State Dept. Cancels $16.5M Kindle Contract

itwbennett writes "The U.S. Department of State will be canceling a $16.5 million Amazon order that included 2,500 Kindle Touch e-readers, 50 pieces of content, and 'required provision of a secure, centrally managed content distribution and management platform.' The department said that it will be re-examining its requirements for the program. Those requirements had called for a single-function device with text-to-speech, a 'battery life of no less than about 8 hours of continuous reading or approximately 7.5 hours of video playback,' and free Wi-Fi. The Kindle was the only project that met that original set of requirements."

Comments

sucks to be Amazon

[TheRealQuestor]

wonder who they ticked off this time

Re:sucks to be Amazon

[Cute Fuzzy Bunny]

wonder who they ticked off this time

Eh, someone up the food chain realized that they weren't buying ipads, and those are what the cool kids have. Cue the story about them opening a contract with apple to do the same exact thing, only for double or triple the cost.

They're doing that here in California. Our state budget left the rails and took out every major city, and we're letting go of teachers left and right. But we found money to buy 5 ipads for every classroom from one of those buckets where the money can only be spent one way. No integration, no IT strategy...just 5 paperweights with a quiz on them about a book, and you have to transcribe the results from the ipad to a piece of paper when you're done, as there is no rollup.

I just want to know what person sits in what office in the state organization that agreeably says "Oh, you want to donate money to our schools? Yeah, well those ipads would be pretty much useless...feel like funding something critical thats being cut or how about we buy cheaper tablets, get 20 per class instead of 5, and get someone to do a nice integration job with our curriculum?

We missed a prime opportunity last year when HP (a california company) decided to get out of the touchpad business and sold tens of thousands of them for below cost. Someone from the state should have gotten them to donate them, make more so every kid could have one, and build the software and support infrastructure with that. Replace all textbooks and teaching materials with the pad. Give HP tax credits so its worth it for them to take it on. Hell, it took the NFL no time at all to switch from playbooks and lots of pieces of paper to a tablet solution. If they can do it, I'm pretty sure HP and the state of california could have done it.

Spec'd the Kindle

[tomhath]

So the requirements were for a Kindle and only a Kindle? Nice try by someone ready to retire and move to private industry.

Re:Spec'd the Kindle

[kenh]

Seriously, on the "back" of a contract for 2,500 Kindles? What kind of "payoff" do you think they'd get for negotiating a 2-3,000 piece contract for an item the gov't would by at or below retail?

I think their real goal was to try and avoid the political stigma of a set of requirements that would lead them to buying a couple thousand iPads (while being good/great devices have so many additional uses that their purchase could easily be attacked politically)...

Re:Spec'd the Kindle

[MonsterTrimble]

Actually, I see this all the time in the public sector and have done it on countless occasions myself.

The reason Amazon is the only one which meets the specs is because the specs were chosen so only Amazon could meet them. It's how you can exclude a vendor (or vendors) you have no desire of even giving the opportunity to win the quote. This can be because of past history with the company's sales team, poor delivery, poor service, poor quality, and so on. While in a strict lower cost item sense it's bad, it is often not the case when you consider all the other factors. Extra time spent caused by poor quality or poor delivery can often cost far more than the additional money spent on a product which has very good quality and is delivered on time.

Re:Spec'd the Kindle

[jellomizer]

That is common. We go by the joke we called a fare bidding process. Everyone denies it but this is how it works.
The Government finds a vendor they want to use. Once they find the vendor they like, they often get the resumes of the people who will be working, or the product specifications, then they use that to make their bid. Because the Bid has a detail on what they want, it is hard for a competitor to compete with the bid, because every product and service is a little different. Even though they may be able to help solve the same problems.

