NEW YORK (Bloomberg) — Bermuda-based Tyco Electronics Ltd. lost a contract valued at $2 billion to build a statewide wireless network in New York to improve communication for the first teams to respond to emergencies or terror attacks.

Testing last year showed that Tyco Electronics didn't remedy problems outlined in August, the state said in a statement. The state's Office for Technology wants payment of $50 million under a standby letter of credit and said it may seek an additional $50 million, the Bermuda-based company said on Friday in a filing.

Tyco Electronics' M/A-COM unit signed the 20-year contract in 2005 to build, operate and maintain a common communications system for use by as many as 65,000 public-safety and public-service workers. New York is trying to improve the reliability of communication among police, fire and other first responders in the wake of the September 11, 2001, terror attack.

"We have given M/A-COM every opportunity to remediate existing deficiencies," Melodie Mayberry-Stewart, chief information officer of the New York State Office for Technology, said in the statement. "The state's testing concluded M/A-COM is unable to deliver a system that meets the needs of New York State's first responders."

The state has incurred more than $54 million in project operating expenses, according to New York's Office for Technology. Testing of the system has shown problems including poor reception in Erie County and problems with portable radios.

Tyco Electronics spokeswoman Victoria Dillon couldn't be immediately reached for comment. In a regulatory filing, Tyco Electronics said it is "disappointed" by the contract termination and said it fulfilled its contractual obligations and delivered a "state-of-the-art system".

"We recognize that the state's current priorities may no longer support the construction of a statewide network and we have made several attempts to address this amicably with the state," the filing said.

New York Comptroller Thomas DiNapoli called the contract cancellation the "right decision", in a statement released on Friday.

"We cannot afford to spend $2 billion on a system that doesn't work," he said. "It's frustrating, but New York has to go back to the drawing board. Too much money and too many lives depend on this; we have to get it right."

Tyco Electronics, which beat Motorola Inc. for the contract, fell four cents to $15.82 in New York Stock Exchange composite trading on Friday. The shares have lost 53 percent in the past 12 months.

The company last week announced its intention to move its country of incorporation to Switzerland from Bermuda.