U.S. DEPARTMENT OF COMMERCE 

Office of Inspector General 

National Telecommunications 

and Information Administration 

Review of BTOP Award for the 

San Francisco Bay Area Wireless 

Enhanced Broadband (BayWEB) 

Project 

Final Report No. OIG-11-024-I 

May 6, 2011 

Office of Audit and Evaluation 
UNITED STATES DEPARTMENT OF COMMERCE 

The Inspector General 

Washington, D.C. 20230 

May 6,2011 

MEMORANDUM FOR:	 Lawrence E. Strickling
 

Assistant Secretary
 

For Communications and Information
 

National Telecommunications and Information Administration
 

FROM:	 Todd 

~~5~ J. Zinser 

SUBJECT:	 Review 0/BTOP Award/or the San Francisco Bay Area 

Wireless Enhanced Broadband (BayWEB) Project 

Final Report No. 0IG-II-024-1 

This memorandum provides our final report on the review we conducted in response to a 

November 1, 2010, letter from the County of Santa Clara, California. The letter from the County 

expressed concerns over a $50.6 million Broadband Technology Opportunities Program (BTOP) 

grant to Motorola, Inc., for deploying a public safety network and a public access wireless 

broadband network in the San Francisco Bay Area. 

The objectives of our review were to (I) examine the procedures the National 

Telecommunications and Information Administration (NTIA) followed in its response to a 

complaint from the County of Santa Clara and the City of San Jose about the grant to Motorola, 

and (2) evaluate how NTIA handled Motorola's request for deviating from the approved 

equipment valuation method. 

We identified areas in which NTIA could 

have better handled both matters. For 

example, NTIA did not promptly engage 

the program's Grants Officer to help 

address the complaint made against the 

award or to respond to Motorola's 

requests to be exempted from an award 

requirement. We recommend that NTIA 

improve its procedures for handling 

complaints associated with BTOP awards, 

and remind its Federal Program Officers 

(FPOs) assigned to monitor BTOP grants 

to work with grants officers to address 

important issues. We discussed our 

concerns and recommendations with 

NTIA officials on February 17, 20 II, and 

with you on March 21, 2011. As we 

BayWEB Quick Facts 

• The award was made to Motorola on August 13, 

2010, and accepted by the firm on September 

16,2010. 

• The National Oceanic and Atmospheric 

Administration (NOAA) awarded the grant on

NTlA's behalf. 

• The award amount for this infrastructure project 

is $50,593,551, and the recipient share of the 

cost is $21 ,890,086.The total estimated cost of 

the project is $72,483,637.

• The goal of the project is to deploy an

interoperable wireless public safety broadband 

network and public access wireless broadband 

network in the greater San Francisco Bay Area. 
2 

discussed, we plan to further review the complaint to examine issues that were outside the scope 

of this review, and that you indicated are also outside the scope of NTIA’s program 

responsibilities. 

Your written response to our draft report notes that NTIA has already begun to address our 

recommendations. We summarize your response in this report and have included it in its entirety 

as attachment A. 

Background 

On February 17, 2009, the President signed the American Recovery and Reinvestment Act of 

2009 into law. The Recovery Act gave NTIA $4.7 billion to establish BTOP,1

 and NTIA has 

awarded $3.9 billion in more than 230 BTOP grants to deploy broadband for infrastructure, 

public computer centers, and sustainable broadband adoption projects. Of these awards, 123 

were infrastructure related—grants made to deploy new or improved Internet facilities and 

connect community anchor institutions such as schools, libraries, hospitals, and public safety 

facilities. 

One of these infrastructure awards, the San Francisco Bay Area Wireless Enhanced Broadband 

(BayWEB) project, is a nearly $50.6 million grant awarded to Motorola Solutions, Inc. (formerly 

Motorola, Inc.) in August 2010. The project is a public-private partnership between Motorola 

and public safety entities throughout the counties that comprise the Bay Area (pictured in figure 

1, plus the County of Santa Cruz, which is not shown). The goal of the project is to build a 

700 MHz interoperable wireless public safety 

broadband network and a public access wireless 

broadband network. 

