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After A Brouhaha in West Virginia, Cisco Promises To Refund Millions Of Dollars Worth Of Routers
By Julie Bort, Business Insider
The home state of Cisco CEO John Chambers, West Virginia, has been embroiled in an ugly controversy over a $24 million contract with Cisco.
Fortunately, Cisco has promised to step up and correct the mess.
Here's the story: auditors in West Virginia released a scathing report that basically accused Cisco of swindling the state into buying millions of dollars of high-end routers that it didn't need. (Blogger Brad Reese posted the full report here.)
As part of a Federal grant to bring high-speed Internet to public buildings in the state, Cisco sold West Virginia 1,164 high-end Cisco routers, costing over $22,00 each.
Auditors said that many sites would have been fine with smaller routers, costing less than $1,000 each. All told, the state says it overpaid by nearly $8 million dollars for the hardware. Plus, Cisco sold the state another $6.6 million worth of extra services.
Cisco offered a reasonable explanation. It recommended these expensive routers because state officials wanted features that its low-end routers didn't have, such as dual-power supplies.
The auditors blamed both Cisco and the state employees who signed the contract. They also said Cisco's actions may even be "grounds for debarment," meaning being banned from future state contracts.
The good news is that Cisco has promised to let West Virginia return the routers it can't use.
Governor Tomblin just promised to investigate and to figure out exactly which routers to return, reports Charleston Gazette's Eric Eyre.
A Cisco spokesperson emphasized that West Virginia is an "important customer" and that Cisco is "focused on their satisfaction." So we think that this will be a happy ending for all.
However, Cisco has now been called on the carpet a number of times for excessively high prices.