If you look at lot of these bids, you see things like
Web Site Development
Required Sills:
HTML 10+ years
JavaScript 8+ years
Photoshop 6+ years
ASP.NET 9+ years
FORTRAN 77 4+ years
C++ 12+ years
MUMPS 3+ years

You see bids like that you know they have already picked someone they want to use. The Job doesn't even require FORTRAN or MUMPS or C++ however they may have some in house applications that still run these systems so they add it in their bids, but they have already picked who they want and they know that they have those skills, and they also have similar systems on their side (To show that they have a need for such technology).

They did all the paper work correctly and there isn't any sign of corruption. However they found a way to bypass the fair and competitive bidding process.

Re:Spec'd the Kindle

[stewbacca]

That's how government contracts work. Also, this is how government job positions work. You write the requirements to match exactly the single person you want and only that person.

Re:Spec'd the Kindle

[deKernel]

Guessing you didn't read the article. No device other than the Kindle met the requirements AND the requrements were quite sane.

Re:Spec'd the Kindle

[dpilot]

There is perpetual complaint about "government messing around with business," but clearly not enough complaint about "business messing around with government." I would also argue that the ramifications of the latter are far worse than the former. Think for a moment about the "military-industrial complex" and the number of complex defense contracts that are apparently largely a mechanism to get fat sucking off of the government (and taxpayer) teat. The place where it gets really bad is when we don't get the weapons system that we might actually need - even at the vastly inflated price.

Re:Spec'd the Kindle

[zippthorne]

Oddly, The Kindle doesn't meet the requirements, either. The Kindle and Kindle Touch don't do video, and the Kindle Fire doesn't do 3G...

Also, the requirements are not specific to Amazon - B&N has devices which match the requirements as fully as Amazon does, including the 3G download requirement. If they wanted to force Amazon to be the only supplier, they would've had to require that the device allow web browsing over the 3G link.

Re:Spec'd the Kindle

[tomhath]

The goal is lock-in. First purchase is a balancing act, small enough to get through without too much attention, but big enough that any follow-on has to be for the same equipment. Typically the follow-ons are worth several times the initial contract, and are negotiated separately.

Re:Spec'd the Kindle

[hairyfeet]

Exactly, no different than in the private sector where all it takes is getting burnt once and good luck ever getting another contract. I know several businesses where Dell could offer them hookers and blow and Dells for 10% of cost and they won't allow a single one in because they were treated like shit by Dell during the whole bad cap deal a decade ago. No matter how big of a price difference there is there will NEVER be a Dell computer in their business PERIOD, all because they fucked them over 10 years ago.

I do have to wonder with the way they just up and canceled like that if some middle management PHB screamed because he wouldn't be getting an iPad. I swear some of those PHB types are worse than little kids when it comes to having the latest toys. I can just picture one going "Waaah, that isn't an iPad, its crap!" and throwing a royal hissy fit.

Re:Spec'd the Kindle

[jbengt]

So the requirements were for a Kindle and only a Kindle?

That's how government contracts work.

In my experience (construction) government bids do not work that way. In fact, the contract documemts I have made for various federal, state, and local governments were typically required to explicitly list at least three manufacturers for each product. (The hard part that sometimes gets overlooked is that companies are so busy buying each other, merging, and selling off parts, that three different brands that were made by three different companies yesterday may very well be all under one corporation today.)

Re:Spec'd the Kindle

[AK Marc]

The private sector fakes requirements as well. I've seen a private business put out an RFP that I could tell was written for a specific model of Cisco router. It was an attempt to shop price from a bottom racing hardware market, after the consulting company already built the soution design. They should have just put out an RFP for what they wanted, but they requested the whole design again, for the free doubling of work in order to verify the consultant's work and ensure installation services...

Re:Spec'd the Kindle

[bryan1945]

This happened to me. Came across what would be a perfect job upgrade for me on the USAGov job website. Long list of requirements, but I had all the right experience. By application ended up being 12 pages long. Sent it in, a couple of weeks later I got a personal letter from the hiring manager/department head saying who they picked including a brief bio of him. Same skill set, but worked in that department at a lower grade. I essentially got a freaking apology letter from them for wasting my time. Never saw that before.