Our review of the award focuses on concerns in 

two areas of the award monitoring process: 

• In September 2010, the Mayor of San Jose 

and the County Executive of Santa Clara 

County submitted a letter to the Secretary of 

Commerce requesting suspension of the 

award until concerns about the application 

process for the award and the 

implementation of the project were 

answered—specifically, the process 

followed to select Motorola to apply for the 

award on the Bay Area’s behalf, a question 

relating to the legitimacy of the organization 

acting on behalf of the Bay Area, and a lack 

of adequate communications of the resources 

                                                            

1 BTOP is a competitive grant program intended to provide funds for deploying broadband infrastructure in the 

United States, enhance broadband capacity at public computer centers, improve access to broadband services for 

public safety agencies, and promote sustainable broadband adoption projects.

Figure 1. Bay Area Counties 
participants would need to support the project. On October 1, 2010, the Director of BTOP 

replied with a letter stating that as of that date, NTIA had no information that called into 

question the recipient’s ability or intent to execute the project in accordance with the terms of 

the grant. This response did not satisfy Santa Clara’s and San Jose’s concerns; therefore, 

Santa Clara sent a letter to OIG, dated November 1, 2010, requesting an investigation into the 

award. (See attachment B for a timeline of the award and subsequent contacts between NTIA 

and Santa Clara and San Jose.) 

•	 Motorola plans to manufacture a portion of the equipment intended for the BayWEB project, 

some of which will satisfy its match contribution. Both before and after receiving the grant 

award, Motorola sought from NTIA the approval to use market value in assigning value to 

Motorola-manufactured equipment instead of following the requirement in Title 48, part 31, 

of the Code of Federal Regulations (48 CFR part 31; Contract Cost Principles and 

Procedures). Because the cost principles state that equipment purchased for the project with 

federal funds and equipment that the grantee contributes must be valued at cost, using market 

value would not be an appropriate valuation method. 

NTIA and the NOAA grants office (which made the Motorola award on NTIA’s behalf) share 

responsibility for administering and monitoring the award. Therefore, successful award 

monitoring, including addressing concerns about specific awards or grant terms and conditions, 

requires effective coordination between the grants and program offices. 

We initiated our review in December 2010 to determine how effectively the BTOP program 

office, with the assistance of the NOAA Grants Office, was handling these issues. Attachment C 

of this report outlines the objectives, scope, and methodology we followed for the review. The 

following sections of this report detail our concerns with NTIA’s processes and the 

recommendations we communicated to NTIA as a result. 

NTIA Needs to Strengthen Its Procedures to Address Post-Award Complaints Regarding 

BTOP Awards 

NTIA’s handling of the complaint from San Jose and Santa Clara was insufficient for several 

reasons. The award to Motorola is a significant investment (it is 1 of around 20 awards of more 

than $50 million); it is complicated (it involves the support of multiple county and local 

governments); and it is part of a key initiative for public safety. These factors suggest that a 

complaint about the project deserves a rigorous review, timely responses, and clearly 

documented review results. However, we found several problems in the handling of the initial 

and subsequent complaints: 

•	 NTIA’s documentation does not demonstrate sufficient research into complaints. Our 

review of NTIA’s documentation supporting its October 1, 2010, response to the complaints 

by Santa Clara and San Jose suggests that the bureau did not perform sufficient research 

before it responded to the officials. NTIA’s response was based largely on its review of the 

grant application’s original letters of support for the project from San Jose and Santa Clara. 

Both of these parties noted that the letters were in support of the project concept, not the 

project as it was awarded. 

