$17,000 Per Camera Contract - Let's Dig In

So Carlton has been requesting copies of RFPs and contracts for large government projects. Recently, he got one for a Connecticut city that Tyco a few months ago. The big thing that jumps out is how expensive it is per camera - ~$17,000 average for the 11 cameras.

Here's the 1 page pricing summary, the 45 page full report and below is an excerpt for just the wireless networking component:

It's $85,000+ just for wireless to 11 cameras, nearly half the cost of the entire project and nearly $8,000 per wireless camera connection, a fairly massive sum.

Any issues or concerns you see on that or any other part of the contact?

I am not surprised about the high price because according to my experience the price also include:

1. Prolonged treatment obtaining licenses from municipal bureaucracy just looking for a way to make it difficult.

2. Installations, service and maintenance requires and use of local police +traffic jam, and so on.

3. Municipal bureaucracy love to organize meetings with a large number of officials with long discussions and decisions are usually obtained...... another meeting.

4. City Engineer office often requires asphalt cover half or all the street even if you dug inch wide. Not allow use of techniques such as microtrencher and requires excavation depth 5 feet or not allow to use/ participation in excavation municipality does regularly, things that can significantly reduce the installation prices.

5. Installation of 2.4 Ghz microwave (to save digging) put the integrator in lot of RF disorders.

6.A big problem is the electricity supply to all equipment installed in the street, these required additional bureaucracy with municipality and Electric Company.

7. All those items required a lot of manpower and time (and money)

I agree. The price is right for putting up with the government crap. "Good Jobs Ordinance" Page 14, Holy!

Is it possible the wireless technology specified could have been a standard they had to adhere to? Is it possible the national account manager knows no different and needs a technical makeover?

Don't forget that many municipalities, most states, and all federal construction jobs require prevailing wage rates or Davis-Bacon compliance for labor. Thanks to great lobbying (compliment or sarcasm, depending on perspective), security and low voltage techs are classified as electricians. We perform lots of such work and must pay entry level techs between $27 and $36 per hour, depending on the source of funding, project location, funding year, etc. After you apply burden and overhead to your estimated labor wages and add a fair margin, you find yourself at a steep hourly sell price. If you must work nights, weekends, etc., then your costs are even greater!

The bulk of the money is coming from the actual costs of the Aruba radios. They are expensive but you get (4) 802.11n MIMO in one single housing plus Layer 3 routing built in. That means one single housing can provide backhaul, mesh and Wifi AP using independent radios. This is like getting a Firetide 7000 + Firetide 5000 + a cisco router in one box.

Jacob, what do you think about the price for the Aruba radios? Those models look to sell online for as low as $2500 (and I am sure Tyco would buy it for even less). Tyco is selling for $3,690. That does not include cabling, antennas and lightning arrestors which they charge separately for plus an installation fee of $126 for each of those components for each item installed.

I think the part number and the description don't match. The MSR2000 is a (2) radio unit and the MSR4000 is the (4) radio unit. The description is for a (4) radio unit but the part number is not. If you look at the lightning aresstor counts of 44 that would lead you to believe 4 per radio so a they are using a 4 radio unit which actually lists for more like $5K.

Good eye! Does that mean they are undercharging for the radios or overcharging for the number of antennas?

Maybe neither. It's pretty standard practice to not mark up equipment to full MSRP in order to be competative. My guess is they are getting a 40% discount on the MSRP and adding something like 30% back in for overhead and profit. No way of knowing for sure but IMO the numbers look reasonable to me given the type of equipement installed.

Without knowing the details we can speculate all we want... and that's that.

Josh, there's a full statement of work there so there are quite a number of details. What other details would you want to enable you to have an opinion?