Rock the vote

A steady autumn rain fell on Atlanta on Election Day in November 2000.

It had rained all week, but it didn’t seem to affect voter turnout. On the contrary, according to CNN, some Atlanta voters “waited an hour and 20 minutes to cast their ballots, standing in lines that stretched out the door of their polling place. Officials said they had never seen such a high voter turnout.”

The rain in Georgia, however, was nothing compared to the two-month-long storm that would fall squarely on the state of Florida the next day, in the counties of Miami-Dade, Nassau and Palm Beach. The voting results there would be a catastrophe.

In the weeks that followed, we became familiar with terms like pregnant chad, butterfly ballot and, especially, undervotes, in which the voting machine detects no vote for the candidate. At most, 170,000 Florida ballots were in dispute for the president, while some pointed to as few as 9,000. It was the closest election in U.S. history.

Eventually, the U.S. Supreme Court ruled against Democratic presidential candidate and then-Vice President Al Gore, who appealed to the court for more time for a recount certification. And so, more than one month after the general election, Texas Gov. George W. Bush became president of the United States.

As the rain was ending about 660 miles north, Georgia Secretary of State Cathy Cox nervously watched the battle in Florida. On a gut feeling, Cox asked her staff to calculate the number of undervotes in her state.

The result was astounding. In the 159 Georgia counties, there were 94,000 undervotes for U.S. president, more than in the state of Florida and twice that of the national average. With another election only months away, Georgia’s voting systems, many of which were the same punch-card ballots used in Florida, needed an overhaul.

“‘I don’t want to see my face on Saturday Night Live,'” Cox reportedly told her staff, according to Georgia Director of Election Administration Kathy Rogers, who presided over the project with Cox. “So she put together a 21st Century Voting Commission. That commission went forward to different locations and checked out different systems.

“We unanimously decided that we needed to adopt a uniform Direct Record Electronic (touch-screen) voting system.”

Flash-forward six months to June 2001. A company known primarily for its ATM machines, Canton-based Diebold Inc., acquires Texas-based Global Election Systems for $26 million, according to published reports.

Global manufactures AccuVote (optical scan) and AccuVote-TS (touch screen) voting machines, and already has contracts in more than 850 jurisdictions in North America, including Georgia and Maryland.

“This action will complement our existing core competencies in self-service technology and security,” said Walden O’Dell, Diebold chairman, president and CEO at the time of the acquisition in a statement from the company. “Global is an industry leader with excellent voting solutions, and provides Diebold with considerable expertise and knowledge of the U.S. election solutions market.”

Still, the move seemed wasteful for Diebold when its Brazilian subsidiary, Procomp, already supplied the world’s largest voting system, used by 109 million voters during elections held throughout Brazil. Those elections included more than 180,000 voting terminals, accessories, software, installation, training, logistics and support.

But getting Procomp’s machines to American voters would prove to be a heavily bureaucratic and time-consuming project, and with voting machine mania sweeping the nation in 2001, time was not a luxury Diebold could afford.

“This acquisition allows us to immediately capitalize on this expanding market rather than undergo the lengthy certification and development process necessary to enter the market with our Brazilian product,” O’Dell said. “We expect the U.S. voting marketplace to generate $1.5 (billion)to $2 billion in hardware revenue during the next four to five years.”

Georgia’s Cox moved quickly to modernize and standardize balloting in her state. Shortly after the voting committee’s recommendation, Diebold was among numerous companies which submitted Request For Proposals to win the $54 million contract.

None of the other companies even came close to Diebold, according to state and industry officials.

“Diebold offered a complete turnkey system to the counties,” Rogers says. “They offered experience. They said they could do it in a year. Not every vendor who responded said they could do it in that timetable.

“They could meet the sheer magnitude of units we needed. They had attention to quality control. They came in right on the money, and just won hands-down.”

In six months, Diebold deployed more than 22,000 voting terminals to more than 2,900 precincts in 159 counties. The project required 500 employees to help with logistics, training and support.