3 
In its response, NTIA claimed that when it researched the complaint, it reviewed the grant 

application and documentation regarding the award’s governance structure. However, our 

review of the records supplied by NTIA does not demonstrate that these factors were 

considered in formulating its response. We also reviewed an NTIA timeline that tracked 

meetings held in response to the BayWEB complaint. The timeline identified internal 

discussions, status updates provided to senior leadership, research, and discussions held 

between NTIA and external entities such as Motorola and Bay Area representatives; 

however, it lacked sufficient detail for us to ascertain what was discussed or any actions 

taken as a result. 

NTIA explained it did not reference the minutes for the meetings in the timeline because, due 

to its limited resources, maintaining such records would be unduly burdensome. However, 

we cannot reach a conclusion regarding the thoroughness of NTIA’s review process without 

an adequate record. To ensure transparency in its complaint review and decision making 

process, NTIA needs to develop the necessary policies and procedures for reviewing 

complaints and documenting results. 

•	 Inadequate communications with the grants office. The Grants Officer makes awards and 

amendments, suspends or terminates awards, makes determinations of non-responsibility, 

and approves less-restrictive requirements, while the program office recommends courses of 

action to mitigate existing and prevent future issues. NTIA did not clearly articulate the 

issues associated with the Santa Clara and San Jose complaints to the Grants Officer until 

January 2011, around 4 months after the complaint was made. 

The Department of Commerce Grants and Cooperative Agreements Manual states that 

program officers are responsible for reporting potential or existing problems to the Grants 

Officer within 30 days, and for providing recommendations for remedy. We were told that 

weekly meetings were held to discuss BTOP awards, but the complaint and NTIA’s initial 

response to it were not discussed during these meetings. Therefore, NTIA’s actions were 

inconsistent with the Department’s guidance. 

•	 Inadequate policies and procedures for handling complaints. NTIA did not have 

procedures in place to handle complaints and inquires about awards. Consequently, NTIA 

was not consistent in how they were handled. The FPO handbook states all third-party 

inquiries must be input into the Customer Service Management (CSM) tool, a computer 

program for tracking major programmatic or project issues, including allegations of waste, 

fraud, and abuse. However, a review of the CSM entries provided by NTIA revealed only 

select inquiries received from San Jose and Santa Clara. For example, there were entries in 

CSM for the initial inquiry dated September 8, 2010, but we did not find entries for San Jose 

and Santa Clara’s October 12 response to NTIA’s October 1 letter. We also did not find a 

documented decision to stop logging these inquiries into CSM or to provide a formal 

response to the complaint. 

Also, while NTIA documented its intent to answer inquiries promptly, we found that it did 

not identify specific complaint resolution procedures or give metrics for responding in a 

timely fashion. The Government Accountability Office (GAO) Standards for Internal 

Control in the Federal Government states that internal controls should be documented in 

4 
                                                           

 

management directives, administrative policies, or operating manuals. 2 NTIA stated that its 

Program Services team is responsible for working with the FPO to resolve various 

compliance issues, but this team does not have specific procedures in place for handling 

third-party inquiries. While it may not be feasible to know the precise steps or amount of 

time required to resolve a complaint, NTIA can still develop general guidance for responding 

to requests. Establishing ways to measure timeliness and resolve inquiries will allow NTIA to 

periodically analyze its complaint resolution process and identify improvements, which will 

lead to a more efficient and effective customer service response. 

•	 No process for independent review of complaints. Complaints such as those made by San 

Jose and Santa Clara require NTIA to have a credible process for addressing areas of 

concern. Currently, the structure of NTIA’s program office is such that the same organization 

that reviews original applications (including performing due diligence and making 

recommendations to award specific grants) also reviews any complaints received against 

those awards. The objectivity of NTIA’s complaint review processes could, therefore, be 

questioned. Parties concerned with awards and projects need assurance that their concerns 

are receiving an objective analysis, but in our view NTIA does not currently have the right 

internal structure or mechanisms to perform this independent review. 

