500 apiece.
An obvious question is whether Motorola has engaged in predatory pricing – underpricing products to hoard market share and drive competitors away. To date, Justice Department antitrust lawyers have shown no inclination to pursue such a case.
Predatory pricing suits are especially tough to bring because low bids translate to "lower prices in the short run (and) are recognized as a good thing for consumers," said Hal Singer, a senior fellow at the Progressive Policy Institute, a liberal-leaning think tank, who has written extensively about antitrust law.
If a company submitted "a low-ball bid" and then recouped its losses through contract amendments that raised the final price, "that kind of predatory conduct might raise flags at the antitrust agencies," he said.
Former Mississippi Gov. Barbour said that he was warned "about some companies that have a reputation for underbidding" and then recovering the money through costly contract modifications, known as change orders.
"We worked very, very hard regularly to make sure there weren't change orders" on the radio contract, Barbour said.
It was tough talk, considering that within months of leaving office in 2012 Barbour registered as a federal lobbyist for Motorola Solutions.
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Multiple developments have raised suspicions that state officials steered the Mississippi contracts to Motorola.
During planning for a radio network years before Katrina, state officials asked the company to submit a cost estimate for a system on the UHF (ultra-high frequency) bandwidth.
Motorola's main competitor, Virginia-based M/A-Com, wasn't afforded that opportunity, recalled Victor Wardlaw, who was a Mississippi sales representative for M/A-Com at the time.
Nor was there competitive bidding after Katrina struck, and the Federal Emergency Management Agency awarded $11 million to Motorola to put up a temporary radio network along the Louisiana and Mississippi Gulf Coast. The contract was justified as an emergency measure but wasn't awarded until 2007, nearly two years after the storm.
Reliable radio connections were critically needed not only for rescue efforts, but also for effective hurricane evacuations, when law enforcement reverses interstate highway lanes so all traffic flows away from the Gulf Coast.
Even before Katrina in early 2005, Barbour and the Mississippi legislature had created the Wireless Communications Commission to oversee an upgrade.
In the months after the storm, as Barbour and the state congressional delegation, began to push for funding, state and federal lobbyists for Motorola and M/A-Com seemed to be everywhere.
Some thought, however, that Motorola had the inside track for the radio contract from the moment the Mississippi Transportation Department hired a Columbia, S.C., engineering consultant, Buford Goff & Associates, which ultimately helped design both networks. The firm had a reputation for assisting state governments on large public safety communications deals that nearly always went to Motorola.
Mike Corbett, managing partner for Buford Goff's communications group, said in a phone interview that it would be "false" to suggest that the firm slants project specifications to favor Motorola.
However, of more than two dozen city and state public safety radio projects in which Corbett estimated the firm has assisted government agencies over the last decade, Corbett couldn't name one that went to a company other than Motorola.
M/A-Com was the only firm beside Motorola to respond to Mississippi's solicitation to build a radio network on the 700-megahertz bandwidth, a span of the wireless spectrum being set aside for public safety agencies.
When the bids were opened in late 2006, M/A-Com executives were startled at the $90 million difference between their price and Motorola's winning bid, a gap that was "unheard of," said Wardlaw, the now-retired M/A-Com salesman.
Lawyers for M/A-Com asked a Hinds County judge to unseal Motorola's pricing schedules, but the court accepted Motorola's argument that the information was proprietary.
Helfrich of the state Wireless Communications Commission and William Buffington, the commission's technical adviser, denied that the agency favored Motorola.
Willie Huff, the state transportation official who was on a panel that wrote the solicitation along with a Buford Goff representative and other state officials, said that M/A-Com may have padded its price with "risk dollars" because it was making its maiden pursuit of a contract for a P25 network on the 700-megahertz band.
"That doesn't even hold water," Wardlaw said when told of Huff's comment. "We had P25. It's nothing but software and building some narrow band boards. It doesn't take a scientist to figure out."
Wardlaw said he believes that M/A-Com's price rose partly because the state's project design crimped his company's use of its "Open Sky" technology, in which some transmitters are hung inexpensively on utility poles and similar fixtures, rather than on towers that cost hundreds of thousands of dollars each. The state's project specifications required that all equipment be contained in shelters, precluding use of the cheaper approach, he recalled.
M/A-Com's system was used before Katrina by Harrison County, along the Gulf Coast, Wardlaw recalled, and unlike the state's former Motorola network, it was still working after the hurricane and needed only minor repairs.
Motorola's winning bid hinged on using dozens of state-owned towers from the existing system – towers later found to fall short of new U.S. Department of Homeland Security requirements for withstanding hurricane-force winds.
The problem led the state to strip towers from Motorola's contract. An Alabama contractor agreed to build dozens of new towers for about a third of what Motorola normally charges, saving millions of dollars, said people familiar with the contract who declined to be identified for fear they would harm relationships.
A spokeswoman for Florida-based Harris Corp., which later bought M/A-Com, declined to comment on the bid price disparity. Nor could M/A-Com's bid proposal be obtained for comparative purposes, because Mississippi agencies destroy bid proposals after three years.
Helfrich, who has served as the Wireless Communication Commission's executive director for the last couple of years, said that nearly every state legislator with whom she speaks seems to presume that the contracting process favored Motorola.
No long-term solution for financing the system is in sight. Built to handle 64,000 subscribers and reach every corner of the state, it serves just 17,000 radios. The commission had planned to cover operations and maintenance costs by imposing $200 annual user fees on each radio that cities and counties hooked to the network, a strategy that scared away numerous jurisdictions.
Any county that joins the network would face big risks if the legislature refused to appropriate money to operate it, said Ken Winter, executive director of the Mississippi Police Chiefs Association and a former member of the Wireless Communication Commission's advisory board.
Their costs "would triple or quadruple for maintenance and upkeep," he said.
By Greg Gordon, Paul Hampton and Lydia Mulvany
McClatchy Washington Bureau