The city of New Orleans has dismissed a formal contract protest lodged by internet provider Cox Communications that accused the city and an outside consultant of illegally rigging a contractor search to favor a specific bidder for a proposed “smart cities” project.
Cox, which submitted a losing bid, described the process as a “coordinated effort in order to guarantee the award to a preselected or predetermined Respondent.”
“The inconsistencies throughout this process have been egregious,” the protest said.
The city released a request for proposals (RFP) for the multi-million dollar “smart cities” project in April. In June, the selection committee considered six responsive proposals and chose the one from Smart+Connected NOLA, a consortium of several companies, including wireless giant Qualcomm and investment management firm JLC Infrastructure.
Cox’s allegations center on the city’s relationship with a “pro bono” consultant, called Ignite Cities, that helped the city formulate the RFP. Although Ignite Cities doesn’t appear to have a formal role in Smart+Connected NOLA, it does have a partnership with two of the primary companies — Qualcomm and JLC .
According to a 2020 Qualcomm press release announcing the partnership, the three companies intend to work together to develop “smart and connected” technology for businesses and local governments. Qualcomm would act as the technology partner and JLC — a Chicago partnership between boutique investment bank Loop Capital and former NBA player Earvin “Magic” Johnson — would provide the capital.
Chicago-based Ignite Cities, headed by George Burciaga, would “provide its expertise in building municipal partnerships and successfully resolving complex city issues.”
In New Orleans, Burciaga began that work well before his partners were selected for the contract. He consulted with New Orleans officials, for free, to develop the RFP, a document that details exactly what the city is looking for in a contractor.
City officials also sent Ignite Cities advanced copies of the RFP weeks and even months before it was officially published, according to emails obtained by The Lens and contained in the Cox protest.
Despite Ignite Cities’ on-the-record partnership with companies in the Smart+Connected NOLA group, the city defended the process, saying it didn’t violate state Public Bid Laws because it doesn’t have a contract with Ignite Cities, and because the company isn’t an official member of the Smart+Connected NOLA consortium.
“On information and belief, IGNITE has no economic interest in the RFP,” the city’s protest response said.
It’s not clear who Ignite Cities was working on behalf of when advising New Orleans officials, or whether New Orleans officials ever inquired as to exactly what Ignite Cities’ interest was in the process. Ignite is a for-profit company, but it provides free advising services to local officials looking to adopt smart cities technologies.
It’s also unclear whether, or how, Ignite Cities is compensated through its partnership with Qualcomm and JLC. None of the three companies responded to requests for comment from The Lens. Neither did Mayor LaToya Cantrell’s office.
‘City-directed’ internet service
As The Lens previously reported, the Smart+Connected NOLA proposal would create a “city-directed” internet subscription service to compete with existing providers, such as Cox, while introducing thousands of new “smart cities” devices including smart streetlights, smart traffic signals and WiFi kiosks.
Privacy advocates and City Council members have raised concerns about several portions of the proposal, including the thousands of cameras and sensors that will be embedded in the new “smart” technology to collect massive datasets for city use and to sell to private companies.
The city is now negotiating a contract with the consortium, which proposed a 15-year cooperative endeavor agreement, or CEA. While contracts usually take effect with the mayor’s signature, a proposal like Smart+Connected NOLA’s would have an additional layer of scrutiny. Under city law, multi-year CEAs have to be approved by the City Council before taking effect.
Cox, which also submitted a proposal for the RFP, has a clear financial incentive to nullify the award. Because Cox’s proposal was ranked second by the city’s selection committee, Cox would win the bid if Smart+Connected NOLA was disqualified. What’s more, Cox is currently one of the city’s two largest broadband internet providers, and the proposed internet subscription service could create a major competitor.
But the Cox protest raises serious questions about Ignite Cities, which has been closely involved in at least two other city projects over the past two years. It also highlights a host of alleged deficiencies in the Smart+Connected NOLA plan that, Cox says, the city ignored in order to choose its preferred vendor.
“The City effectively moved the ball in order to accommodate the deficient proposal of the Respondent the City wished to contract with, either out of bias or due to a pre-existing relationship,” the Cox protest said.
One of those deficiencies, Cox argued, was the proposal’s failure to achieve what Mayor LaToya Cantrell’s administration claimed was a primary motivation for the project — getting free or subsidized WiFi to those who can’t afford it, and doing it without impacting the city’s bottom line.
Cox also questioned whether the project would be “cost-neutral” for the city as advertised in the proposal.
In official responses obtained by The Lens, the Mayor’s Office of Utilities fiercely denied Cox’s allegations in its protest. And earlier this month, the city’s procurement office officially denied the protest, ruling that the Cox allegations lacked merit. A Cox representative declined to comment, so it’s not clear if the company will take further action, such as filing litigation.