Overall, we found that NTIA did not respond in a manner sufficient to resolve Santa Clara’s and 

San Jose’s requests for investigation of the BayWEB award. On February 24, 2011, NTIA 

responded to Santa Clara’s and San Jose’s letters from January 18, January 31, and February 15, 

explaining its decision that there was an insufficient basis to de-obligate or suspend the award or 

to impose special award conditions. On February 28, 2011, Santa Clara responded to NTIA, 

expressing disagreement with this decision. Given the fact that the success of the grant depends 

upon the participation and financial commitment of several local government bodies, it is 

important to address unresolved concerns about the award process. Accordingly, we plan to 

further review the issues raised in the complaint. 

Recommendations 

We recommend that the Assistant Secretary for Communications and Information 

1.	 establish a process for ensuring an independent review of difficult complaints—one that 

benefits from input from independent parties such as the Office of Secretary and grants office 

and stresses the importance of documenting actions taken by NTIA in response to the 

complaints, and their results; 

2.	 develop policies and procedures for responding to complaints, including establishing metrics 

for measuring timely response and formal protocols for communicating issues with the 

Office of Inspector General; and 

3.	 promptly address the BTOP office’s lack of coordination with the grants office by issuing a 

memorandum to BTOP staff on the importance of communicating with and enlisting the 

support of the grants office when responding to complaints and other issues. 

 GAO, November 1999. Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1, 15. 

5 

2
BTOP Program Office’s Handling of Motorola’s Request to Depart from Grant Terms and 

Conditions Demonstrates the Need to Improve Communications with the NOAA Grants 

Office 

The financial assistance award (form CD-450) signed by Motorola, Inc., and by the NOAA 

Grants Officer on behalf of NTIA represents the government’s award offer and the recipient’s 

agreement to comply with award terms and conditions. One of the terms Motorola agreed to 

comply with was 48 CFR part 31, Contract Cost Principles and Procedures, which state that both 

the equipment purchased for a project with federal funds and the equipment that a grantee 

contributes must be valued at cost. 

The federal grant is matched by Motorola’s contribution of $22 million. The estimated total 

project cost of $72 million is composed of $44 million in equipment, with the remainder 

representing services and other costs. Of this $44 million, Motorola plans to contribute a 

significant portion as equipment that the company will manufacture itself with the rest to be 

provided by third-party vendors. Even before it accepted the award, Motorola discussed with 

NTIA the applicability of the contract cost principles and Motorola’s desire to use an alternative 

valuation methodology (based on market value) for the equipment it planned to manufacture. 

However, under the terms of the grant, using market value would not be an appropriate valuation 

method. Because Motorola is required to provide a matching share, and Motorola has indicated 

that a significant portion of its matching share will be equipment, the proper valuation of 

equipment is key in ensuring compliance with the cost principles applicable under this program. 

The grants office did not become aware of Motorola’s challenges related to compliance with the 

terms of the grant agreement until January 14, 2011, after receiving our request for a meeting on 

cost valuation for the project. Discussions between the NTIA program office and Motorola 

regarding these challenges occurred for approximately 4 months before the Grants Officer was 

properly notified of a potential departure from the award terms and conditions. This action was 

inconsistent with the Department’s grants manual, which states that program officers are 

responsible for reporting potential problems, inconsistencies, or instances of noncompliance to 

the Grants Officer within 30 days. 

Per version 2.0 of the FPO handbook (December 2010), program officers are also responsible for 

providing “written background and recommendations to the Grants Officer on recipient award 

action requests and programmatic issues, such as amendments to the project description, budget 

or transfer requests.” (Award actions are changes or amendments to the original terms and 

conditions of an accepted award package, such as a change of address, changes to the approved 

project budget or original scope of work, or extension of the performance period.) Award 

recipients typically initiate requests by submitting an award action request form to their FPO via 

one of two systems used by NTIA to administer awards: Grants Online (GOL) or the Post Award 

Monitoring System. The FPO then makes a recommendation based on the request form and its 

analysis of the pertinent issues, and the Grants Officer evaluates and approves or disapproves the 

request. 

