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Cisco Pricing Undercut By $100M In Big Cal State University Network Project
alphadogg writes "The $100 million price differential between the Alcatel-Lucent and Cisco proposals to refresh California State University's 23-campus network revealed earlier this week was based on an identical number of switches and routers in various configurations. CSU allowed Network World to review spreadsheets calculating the eight-year total cost of ownership of each of the five bidders for the project. 'Everybody had to comply with this spreadsheet,' said CSU's director of cyberinfrastructure. 'Alcatel-Lucent won the project with a bid of $22 million. Cisco was the high bidder with a cost just under $123 million. Not only was Cisco's bid more than five-and-a-half times that of Alcatel-Lucent's, it was three times that of the next highest bidder: HP, at $41 million.'"
It's very possible. If you read the RFPs for some government things, you'll find things that almost no vendor can possibly adhere to. If you are a top tier vendor like Cisco, you likely CAN meet the requirements, but not cheaply. So instead of trying to compete on price, you compete on being able to fulfill all of the requirements in the RFP. You take the gamble that the people analyzing the proposals will nix the cheaper ones as non-compliant, and you are the only bidder left. Or, that the agency will cancel the RFP and rewrite a new one with different or clarified requirements. Then everyone rebids with full knowledge of each others' pricing, and hopes for the best.