Re:Spec'd the Kindle

[dpilot]

How do you suggest breaking the cycle then? IMHO if the founding fathers had seen what corporations would become, they would have done a specific delineation of rights in the Constitution. Perhaps it would be as some sort of "collections of peoples", actually rather similar to a church, when you think about it. As it is, corporations are getting everything but the vote, less of the liabilities, and the recent and not-so-recent "personhood" rulings form the Supremes indeed make mere people second-class citizens.

Again, as you say, a corporation only exists because it gets its charter from the government. What piece of legal fiction would you use to give a corporation existence? Or would you go back to partnerships, abandon the limited-liability nature of corporations, and recognize them only as the people running the show? (That may not be a bad idea, now that I think about it.)

Let's cheer for No-bid contracts

[Banichi]

Is a Raytheon tablet in the works?

Re:Let's cheer for No-bid contracts

[sizzzzlerz]

Yeah. I'll be battle-hardened to withstand 20G shock, survive submersion in seawater to 500 feet depth, be rad-hard, and have full-up mil spec documentation. It's yours for $127,343.36 per copy. Do you need the HumVee mounting kit as well?

That can't be...

[kenh]

A federal procurement contract with a set of requirements that can only be satisfied by one vendor?

Unheard of!

One one thousandth of a penny wise, pound foolish.

[Impy the Impiuos Imp]

> canceling a $16.5 million Amazon order

Yey! The government just reduced its spending by .00037% this year!

It still continues to borrow 9/10ths of a Nimitz-class aircraft carrier every day.

Re:Kindle touch video?

[Shoten]

It said "or," as in "8 hours of continuous reading or approximately 7.5 hours of video playback."

I suspect that the challenge here had to do with procurement rules. It's against the rules to design an RFP or RFQ in such a way that only one vendor can fulfill the requirements. It sometimes happens that the requirements are immutable and the RFP ends up being built that way, but that has to be proven, and I find it difficult to imagine that the Kindle is such a totally mind-blowing device that a Nook, for example, couldn't actually meet their needs as well. (I own a Kindle, and love it, mind you...it's just that the Kindle hasn't been the unapproachable paramount that the iPad is in the tablet market, in my opinion.) So I think someone had a predilection for Kindles, wrote the spec that way, and is now getting bitten by that no-no.

Reconsidered

[guttentag]

The state department realized it was going to cost a lot more than originally expected since they'll have to pay sales tax by the time the shipment is ready.

$6600 per Kindle!

[rollingcalf]

$16.5 million divided by 2500 = $6600.

Even though that includes some content and services on top of the Kindle itself, I don't see how it reaches $6600 per unit without most of it being waste and kickbacks.

Re:$6600 per Kindle!

[aardvarkjoe]

$16.5 million divided by 2500 = $6600.

Even though that includes some content and services on top of the Kindle itself, I don't see how it reaches $6600 per unit without most of it being waste and kickbacks.

Maybe they forgot to select the "free super saver shipping" option.

Re:$6600 per Kindle!

[PPH]

Yeah. You'd think that this was a contract to procure hammers or toilet seats or something like that.

Re:$6600 per Kindle!

[Nanoda]

Having dealt with selling a government some hardware and services, I can understand charging way more. They don't just call up and order what's on the shelf like your other customers. They want studies and paperwork and certifications and documents and reviews and more paperwork and certificates and contracts and guarantees and the whole process takes a year for what takes your other customers a week.

Seriously, I'm all for accountability in government, but this is the kind of stuff you get for it.

Re:$6600 per Kindle!

[rwv]

All kidding aside... they are *probably* trying to go paperless. Laptops/desktops allow a paperless office (e-mail, databases of information), but when you're reading and reviewing documents printed pages were king right up until the Kindle Touch. I'm actually surprised it just says Touch and not DX since the bigger size is supposed to be better for displaying graphs/charts/tables. But for reviewing and commenting on straight-text the Touch is a phenomenal platform.