Because Motorola’s first two valuation proposals were submitted via e-mail, not as an award 

action request, NTIA lacked a formal submission and an adequate record of related discussions. 

6 
NTIA’s position is that a formal request was not submitted because the discussions with 

Motorola were preliminary. 

The grants office has taken a firm position that the terms of the grant agreement must be upheld. 

On February 10, 2011, the Department’s Office of General Counsel also determined Motorola 

must comply with 48 CFR part 31 cost principles. However, NTIA had let the issue go 

unresolved for more than 4 months, when it should have been promptly communicated to the 

grants office for resolution. The grants office was surprised to find out about Motorola’s requests 

and NTIA’s subsequent actions. The office was also surprised that this matter continued be an 

issue, as Motorola had submitted a request in March 2010 to waive the requirement to comply 

with 48 CFR part 31; that request had been denied in June by NTIA on the grounds that 

Motorola did not provide adequate support for the request or demonstrate why the waiver would 

be in the best interest of the government. 

In a meeting with us on January 18, 2011, the grants office confirmed that NTIA had not 

consulted with it prior to our meeting request. The office reaffirmed that it still believed the cost 

principles applied, and that NTIA had been told that it should inform Motorola of this promptly. 

NTIA subsequently sent a formal denial letter to Motorola, dated January 24, 2011. The letter 

stated Motorola did not provide sufficient support for its proposal, nor did Motorola show how 

an alternative cost principle would provide benefit to the government. 

In addition, the extent to which NTIA allowed this issue to continue without consulting the 

Grants Officer (the appropriate person for addressing requests to change award terms and 

conditions) is unclear. Prompt action (i.e., communicating with the grants office and Office of 

General Counsel) would have been prudent in order to resolve the issue, which was pending even 

before the grantee signed the award document in September 2010. 

On February 4, 2011, Motorola submitted an award action request in GOL for the review of its 

third valuation proposal. On March 7, the NOAA grants office, on behalf of NTIA, issued a letter 

to Motorola stating that 48 CFR part 31 must still be followed and that this matter is considered 

closed. 

Recommendations 

We recommend that the Assistant Secretary for Communications and Information 

1.	 ensure, in NTIA’s monitoring of the award, that any equipment is valued at cost, consistent 

with the cost principles; and 

2.	 take immediate action—similar to our earlier recommendation to improve coordination with 

the grants office—directing BTOP personnel to promptly communicate any potential 

problems or deviations to the Grants Officer. 

Summary of Agency Comments and OIG Response 

In responding to our draft report (attachment A), the Assistant Secretary for Communications 

and Information states that NTIA will take the appropriate steps to address our 

7 
 

recommendations. He further notes that NTIA “is committed to making process improvements, 

strengthening its compliance function, and enhancing [the bureau’s] customer service to ensure 

transparency and accountability.” 

NTIA summarizes the steps it is taking to address our recommendations. The Assistant Secretary 

reports that he has notified NTIA staff that they must promptly communicate issues to the grants 

office consistent with the Commerce grants manual. NTIA also discusses its new policy for 

complaints that raise particularly difficult, sensitive, or chronic allegations to BTOP-funded 

projects, noting that the process will be handled outside the program office. We are pleased that 

NTIA has already initiated corrective actions. 

Within 60 days of the date of this memorandum, please provide us with an action plan that 

responds to all of the report recommendations. We would like to extend our thanks to the BTOP 

team for the courtesies shown to us during our fieldwork, and we look forward to reviewing the 

action plan. If you have any questions, please contact me at (202) 482-2754, Katie McKevitt at 

(202) 482-0264, or Chris Rose at (202) 482-5558. 

