- Dec 19, 2002
- Southern California
I haven't seen mention of this in any other thread yet so I figured I'd share:
Nextel project on hold
Nextel project on hold
Nextel project on hold
Costs of labor blamed for delay
Jeff Horwitz, Staff Writer
San Bernardino County Sun
Heidi Asherbranner was paid $20 an hour as a San Bernardino County secretary. Then she retired, and the county paid $90 an hour for her secretarial services.
Her boss on the new job, also a former county employee, cost the county $208 an hour or $432,000 a year.
After sinking well over $1 million of payroll costs into a troubled emergency-communications project that hired former county employees through a contractor, county officials have put the project on hold and dismissed most of the staff.
The purpose of the project was to make sure that Nextel Communications work in the county did not interfere with the the emergency-communication system in place. The Federal Communications Commission decreed that Nextel pay to guarantee the noninterference.
Sponsored by Board of Supervisors Chairman Bill Postmus, the project employed one of his former senior staffers, Bob Smith, as well as the brother of another staffer. It ran aground amid concern over Nextel's possible refusal to pay for the program's labor costs. The bill for the program included Asherbranner's $187,000 annualized salary and the $432,000 yearly for its project manager.
Since jettisoning the staff, the county has recovered half of a $1.1 million planning bill from Nextel. But after Nextel objected to the generous labor costs, the county agreed to eat more than $60,000 in payroll costs.
"When Dean (Arabatzis) and I saw the rate they were charging for a secretary, we pulled the plug," said County Administrative Officer Mark Uffer. "If there's not a very clear direction on this project, I'll pull the plug on it again."
The 800 MHz project was born in 2004, when the federal government ordered Nextel to pay billions of dollars to resolve interference problems between its network and emergency radio systems throughout the nation. San Bernardino County and other emergency radio-system operators would change their frequency, the agreement went, and then submit bills to Nextel.
Changing the frequency of every radio in the county was a massive and technical project, expected to cost more than $50 million. Complicating matters was a strict timeline: If the county didn't convert its system by July 2008, the feds might yank its emergency radio-operators' license.
A third problem was the looming retirement of the people who had set up the county's system in the 1980s. The county received permission to start planning the project early and consented to a pay raise to keep its radio experts on board.
"You had our guys getting ready to retire and they said, `Hmmm, golden opportunity here,' " Uffer said. The 800 MHz project's management initially requested that the county pay them as much as double, which would have spiked the older employees' pensions as well. The county's response to the plan, Uffer recalls, was "whoa, Nellie."
Instead of boosting their salaries, the county agreed to let four of its employees retire, sign on with an independent contractor and then be hired back.
Routing payment through the employment agency, Harvard Consulting, made the project significantly more expensive. In exchange for handling what Smith said were primarily payroll issues, Harvard marked up its new-found employees salaries by a third. Out of each $90-hour billed for the project's secretary, for example, Harvard took a $32 bite. In total, Asherbranner worked 1,360 hours at a cost of $122,400 to the county.
"I'm concerned someone thought that was appropriate," Uffer said later.
Those hired for positions with more technical expertise billed an even higher rate. Manager Dave Seidel cost the county $208 per hour. Chuck Ferrell, who did financial management, cost the county $156. Smith, who was a deputy director for the project and handled intra-governmental relations, billed at $183.
Harvard did not return calls seeking comment on the arrangement. Smith, who assumed responsibility for the project after Seidel left, said the salaries he and his colleagues received were, if anything, less than average for radio communications system consultants.
"If the county had to right now go out and hire somebody on the outside to fill my position at my salary, it could not be done," he said.
All told, the county paid Harvard $180 per hour for the use of four of its former employees. Nextel was not told of the exact arrangement until the county had spent more than $1 million, almost all on salary costs.
The bill was ill-timed. By late 2005, the 800 MHz project was barely started but already bogged down nationwide. In published accounts of its early negotiations, Nextel had built a reputation for intractability and quibbling. Complicating matters even further was the company's merger with Sprint, which had slowed negotiations with local governments to a crawl.
Required to pay only legitimate expenses, Nextel questioned the county's bill on at least 21 separate fronts, from the salary markups to line-item costs, such as why it would take the county 20 billable hours to fill out a 7-page form. Of particular concern was the county's inability to match the number of hours billed by the 800 MHz employees with work done.
Smith responded that the 800 MHz staff had approached their work "as a team effort and not specific task by person."
"In summary, we can debate the quality of time spent but the quantity of time spent is conservative," Smith wrote on Oct. 31 in response to Nextel concerns.
A check from Nextel was not forthcoming. With more than $1 million in county funds sunk into the project, the project's managers told county administrators that there was no way to tell when, or if, the county would be paid back.
County officials launched an audit and found the salaries and Harvard's markups hard to justify, Uffer said.
With the exception of Smith and a county-employed technician, the project's staff was laid off, touching off some touchy discussions between Smith, now the project's manager, and county administrators.
"There was minimal project tracking done by my two predecessors," Smith wrote in a Feb. 26 e-mail to Kathy Kubesh in the CAO's office, in response to questions on subjects such as "why I did not make someone outside the project aware of the project's poor performance and management."
In subsequent negotiations with Nextel, Smith said he tried to take a new tack.
"Where I was willing to negotiate, I think the predecessor had drawn a line in the sand and said `we're not going to go beyond this,' " he said.
In the spirit of compromise, the county accepted only $40-an-hour reimbursement for its $90-an-hour secretary, Smith said, a $68,000 loss. While Smith said he thought Asherbranner should have been billed at more than secretarial rates she knew PowerPoint, for example he thought it wasn't a point worth arguing. Nextel ultimately agreed to cover the county's other labor costs, he said, even if it didn't like Harvard's markup.
While Smith described the Harvard payroll plan as being "somebody else's philosophy, as you will," he defended the project's overall value.
"If it was a money pit, Nextel would not have negotiated the amount they have to pay," he said.
In the end, Smith said, the county will come out ahead.
Nextel's agreement with the county requires the company to pay for new equipment of a comparable quality, which means the county can expect to have millions of dollars of 15-year-old communications equipment replaced.
"They have to give us what's on the market right now, which is newer and better equipment," Smith said.
Uffer said he intends to make sure the implementation of the project goes better than its planning.
"We're in a maintenance mode right now. We're not expending hours," Uffer said, adding that, in the grand scheme of county finances, the project's no budget buster.
"Right now our risk is a little less than $500,000," he said.
"It's a $3 billion budget we run, and we caught this thing at a million."