Now... I can't guess what the savings is for switching top paper-users to e-Ink, but I can imagine 100 pages/day * 5 * 50 = 25,000 pages/year. Assuming a cost $0.01 for each page, toner, and maintaining the printer... $250 per person per year. This could very well be off by an order of magnitude in either direction, but without having the data for office product costs in the State Department it's okay to make WAGs.

If they are in an exploratory phase.... $6,600 per person is justified if they've got plans to roll it out to an extra 20,000 if the "pilot program" is successful for a more reasonable market rate (call it $500 per device... and $10M order). In this case, the $16.5 M + $10 M e-Ink project pays for itself in less than 4.5 years (assuming paper use drops precipitously).

Though after throwing around this speculation, it'd be nice if TFS gave more insight into the actual goals of the Contract that's in question. I could easily be completely wrong. Sometimes government wonks - as with business wonks - just want shiny new toys paid for with the shareholders (taxpayers) dime.

I guess nobody here read the procurement doc

[Anonymous Coward]

Go read it.. SAQMMA12R0272 at fedbizopps.gov some highlights:
"The US Department of State intends to award an indefinite-delivery indefinite-quantity commercial items contract on or about June 19, 2012, on a sole source basis to Amazon Digital Services, Inc. of Seattle WA for the commercial supplies and services described below. The anticipated value is $16,500,000 over the life of the contract, which shall be one base year plus 4 option years."

"The Contractor shall provide 3G services globally. The Contractor is responsible for all costs associated with 3G services globally (i.e., downloading content and access to the Internet Browser)." {Better make sure it works in Ulan Bator}
"The Contractor will supply content to the device delivered under this contract, but shall also support the delivery of content to the following other devices currently utilized by the Department of State: Apple iOS, Android, Amazon Kindle, RIM Blackberry, PC, and MAC"
"The Contractor shall provide a dedicated 24/7 help desk to support inquires from the Department of State and its partners in countries specified in Attachment A."
-------------------
it's not 16M for 2500 kindles.. it's for a package of services, secure distribution channels, etc., The "initial delivery" is for 2500 readers, with options for a lot more, within the 16M total. And a starting batch of 50 documents, which Amazon would have to convert. 1 initial year plus 4 option years, too.

They wanted a locked down platform which could NOT be used as a general purpose computer or have user installed software (knocking out the iPad, jailbroken or not)

Re:I guess nobody here read the procurement doc

[kcitren]

Also, the system is not tied to the Kindle. It needs to be able to push content to iPhones / iPads, Android devices, Blackberries, Windows and Apple PCs over a global 3g network. Hell, the global 3G network is going to cost more than 16M over the life of the contract. According to Amazons 3g coverage maps, they've got the North America, most of Europe covered (except for Belarus), India, Japan, Australia, and a few spots in South America, the Middle East, China, and SE asia.

Re:that doesn't seem like a bad deal

[fast turtle]

want to bet that the new MS Surface tablet is going to meet the specs? Not only that but it runs Windows, Outlook and connects to the exchange server while being compatible with all of the existing MS infrastructure the dept has.

Nothing sneaky here.

[Dcnjoe60]

Nothing sneaky here with Amazon being the only e-reader selected. From the actual article, the iPad was/is not classified as an e-reader, but is a tablet/computer and the bid was for e-readers. The nook is not mentioned, but the requirement for text to speech would have eliminated it at the time the specs were created. Most other ereaders at the time didn't support that, either.

Now some may want to arugue that it was intentional to only allow the kindle, but a much more likely scenario is that the device selected needs to accomodate people with visual impairment.

Nothing sneaky here with Amazon being the sole provider. On the otherhand, it if they end up buy 2,500 Windows Surface RT at twice the price, then, that should really be looked into. Because, like the iPad, it's not an ereader, either.