Attachment 

cc: Scott Quehl, Chief Financial Officer and Assistant Secretary for Administration 

Kathy Smith, NTIA Chief Counsel 

8 
Attachment A: NTIA Response 

9 
M,. To<I<I J. "lI.",.

"1"'127. 1011 r.~<l.f •

thoroughly uOO uddn'SS"d ul'l'roprialcl)·. NTI,\ n>cognize'lltm we can enhance our processes 10

imp<Q\'c cOSlo",,,r sen'ice manugemenl and rcronl.keeping. "S a ",sull. IhI: Agene)' h... taken

SI.ps resporu;i,'c 10 IIJc area.< you raised as follows:

De,,""" lI",irtrll P,,/irk" ami Pmc,·d",.x forlfmrdli~gThird·/'orry Corrcspm,,/t'/Jce

1lIe Departmenl of Comm"'""'e Grunl. Manual <loes !I01 req"i"" NTI,\ 10 reSflOnd lO third·

part)" corrc:spondence regarding granl n:cipietll., Consi.<lcnl wilh lhe Al,'<11C}"'s gools of

lra"'parenc)" and openness. bow"cr, NT1A has St.>ughllo p<Qv;dc limely aOO ""curulc re,p'lI\""

10 public i"'Joiries abouIllTOI'. In fael. NTI,\ d.,'e1oped u I'fOCCSS 10 llIanage and track all such

correspondence and. during lhe lrans'lion Iu IhI: posl-aw"nl phase oflhe program. NTI"

nlOdifled litis syswn 10 ben.. lmCk eort"C$JXlndence relaling 10 IITOP inquiri.,. and issues.

In <tlpO!1"" 10 !he OIG·. rcromrncndmiOIl. NTI" has ",,·,ewe<! and fortllalized its policy

fill" BTOI' respon.ses lu Ininl·pany co~pondenc•. including lhose comaininll conCcms

regartling IHOP projects or proc.,..... More .p<:cilieally. NTlA has imp",wed the process by

re4uiring OIG OOIitical;o" of all such correspondence 10 help charncl.,i,.., lite proper "'ope nr

NT1A', response. This, of course, in\'Oh'es NTlA deferencc 10.nd 'upp<><t ofOIG's dUly and

pn:rog:llive lO .xerei"" principal authorilY 10 OOdrc.s serious allegalion of waSle, f...."l. oc abuse.

Nl1A has alSt.> C'Stabli.hed """,ice-Ie,'e1 stal1dard. to whiclt ProWl'm Slaffshould adhere.

fnnher. BTOP', Corn:spond<-"'ee T."",' will eoolin"" 10 p<Qvide ",gular updales regarding

o"lSlanding issues lhe .')"Olem l,.""k.. including UllY lrends idenlified in Ihinl·parl}'

correspondence, As lUI mopul of tltis jlI'O<C"l. NTI,' "ill eonlinually impro"e c,,<lomcr ser";ce

willt additi01lJlI ,,-,<ipiem or FI'O guidance (e.g.. fael sheets. I",ining. or lechnieal assistance). as

"eeded, in ....ponse lO s""h trends.

Nl'lA also ",,""""ed lhe Ihinl_party cor....pond.nce policy wilh a "",w revicw proc.ss for

compla'nts that raise particularly dimcllh, ",n,ili,'., or cltrunie all.gati(lll!i rel.ted to BTOI'­

funded projC'C1S where. aftcr conwhalion willt OIG. il is decided thai w. will handle the

complaint. Moving forwanl. the.....omplaints will follow' a re",ew p,,,,,css lhat will be C'SCal3ted

Ihrough NTIA" Chief Fi""""inl Om""r (CfO). To ""SU'" 8.J\ oplUn.11 and objecli"e r""iew.

B roP's Complianc. Team' will re,'iewand prcpa'" init;.1 reSflOnscs {Q lhese 1)'pe$ of

complainlS. To ",'oid lilly appearance I)fconllict. lhe Compliance Team member assigm'<1lo an

issue will not Ita,·. participated in pre-aw"Unl due diligence,.nd any Team l..",d assigrn.'<1 to

revicw draft rcspooses w;1I 001 Ita'c I't'vicwed lhe p<Qj""l in queslioo during pre-,wllrd. Th.

