Is Motorola Solutions’ equipment so much better than radios offered by competitors?
Since the 9/11 attack, the nation has spent billions to upgrade radio systems so that police, firefighters and other first responders can communicate seamlessly across agencies during emergencies. The ambitious taxpayer-funded effort has afforded rich business opportunities, particularly for Illinois-based Motorola Solutions.
As McClatchy reporters detailed last week, Motorola Solutions has solidified its position as the leading provider of emergency communications gear by using shrewd business practices, hiring top law enforcement insiders, and spending heavily on campaigns, lobbying and charities favored by its customers.
Motorola sells a vital service. No tools are more important in a disaster than reliable communication devices and the systems that support them.
But the McClatchy Washington Bureau investigation, part of which appeared last week, raises basic questions: Is Motorola’s equipment so much better that cities and counties are justified in granting no-bid contracts worth tens of millions of dollars?
Motorola sells communications equipment used across America. But how has Motorola come to control 80 percent of the market? Motorola effectively shut out competitors by embedding proprietary features so its equipment cannot interact with radios made by other companies.
Most agencies pay from $3,500 to $4,000 for each Motorola radio. Some locales have paid up to $7,500. Competing products performing to similar specifications can cost thousands less. With such a old on the market, Motorola has, in effect, created a monopoly that should not exist.
Motorola Solutions offers a case study in how big business gets bigger, often hiring “rainmakers” from the ranks of top law enforcement officials and government agencies.
Its board has included former CIA and National Security Agency chief Michael Hayden and, until recently, William Bratton, the former chief of the Los Angeles and Boston police departments and New York City police commissioner.
After radios failed in Hurricane Katrina in 2005, then-Mississippi Gov. Haley Barbour set out to improve the communications system. Motorola won Mississippi’s business with bid prices so low competitors were dumbfounded. But the system has not performed due to too few towers and other issues, explaining the low bids. Barbour, a former chair of the GOP National Committee and Republican Governors Association, left office in 2012 and returned to his Washington, D.C., lobby firm, BGR Group. Among the clients: Motorola Solutions, which has paid BGR Group $200,000 since 2012, according to the nonpartisan Center for Responsive Politics.
The company spends $2 million to $3 million a year lobbying in Washington, and more in state capitals. The nonpartisan National Institute on Money in State Politics has identified 310 lobbyists registered to represent Motorola in the states.
It works out well for Motorola Solutions. Thanks to taxpayer-funded government contracts, Motorola Solutions’ net income grew to $1.1 billion last year, from $747 million in 2011. Its stock price hovers at $65, up from $15 in 2009.
Building two-way radio networks is lucrative. But it’s not rocket science. Policymakers need to ask hard questions, starting with why contracting officials award sole-source contracts that benefit the industry goliath and freeze out the competition.