Just when so many important launches are around the corner for Apple Inc. (NASDAQ:AAPL) the company finds itself in an awkward situation – Apple’s iPad contract with L.A Unified School District worth $1 Billion has been suspended.
L.A. times has reported that the district superintendent of Los Angeles, John Deasy, has ceased a billion dollar contract for iPads. According to this contract LAUSD students were to be provided with Apple iPads that stored class curriculums.
The contract suspension followed the reports of close ties between Apple executives and superintendent’s top deputy and Superintendent Deasy himself. These two also had association with the company Pearson that was given the charge to load the iPads with curriculum. An internal report revealed problems with implementation and the process through which the contract was handled.
The contract had been signed more than a year ago and required Apple to collaborate with Pearson to deliver the iPads with curriculum. The initial investment made for the contract was $30 million and for expansion over the years the sum would have gone up to $500 million. Another sum of $500 was to be spent on developing school’s infrastructure so it could support wireless services in schools and expansion in internet access.
The main reason for signing this contract was to allow students to stay up to date with their curriculum. The contract was to be completed in more than one stage. Every stage of this project required the district’s approval; the district had the authority of nullifying the contract if either the objectives were not met or the contract did not serve any useful purpose.
This project had loopholes from the very start; many issues surfaced which included a flaw in calculating iPads’ exact cost and ability of students to handle all the iPad security controls. Even though both these issues were resolved, but many others appeared with time which resulted in contract suspension.
The internal report compiled by the technology committee of the district also found issues with the bidding process. The report claimed that the guidelines set for winning this contract were drawn in such a manner that favored Pearson and Apple; there was an objection that these guidelines did not put the district before the contractors. It was believed that the changes were made to the bidding guidelines quite late into the competition. The ties between school authorities and contract winners were also a cause for concern even if ethical codes were not broken.
After the contract was suspended Deasy said that LAUSD was looking to expand its technology program through alternative curriculum and other devices. A laptop program is also expected to start that involves distribution of some 18,000 laptops. Like other companies Pearson and Apple have also been asked to present their pitches.
Deasy who came under scrutiny after the suspension wrote in a memo that this suspension will allow LASUD to explore the rapidly changing technology and its market. He further said that it will also allow the district to evaluate all the controversies and concerns that were raised.
Apple has a way of finding itself in the news one way or the other. The question at the point is whether this little scandal will affect any of the company’s upcoming launches. The possibility of that happening is not very high because a company of Apple’s reputation stature has what it takes to survive small “glitches” on its way to greatness. It has always relied on innovation and novelty of its products to establish itself as an authentic brand.