Complill1lOC T.am will also seek input during lhe rcviewproces. from lhe appropriate GmnlS

Ollioe, NTIA's Olliee oflhe ChicfCounscl. lhe l)cpanmenl's Office of General Counscl. and

the OIG, lIS appropriat.. Folio" ing its ",,'iew, lhe Complianc. T..~m ,,;II revicw tindings "itk

NTlA'$ Office ortlte Ch;efCoun",1 and the Granls Ome•. and n'flOrI findings 10 sen;or

I TIl< Cone'l"J"'l<""" Tum i•• Compon<tlt oftho Il'I'Or ~m Scf,,<os Offl«, "hioh 0'''''''''' .....,..,

,,"»porn"""'" IUidon« ............... _ ...Inl """"", r... thinl1""Y '-0""'1'000"'1«,

, 11>< Campi..... r<IIm'" <ompon<nt or1l.. DlOr S<f,.I<OS Offl«, "h",h pro,..... OIl..... ., til< 1'1_ Olll<. rot",";n, ~;.,;,..,..__I """pi........

10
 
'fr.' d J. 7in r

I'ril27.2111\

"~ rJ

hanoI J oul 10

Elllltlll't' mil" Ollie' /JIm/illd/llJ1I

\0' r..:1.: mm mlali n. thi Jl \\ proc \\111

Belll:r Ifofl/fOr ./ward Tam ulll CcmdulOII

11
 
 

.\I'.T........ _

AjIriI :-. ~11

...~.U

IIool ,,",vdIO~10 YoUt1Oith you .. "'ftlCCS 1hls imporurll: prognm.

IfVl1A may be offu.d.... pkaor- 0DflbI;l MihcM aro-ll. NTIA's Liai.... 10 010.•

(202j4S2·I.Sl.

Sirl<:ady.

12
 
Attachment B: Timeline for the BayWEB Project and Correspondence on the Award 

Date Event 

March 26, 2010 Motorola submits application to NTIA or BayWEB project. 

June 28, 2010 NTIA Assistant Secretary denies Motorola’s request for a waiver of the Federal 

Acquisition Regulation (FAR) cost principles. 

July 7, 2010 NTIA Assistant Secretary sends memorandum to NOAA Grants Office 

recommending award to Motorola for the BayWEB project. 

August 13, 2010 NOAA Grants Office makes BTOP grant award to Motorola. 

September 8, 2010 

Chuck Reed (Mayor, San Jose), and Jeffrey Smith (County Executive, Santa 

Clara), send a letter to Secretary Locke requesting the award be suspended or 

postponed until concerns regarding the procurement and vendor selection 

processes have been addressed. 

September 16, 2010 Motorola agrees to the award by signing the Form CD-450 “Financial Assistance 

Award. 

October 1, 2010 

Director of BTOP responds to Santa Clara, stating that to date NTIA has not 

received any information calling into question the recipient’s ability or intent to 

execute the project in accordance with the grant terms. The letter cites NTIA’s 

review of the memorandum of understanding between the five local governments 

involved and letters of support encouraging NTIA to award the grant. 

October 12, 2010 

County Executive for Santa Clara and Mayor of San Jose send a response to 

NTIA’s October 1 letter, outlining their concerns regarding the Bay Area Urban 

Area Security Initiative (UASI) General Manager circumvention of the Bay Area 

UASI Approval Authority process, the process used to select Motorola, 

misrepresentations in the application and potential conflicts of interest with former 

Motorola employees 

November 1, 2010 County Executive of Santa Clara sends a letter to Todd Zinser, Inspector General 

for the Department of Commerce, requesting an investigation of the award. 

