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Mitel trying to protect home turf from Cisco

Cisco Systems and Bell Canada thought they had won the bidding for a municipal IP telephony contract with Ottawa worth between $4  million and $7 million. But as I mentioned in a story today about a new fixed-mobile convergence offering, Mitel Networks has – at least temporarily – scuttled the deal.

Mitel is headquartered in Ottawa, and no doubt it blanched at the possibility that Cisco would supply IP telephony to the city it calls home (Currently the city government has about 10,000 phones, 7,000 of which are from Mitel).

After learning that his company was not the winning bidder for the telephony contract, Mitel chairman Terry Matthews tried to sweeten his company’s offer. He sent a letter to the city offering to donate $2 million worth of Mitel IP phones (10,000 phones in all) to the city if it agreed to make Mitel its sole communications vendor “for the next several years.”

After receiving this last-minute offer, the economic affairs committee of Ottawa’s city council voted to suspend negotiations with Cisco and Bell while it explored the legality and feasibility of such an offer.

According to the Ottawa Citizen, Cisco will refrain from commenting on the Ottawa affair until the city completes its procurement process. However, Bell spokeswoman Jacqueline Michelis told the paper, “We’re disappointed. We put in a compelling and competitive bid.”

As I recall from my days as a newspaper reporter, the bidding process for municipal procurement tends to be very strict.  There are lots of legal and ethical issues that could come up.  I’ve seen vendors sue municipalities, claiming a bidding process was unfair, after losing out on a contract. Clearly Mitel executives think this move is worth whatever legal headaches that might arise if it means keeping Cisco out of their home town. Plus, Mitel could use a big customer win in North America, where Cisco, Avaya and Nortel dominate.

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