Nassif on the Brazilian “Risco Cisco”: No Fun for SUN?

Luis Nassif (Brazil) hints that we should look at a firm called Cobra Equipment to understand how “permanent operators” influence government technology contracting in Brazil, regardless of who is currently occupying elected office.

Nassif, not generally given to hyperbole, makes some strong claims about the profundity of the maracuatias involved, so I figure I should try to dig up some background on the case he is referring to.

O relatório do TCU (Tribunal de Contas da União), mostrando favorecimento da Cisco pela Caixa Econômica Federal em 2002 (Blog do Josias) vai comprovando a perpetuidade dos operadores de governo.

The report from the Federal Accounting Tribunal (TCU), showing favoritism to Cisco by the Caixa Econômica Federal (federal credit bank) in 2002 is another proof of how government operators perpetuate their influence.

In the specific example Mr. Nassif cites, however, the equipment purchased was SUN enterprise servers, not Cisco stuff.

Mr. Nassif cites the Folha de S. Paulo Web-only column of Josias de Souza, who points to a 2004 TCU report that questions the lack of a competitive bidding process for equipping the federal financial institution with IT hardware and services, signed in 2002.

The CEF acquired lots of Cisco gear through the systems integration arms of IBM and Alcatel.

Oh, and non-Cisco gear as well. De Souza’s headline: “Government bought Cisco equipment under irregular circumstances under Cardoso.”

Which, now that I read the report myself, is true, but only part of the story.

The TCU questioned some procurement of Cisco equipment in the report Souza cites, resold by Alcaltel and IBM. But it also questioned the procurement of SUN boxes, through Cobra. And an emergency no-bid contract for IBM OS/390 systems management services.

This is why I normally do not pay much attention to de Souza.

Rather than going out and finding stories, the guy, like most Brazilian Bob Novaks, he mostly just seems to sit by the phone waiting for an anonymous Magalhães to feed him one (a common journalistic vice here).

I do understand Nassif’s general point, though.

Folks like Larry Rohter try to get you all interested in the notion that one government is viciously corrupt (and lumpen-Stalinist) and another virtuous (and Ayn-Randy capitalist-heroic).

But the more you look at it, the more you see the need to distinguish between the State (permanent bureaucracy) and Government (the elected officials who get to wear the ceremonial hard hats at the ribbon-cuttings.)

Wanderley dos Santos has written quite a few good books on the subject. I am in the process of poring over them.

These sorts of cases are of interest to gringos, of course, because government technology procurement contracts are under scrutiny back in the Homeland as well.

This after some tech Big Digs aparently collapsed into black holes under the event horizon of that hysterical state of exception declared for the so-called Global War on Terror (GWOT). Which the GAO is now extremely busy trying to learn about.

In Brazil, meanwhile, it seems, the exception remains pretty much the rule. If the State objects to the Government’s policies, it pretty much just tells the Government to go fuck itself. You can observe this on many levels.

In a way, after the Bush years, this sort of puts us gringos in a similar position to the Brazilians: Trying to find our way out of this nightmare. Which is one of many reasons why Brazil is so interesting to watch.

Collapsed Big Digs — and Big Digs that do not collapse, and reflecting on what tends to make the difference between collapsing and non-collapsing big digs — have become something of a hobby of mine. So I will have to update my notes on such things, dig through some back issues of Government Computer News.

Not, mind you, that the Big Digs in question here necessarily collapsed. That is a separate, and equally interesting, technical issue.

But I have seen some really astonishing bad database-driven government Web sites here that make a real mockery of the “rhetoric of the technological sublime” used to promote transparent e-government as the gateway to a new era of global peace and prosperity. Generally Microsoft and Oracle-driven.

I cannot comment on the procurement procedures for these information systems (partly because in order to get such information you have to use the technology in question, which throws more database connectivity errors than the fiercest bull on the pro rodeo circuit throws cowboys). But I think I can make a pretty good case, as a frequent user of databases, that getting information out of these gizmos can be like getting blood from a stone.

Pelo relatório, se identifica desde o governo FHC o uso da Cobra Equipamentos para driblar licitações.

According to the report, Cobra has been used since the Cardoso administration to get around competitive bidding requirements.

Here comes a very big claim:

No governo Lula, o escândalo da Cobra foi muito maior que o do “mensalão”, mas acabou indo para segundo plano devido à superficialidade da cobertura da mídia, que se fixou na fumaça e não se aprofundou no fogo.

During the Lula government, the Cobra scandal has been much bigger than that of the mensalão (the supposed “big allowance”), but wound up being pushed to the back burner because of the superficial coverage it received, which focused on [the trees and missed the forest.]

Literally, chased the smoke and missed the fire. Similar idea.

If Jack Abramoff directs hundreds of million dollars to himself through front NGOs and shell corporations, and no one notices, does it make a scandal?

If the news media fails to make a scandal out of Cobra — whether there ought to be one or not, I could not tell you — then it seems like there really is no scandal — though there might ought to be one.

À medida que os fatos vão se desenrolando, percebe-se que a influência da Cisco se estendia para muito além da alfândega. Também nas licitações e sobre pelo menos uma grande editora, que até agora não deu uma linha sequer sobre o escândalo.

As the fact continue to emerge, you can see that Cisco’s influence extended well beyond the Customs service. It extended to government procurement as well, and to at least one major publishing house, which to date has yet to report a single line about the affair.