Ignite Cities
Burciaga and his company are at the center of Cox’s conflict of interest allegations. It appears Burciaga’s job is to act as a liaison between city officials and companies that produce or sell smart cities technologies.
“By refocusing their direction and with the support of private and public influencers, these city leaders will be able to author the framework to build a truly smart city that is scalable, able to be replicated, and profitable,” the Ignite Cities website says. “We articulate, architect and deliver a tactical framework to accelerate the success for our partner cities and clients.”
The company’s presence in New Orleans has grown significantly over the last year. Aside from consulting on the RFP, the company also helped launch a separate public WiFi pilot program last year that, according to city officials, didn’t work well. And this year, the company helped the city partner with MasterCard and MoCaFi to launch a universal basic income pilot program for local youth.
In 2020, Ignite Cities announced a formal partnership with Qualcomm and JLC, in which Ignite would leverage its relationships with cities to help craft smart cities projects that would be funded with JLC capital and use technology made by Qualcomm or one of the companies in the “Qualcomm Smart Cities Accelerator.”
It’s unclear exactly when Ignite Cities started working with New Orleans officials, but the Cox protest says it’s clear the company had a hand in shaping the smart cities RFP.
When city officials announced the RFP — a month before bids were due for evaluation — they publicly thanked the company.
“I would like to thank some of our partners, especially Ignite Cities, which has provided pro bono services for the city of New Orleans, and many other cities, to try and help us understand and to leverage the power of this smart cities approach to connectivity,” Office of Utilities Director Jonathon Rhodes said at the April press conference.
Cox claimed that Ignite Cities’ role in crafting the RFP, and its business relationship with two of the primary vendors in Smart+Connected NOLA, displayed a clear conflict of interest that gave the consortium an advantage.
In its response, the city downplayed the role that Ignite Cities played, saying it was only one of many industry representatives that officials met with to craft the city’s goals. In fact, the response pointed out, the city met with Cox representatives in 2020 to discuss potential future smart cities projects.
“These conversations with Cox not only helped to inform the City’s thinking about, and drafting of, the Smart City RFP, it also informed Cox about the City’s Smart City needs and priorities,” the city’s response to Cox’s protest said.
But Cox argued that even without Ignite Cities’ role in crafting the RFP, the company got advance information about the RFP before it was released to the public on April 16. The protest includes an email from January, in which Rhodes sent Burciaga a document titled “Smart Cities Scope of Services DRAFT.docx.”
“I would appreciate your insight on the attached Scope of Services for a comprehensive smart city program that the City would like to deploy asap,” Rhodes wrote.
The city did not address that email in its response.
According to another email obtained by The Lens, Rhodes sent Burciaga a near-final version of the RFP on March 25, roughly three weeks before it was made available to the public.
The city argued that Cox’s arguments were moot because Ignite Cities doesn’t have a contract with the city and isn’t an official member of the Smart+Connected NOLA consortium. But the city’s response ultimately fails to fully clarify whether it gave Smart+Connected NOLA a leg up on the competition by providing Ignite Cities’ early access to RFP details.
‘Flagrantly misleading proposal’
While the first half of Cox’s argument revolved around how the RFP was crafted, the other half focused on what happened after it was released. Specifically, the company argued that the city’s selection committee showed a clear bias for choosing Smart+Connected NOLA, and that they ignored Smart+Connected NOLA’s failures to satisfy several key requirements outlined in the RFP.
The Cox protest includes a list of RFP requirements that were missing from the “flagrantly misleading proposal.” For example, the protest pointed to the RFP criteria to create a 5G network over the city’s 350 square mile area. The Smart+Connected NOLA proposal only “provides immediate coverage for 90% of the area in 75 square miles.”
The Cox protest also claimed that Smart+Connected NOLA failed to meet the RFP objective of replacing all of the city’s 45,000 street lights with smart LED lighting. The Smart+Connected NOLA proposal would only replace 3,000.
And the protest pointed out that the proposal doesn’t provide a concrete solution to one of the central problems the project is supposed to solve — closing the digital divide by getting internet services to those who can’t afford them.
Instead of a clear plan to provide free or subsidized internet service, Smart+Connected NOLA proposed a revenue sharing structure that would give the city some of the new revenues brought in by selling data collected by smart cities devices and by attracting customers to the new “city-directed” internet service. The proposal said that the city could then use that money for whatever it wanted, which could include subsidizing internet service costs for low-income customers.
The city didn’t address that criticism in its response. But it ultimately characterized Cox’s entire protest as a blatant attempt to steal a contract it didn’t win.
“These allegations are supported by no more than false assumptions, speculation and a desire by Cox to protect its bottom line at all costs,” the city said.