Updated at 7:09 p.m. on March 19, 2011

Plans for a 10-site LTE pilot network for public-safety use in the San Francisco Bay Area have been changed, with the scope of the project being pared significantly after a key Bay Area governing body this week declined to approve most of the funding for the controversial initiative.

On Wednesday, the Bay Area Urban Area Security Initiative (Bay Area UASI) Approval Authority voted to return $2 million in UASI funds to the city of San Jose and another $2 million to the city of Oakland. Without the $4 million, the Project Cornerstone pilot project will be a four-site network instead of the planned 10-site project.

“San Jose received its $2 million back, Oakland received its $2 million, and the $2 million that went to San Francisco was allocated to Alameda County for Project Cornerstone,” San Jose City Manager Deanna Santana said. “So, Project Cornerstone has — for lack of a better term — closed down and has been frozen at a $2.2-million expenditure limit.”

Motorola spokesman Matt Messinger said the Approval Authority’s vote limits the amount of funding for Project Cornerstone, but the fundamental functionality of the pilot program remains in place.

“In no instance has there been a discussion of closing down Project Cornerstone,” Messinger said during an interview with Urgent Communications. “Project Cornerstone will remain a critically important pilot project that will enable application and capacity testing of a new technology platform.”

In a letter to Bay Area UASI Executive Director Laura Phillips prior to Wednesday’s meeting, East Bay Regional Communications System Authority (EBRCSA) Executive Director Bill McCammon stated that Motorola officials told him they were “willing to negotiate a close to the contract” that would result in Motorola being paid $2.2 million.

Messinger echoed McCammon’s sentiment that Motorola and EBRCSA have not yet reached an agreement about the proposed changed to Project Cornerstone—a deal that has to occur before the contract for the pilot project can be amended.

“To date, those negotiations have not occurred,” Messinger said. “We expressed to EBRCSA that we would be willing to show flexibility to ensure a successful outcome for both Project Cornerstone and the BTOP-funded BayWEB project.”

Known as Project Cornerstone, the 10-site Bay Area pilot was expected to be the first 700 MHz public-safety LTE test network in the country and serve as the precursor to a 193-site, public-safety LTE installation in the region, which is known as. While Motorola currently is slated to be the vendor for both the Project Cornerstone pilot project and the regional LTE network, the funding sources for the two initiatives are different.

The regional LTE network rollout — also a source of considerable controversy — is being funded with a $50 million federal broadband stimulus grant to Motorola, which also is providing the matching funds associated with the grant. In contrast, the Bay Area UASI Approval Authority in September 2009 allocated $6 million — federal UASI grants of $2 million each to the cities of San Francisco, San Jose and Oakland — to pay for a 10-site LTE pilot and issued a detailed RFI to gauge vendor interest and solicit ideas for executing the project.

Last year, UASI staff asked EBRCSA to oversee Project Cornerstone and promised to direct the $6 million in funds to pay for the project through Alameda County. However, redirecting the $6 million in UASI funds was not voted upon by the Approval Authority, and legal counsel ruled that such a vote needed to occur. In previous meetings, an item on the Approval Authority called for retroactive permission to use these funds for Project Cornerstone, but it was never passed.

Separately, the Bay Area UASI Approval Authority also passed an item naming itself as a co-executive sponsor of the BayWEB project, Santana said. Previously, UASI staff has contended that BayWEB is not a UASI project, so the Approval Authority would have no formal involvement.

“While the Approval Authority agreed to become a co-executive sponsor [for BayWEB], discussions now need to be completed with Motorola about recognizing the Approval Authority as an executive sponsor,” Santana said. “That’s the part that hasn’t been closed.”

Messinger said Motorola is “supportive” of the Approval Authority becoming an executive sponsor of the BayWEB project, “if it helps to expedite the establishment of the BayRICS Authority, which is the legal entity that Motorola requires for partnership on the BayWEB BTOP project.”

Not in existence yet, the BayRICS Authority is the entity that Bay Area government entities are trying to create via a joint powers agreement, so a BayWEB contract with Motorola can be executed. McCammon and Messinger said the goal is to complete the joint powers agreement by the end of March.