Nassif, please: Just come right out and say what (and who) you mean. This sort of soap opera cliffhanger approach is not like you!

I now have to read all the business weeklies to see who might fit the bill.

Wild guess: Editora Globo, whose (simply readful) Época Negócios had not, at the time Nassif posted this (at least according to a quick advanced google limited to its domain — it does not seem to have a search engine of its own) written a single line on the case yet. I could be wrong, though.

Background notes:

Cisco Brasil’s Web site lists a firm called COBRA Tecnologia as a partner “for the last five years,” identifying it is a subsidiary of the Banco do Brasil.

Cisco Brasil presents a case study of how COBRA swapped out its PABX for a Cisco IP telephony system — much as Gávea Investimentos, headed by the former Treasury minister, Arminio Fraga, reports doing, in a CiscoBrasil promotional spot uploaded to YouTube (above).

Reading the report, however, it should be noted that while Cisco equipment was involved in some — but not all — of the deals questioned by the TCU in the report Josias de Souza cites, the deals in question were signed with several systems integrators: IBM, Alcatel and Cobra among them — which the TCU describes as an exclusive representative of SUN Microsystems in Brazil.

And the Cobra contract it questions actually deals with equipment from a manufacturer other than Cisco.

Which makes it hard, at least without further information, to see how this is an example of Cisco‘s long and sinister reach.

Maybe if de Souza had read all the TCU reports dealing with procurement contracts involving Cisco, rather than just the one, he might have a better general picture of the situation to offer us.

The TCU wrote, of Cobra, in that 2004 report, that it was not happy with:

Contratação, por inexigibilidade de licitação, da empresa Cobra Computadores e Sistemas Brasileiros S.A. para aquisição de componentes da marca SUN Microsystems, sob a alegação de que esta empresa opera no Brasil através de representantes autorizados e houvera designado a empresa Cobra para o atendimento, com exclusividade, do projeto ‘Nova Plataforma do Segmento Comercial’ da CAIXA, assim como para a comercialização dos equipamentos da linha Ultra Enterprise 6000 e 10000, a despeito da existência de outros fornecedores dos produtos.

The contracting [in 2002], based on a waiver of the need for competitive bidding, of Cobra Computadores e Sistemas Brasileiros S.A., for the procurement of SUN Microsystems hardware, the waiver being based on the allegation that this firm (SUN) operates in Brazil through authorized representatives and had designated Cobra to provide services, on an exclusive basis, to the CEF’s “New Commercial Banking Platform,” as well as for the marketing of Ultra Enterprise Model 6000 and 1000 equipment, despite the fact that other suppliers existed for this same equipment.

In other words, the TCU questions the legitimacy of the exception to the competitive bidding rule, saying it is not true that Cobra is the only source for those big humming boxes that SUNW makes (which one hears are perfectly good boxes, by the way, as are a lot of the competing models).

Again, for the procurement, not of Cisco equipment, but of SUNW equipment.

Maybe Cobra got other allegedly improper no-bid deals to sell Cisco equipment to the CEF, but in the report cited, the TCU is questioning the propriety of its no-bid deals to sell SUNW equipment to the CEF.

The TCU was also unhappy about about the no-bid contracts awarded to IBM and Alcatel — to supply Cisco boxes — as well an emergency contract for systems work related to IBM OS/390 for the financial institution’s mainframes. In another case, it noted an “emergency” contract, signed in 1997, that was justified by an “emergency” that it claims only actually emerged in 2002.

So in what sense are the contracts indicative of Cisco maracutaias in what we might properly call the “Cisco affair”?

Systems integrators then offer various makes and models of stuff for you to put together, the same way music stores might carry both Fenders and Gibsons, Marshall stacks and Yamaha boxes for you to integrate into your noisy Ramones cover band.

My Álvaro Reis cavaco used to be strung with one local brand of strings, but is currently strung with nickel-plated Gianninis. I think I prefer the other brand, actually, now that I have tried them both.

The point being that what the TCU objected to was not contracts with the Cisco — though in some cases, Cisco got boxes sold as result of the contracts — but contracts with the systems integrators.

As they write, the problem they found was not why the CEF bought SUN boxes, but why it had to buy them from Cobra, when there were other authorized SUN box peddlers to buy from.

What does it all mean? I have no idea. I would just continue to guess that the entire tech sector will be feeling the heat, and that government procurement is likely under the microscope as well now.

The federal police and tax authority have been fairly busy targeting corruption in government contracting in other sectors — public-works construction, mostly — and I would expect that if their analysis turns out similar hanky-panky in the tech sector, you will see the same sort of thing occurring there.

There was an enormous, but short-lived, flap over a no-bid contract for communications equipment for the Pan-American Games this year, which the Ministry of Justice awarded to Motorola.

The flap was driven by one of the other firms competing for the contract, with the help of a friendly journalist willing to disguise the story as a possible case of government corruption rather than stealth marketing by disgruntled competitors.

See

But the procurement rules here do allow a less-public selection process when national security issues are involved, I understand.

The notion being that if you published all the technical specifications of the security system you were acquiring, well, it would not really be all that secure any more, now would it?

Since nothing more was heard on the issue, I gather that no one is still insisting this was an improper or abusive invocation of the national security exception. One more tempest in a teapot.

The details of the selection, the Ministry of Justice said, would be made available after the Games. As far as I know, that was the case. And the Rio cops now have new radio and GPS equipment to keep and use.

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