December 2, 2010 

Secretary Locke responds to Mayor of San Jose, indicating NTIA evaluated 

Motorola’s application according to requirements established in the second Notice 

of Funds Availability. In addition, NTIA found no reason to question the process by 

which the Bay Area jurisdictions chose to participate in the BayWEB project. 

December 13, 2010 

Mayor of San Jose replies to the Secretary’s December 2 letter, stating that 

although his concerns are local in nature, they could be of some interest to NTIA 

because they resulted in misinformation and misrepresentations in the application. 

Mr. Reed also indicates his letter of support was obtained under false pretenses 

and that he does not wish to be a party to misleading NTIA. 

January 18, 2011 

County Executive for Santa Clara and Mayor of San Jose send a letter to NTIA, 

the NOAA Grants Office, and the Recovery Accountability and Transparency 

Board to provide additional information related to the BayWEB complaint, request 

an additional investigation, and ask that the award be suspended or high-risk 

special award conditions be imposed. 

January 31, 2011 County Executive for Santa Clara sends a letter to NTIA following up on request 

to investigate the Motorola award. 

February 4, 2011 Motorola submits award action request not to follow the cost principles found at 48 

CFR part 31 to place a value on the equipment it contributes to the project. 

13
 
 

Date Event 

February 15, 2011 

County Executive for Santa Clara sends a letter to NTIA to follow up on January 

18, 2011, complaint and identify actions that NTIA should take to address 

problems with the award and the project. 

February 24, 2011 NTIA sends a response to Santa Clara and San Jose, stating that it has declined 

to de-obligate, suspend, or impose special award conditions at this time. 

February 28, 2011 

Santa Clara responds to NTIA with a letter expressing that they disagree with 

NTIA’s decision that there is insufficient reason to de-obligate or suspend the 

award or impose special award conditions. 

March 7, 2011 NOAA grant office issues a letter to Motorola stating that 48 CFR part 31 must 

continue to be followed and they consider this matter closed. 

14
 
 

Attachment C: Objectives, Scope, and Methodology 

We initiated this review in December 2010 based on the concerns San Jose and Santa Clara 

raised about the Motorola award and NTIA’s process addressing those concerns. Our work was 

performed in accordance with the Quality Standard for Inspections (January 2005) issued by the 

President’s Council on Integrity and Efficiency and under authority of the IG Act of 1978, as 

amended, and Department Organizational Order 10-13 (August 2006). We conducted our review 

from November 2010 through March 2011 at the Department of Commerce headquarters in 

Washington, D.C. 

The objectives of our review were to (1) examine the procedures NTIA followed in its response 

to the initial complaint from the County of Santa Clara and City of San Jose about the grant to 

Motorola, and (2) review how NTIA handled Motorola’s request for deviating from the approved 

equipment valuation method. The scope of our review did not include a final determination of 

the concerns raised by the County of Santa Clara and City of San Jose or the appropriateness of 

Motorola’s equipment valuation proposals. 

To accomplish these objectives, we interviewed officials from NTIA, NOAA, Motorola, the 

County of Santa Clara, the City of San Jose, Alameda County, and the State of California. We 

also reviewed documentation, including 

•	 The initial September 8, 2010, letter submitted by the County of Santa Clara and City of 

San Jose expressing concerns with the application process and the progress of the 

project, and subsequent letters identifying concerns with the project. 

•	 The October 1, 2010, NTIA response to the complaint and internal documentation 

associated with developing the response. 

•	 The application submitted by Motorola, documentation associated with the review of the 

application, and the CD-450 Financial Assistance Award form. 

•	 Documentation associated with Motorola’s request to follow a valuation process other 

than the one outlined in the grant terms and conditions, and NTIA’s response that it 

would not waive the condition. 

•	 The Department of Commerce Grants and Cooperative Agreements Manual and 

Broadband Technology Opportunities Program: Federal Program Officer Handbook. 

(BTOP-000116) 

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