The scandal resulting from collusion between Cisco and the city of San Jose on an $8 million VoIP installation highlights how the rules differ for IT buying in the public and private sectors.

With taxpayer money on the line, IT executives from local, county and state governments are under a microscope designed to elicit maximum value for their constituencies while avoiding appearances of back-room dealings.

A report released last week by the San Jose city auditor showed impropriety in the city's selection of Cisco for an $8 million converged voice/data network for the new city hall. The auditor's report found that Cisco helped city IT staff design and plan the network even before the contract was put out to bid, and that only network integration firms that resold only Cisco gear were allowed to bid.

As a result, the contract bidding process will be restarted, and vendors offering competitive technologies will be allowed to bid. This could result in delays for the $388 million city hall, slated to open next spring. Last week, San Jose CIO Wandzia Grycz resigned under pressure.

"The other issue" was that "Cisco had been interacting with our staff during the procurement process," which violates the city's municipal code, says Edward Shikada, deputy city manager city of San Jose.

As a result of the auditor's finding, the IT staff that communicated with Cisco during the bidding process will not be allowed to work on the convergence project.

Additionally, the convergence aspect of the project created more legal gray areas, Shikada says. While the city had moved towards formally standardizing on Cisco data gear, he says, that process wasn't completed, and there was never mention of making Cisco a standard telephone vendor. The city has codes for data and voice technology procurement, but not converged voice and data from the same vendor.

IT executives from state and local governments say that keeping the process for IT contracts open, and defending technology choices through research and testing, are keys to the balancing act of running good networks and maintaining public trust.