Stalled Arizona wiring project gets new life—at a new price

The Arizona School Facilities Board agreed Aug. 2 to pay Qwest Communications an additional $40.7 million to finish wiring its schools for the internet. Work on the massive technology infrastructure was stalled when money from the original contract dried up in June.

Qwest agreed to resume wiring more than 800 schools as early as this week, with plans to finish the project by June 30, 2003. So far, only 559 out of 1,450 schools have been completed. But prior to the work stoppage, the company announced it had begun construction on 98 percent of buildings across the state.

The agreement marks what Arizona school officials hope is the final installment in a lingering controversy, which has since soured enthusiasm for the highly anticipated technology initiative.

According to School Facilities Board Interim Director Ed Boot, many schools across the state were so anxious to implement the new system that educators lost sight of a continuously rising swell in estimated costs.

“Schools were saying, ‘We don’t care what it costs, just get it to work.’ That was not the proper answer,” he said. “We did care about costs. The state is spending $40 million more than was anticipated. With the seriousness of recent budget scenarios, that is not exactly good news.”

In July, eSchool News reported that Qwest had discontinued work on the infrastructure after the board refused to fork over an estimated $50.7 million that was needed to wire the remaining schools and finish pending projects.

That was money the board said it wasn’t prepared to pay, citing a clause in the original contract stating the purchase price was “not to exceed” $100 million.

Claire Maledon, a Qwest spokeswoman, said neither side agreed that the initial $100 million contract was a point of impasse. That price, she said, was a starting block used to set the project in motion. “The expectation on both sides was that the $100 million purchase order was merely a kind of way to get things moving, to get this project under way,” she said.

Boot said the disagreement resulted from the fact that representatives on both sides were unclear as to what type of contract had been agreed upon. Some understood that the project was based on the size and scope of services rendered, but others viewed the initial $100 million as a “lump sum, fixed-price contract,” Boot said. “We just didn’t communicate clearly enough.”

He attributes part of that confusion to the sudden departure of former School Facilities Board Director Philip Geiger.

Geiger—who resigned in May amid controversy surrounding his alleged ties to a subcontractor hired by the board to deliver software to schools via the internet—was not forthcoming with initial estimates that, at one point, had pegged final costs near $300 million, Boot said.

According to Boot, Geiger and Qwest hammered out 37 revisions to the original agreement in efforts to lower those initial estimates. By the time the revisions had been completed, Boot said Geiger was able to reduce final costs to approximately $180 million, which was far better but still well above the $100 million figure.

Upon Geiger’s departure, Qwest and the board continued to haggle over what a fair price for the technology infrastructure should be. As the controversy neared a climax, state officials began to solicit bids from independent contractors, many of whom sought to one-up Qwest on the price.

During negotiations, the state considered seriously three bids from outside contractors, all of which ranged between $135 million and $175 million, Boot said: “It became clear that we [had] a $150 [million] to $200 million project.”

Once it was determined that the initial $100 million number was grossly underestimated, Boot said the decision to stay the course with Qwest was an easy one. Disagreements aside, Boot praised the quality and speed of the work Qwest did before the stoppage.

“We verified that the quality that we were getting was good,” Boot said. “We knew Qwest had the size and the wherewithal to pull this project off.”

Quality was so favorable that of the more than 500 schools already wired, Boot said there had been only 21 complaints about network connectivity. Of those 21 complaints, 13 turned out to be problems related to internet service providers, while another three were the result of equipment issues. That left only five complaints associated with cabling issues as a result of the work done by Qwest, he said.

“It’s unfortunate that we had to slow down while we all came to grips and decided that Qwest was the best path to take,” Boot said.

“This is a mutually beneficial agreement,” Maledon said. “[State] officials did entertain bids from other contractors, but in the end it was determined that Qwest offered the best solution.”

Still, some concessions were made on both sides to reach a fixed price.

First, considering the financial uncertainty surrounding the now-embattled telecommunications company, Qwest agreed to be paid on a per-school, post-inspection basis, Maledon said.

That means the company won’t see a dime for any of the work it does until each school passes a state inspection. “It’s a rolling pay scale,” Maledon said. By last count, only 220 schools had been cleared by such inspections.

But Qwest isn’t the only party making sacrifices to move the stalled technology project forward. To come to terms on the $140.7 million total, Arizona officials were forced to forgo the benefit of a three-year contract that would have covered all maintenance costs related to the new infrastructure, Maledon said.

The new contract also omits the wiring of 40 buildings throughout the state, including bus barns and other storage facilities—spaces Boot said never should have been considered in the first place.

Now that a fixed sum has been reached, educators, policy makers, and other stakeholders say they look forward to the completion of the project, which will bring internet access to the state’s most beleaguered schools.

“While the delay was difficult, I believe that what we have heard from the districts is that we need this project to happen,” Boot said.

Boot’s sentiments were echoed through the governor’s office. “This is a compromise, and it appears to be a workable compromise between the board and the company,” said Francie Noyes, press secretary for Gov. Jane Hull. “This is an equitable settlement.”

“The most important thing is to get these kids wired and get them on the internet,” Maeldon said. “We are just happy to have gotten this project back on track and are looking forward to moving ahead.”


Arizona School Facilities Board

Qwest Communications

Gov. Jane Hull

eSchool News Staff

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