“Only Diebold could’ve completed that order in that timeframe,” says Mark Radke, Diebold Election Systems Director of Voting Industry. “Since we have our own manufacturing facilities, it allowed us to ramp up our manufacturing and add lines to complete that project.”

The first Georgia election with Diebold’s machines was a primary on Aug. 18, 2002, in Hall County, 60 miles north of Atlanta, and Marion County, 100 miles south of Atlanta. Fewer than than 20,000 voters would decide if the state had wasted $54 million.

“We chose those two particular counties because the systems they had were truly just junk,” Rogers says. “They couldn’t paste them together with glue, and they just begged us for the new machines, so that gave us an opportunity to have a test site.”

The test run was a success.

Hall and Marion county voters were pleased with the change, as were voting officials. The only glitch occurred when some election managers plugged in the machines incorrectly, according to The Repository in Canton. But the error didn’t affect elections, thanks to the terminal’s battery backup.

“It went really well,” says Rogers. “Voters just loved the doggone things, and we knew they would.”

When the touch-screen terminals were rolled out for the statewide election in November, the response was equally as enthusiastic, according to exit polls. The Atlanta Journal-Constitution reported a 97 percent voter approval rate, according to a survey it conducted after the elections, and it gave a rare endorsement to Cox and Diebold on its editorial page the following day.

Although Diebold won the Georgia contract handily and recently closed a major $30 million contract with San Diego County in California, it’s not alone in the voting system marketplace.

Two other companies, Sequoia Voting Systems and Election Systems and Software, share roughly an equal portion of the growing market. It’s a market that’s sure to intensify, with $3.9 billion in federal funding on the way from the Help America Vote Act, signed by President Bush in October last year to help states update their systems.

“It’s pretty clear the direction that the states, counties, precincts want to take this voting, and it’s more toward electronic or optical-based systems as opposed to paper-based systems,” says Matt Summerville, an industry analyst with McDonald Investments Inc. “Diebold has garnered themselves a very decent share in the marketplace with the acquisition of Global. They’re one of the top-tier players, but this is a market that is going to be very competitive.”

Summerville adds that if it weren’t for the botched elections in November 2000, Diebold wouldn’t be in the dominant position it is now. But, he says, the company responded well to the crisis.

“I feel great about our position in voting,” O’Dell told investors during Diebold’s year-end conference call. “The company we acquired was $9 (million) or $10 million in 2001, and third in market share. We went from third to first in a year. Then, all of our equipment and all of our support performed perfectly on Election Day, and that propelled us forward with a great opportunity to continue to lead the industry and gain more share in that market.”

Creating consistent sales of voting systems will be a challenge for the company, Summerville says. The size of the contracts will cause large revenue spikes, then dips, which could scare off some investors.

“If they get L.A. County this year, that could be $100 million in and of itself, so it’s going to be fairly lumpy,” Summerville says. “The state of Georgia was $54 million in 2002 to Diebold, but that’s not a repeatable business. About $50 million of that was hardware, with the remainder a flat-out service agreement. The service component is so much less.

“So you don’t have right away the magnitude of recurring revenue streams.”

It’s strange that it took states and counties this long to get to this point, when, since the early 1980s, people have used Automatic Teller Machine to manage their finances.

Why did it take the most fiercely debated and mishandled presidential election in U.S. history for officials take action?

“That’s a good question,” Radke says. “The market has been waiting for a technology leader like Diebold to step into it to take it to that next step, both from a security standpoint, a reliability standpoint and from a support standpoint.”

Diebold’s Election Systems division contributed $111 million to the $1.9 billion company in 2002, but Diebold predicts the division will continue to remain strong, with growth of 15 percent to 30 percent this year.

In his year-end report to investors, O’Dell said that Diebold is in the running for more voting contracts in Maryland, California and Ohio in the coming years.

“Do I see this as an industry that is going to grow significantly over the next three, four, five years? My answer is yes, I strongly believe that,” Summerville says. “One of things that we have now that we didn’t have a year ago is federal funding in place and available for states and counties to go after.” How to reach: Diebold Inc. (330) 490-4000.