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TAUZIN WANTS GAO TO INVESTIGATE E-RATE

In addition to his own committee’s investigation of the E-rate program, House Commerce Committee Chmn. Tauzin (R-La.) asked the General Accounting Office (GAO) Tues. to conduct an E-rate probe. Tauzin repeatedly has expressed concerns about alleged fraud and abuse in the program. The investigations would complement a hearing on the E-rate program the committee plans early next year. E-rate is financed through the Universal Service Fund for Internet and telecom services for schools and libraries.

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It was unclear how a GAO review of E-rate would fit in with the Oversight & Investigation Subcommittee’s review. House Commerce Committee spokesman Ken Johnson wouldn’t comment on the parallel nature of the investigations, but did say the panel’s probe was showing fraud in the program. “We are continuing to uncover information confirming our beliefs that the E-rate program has some serious problems,” Johnson said.

In a Dec. 2 letter to GAO Comptroller David Walker, Tauzin and House Commerce Oversight & Investigations Subcommittee Chmn. Greenwood (R-Pa.) asked the GAO to investigate the E-rate program’s “structure and operations” to determine: (1) Whether federal funds were being used in accordance with the program rules. (2) Whether the funds were being used effectively to achieve the program goals. (3) Whether the program needed fundamental changes to ensure program goals were met. The letter said GAO should be ready to testify on E-rate at the upcoming hearing.

While several previous GAO reviews of E-rate resulted in recommendations to fix the program, allegations of waste, fraud and abuse continue to surface, the letter said. After conducting several investigations 1998-2001, the GAO recommended the FCC and the Universal Service Administrative Co. (USAC), which administers E-rate for the FCC, take steps to improve its internal controls, including: (1) Establishing a quality assurance function to ensure that funding decisions complied with eligibility rules and procedures. (2) Developing effective internal controls over the disbursement of funds to ensure the money was spent appropriately.

In March, Tauzin told the FCC and USAC there could be up to $200 million in fraudulent payouts from the $2.25 billion annual fund (CD March 14 p6). He said oversight of USAC might not be sufficient for problems of that size. The FCC in April updated several E-rate eligibility rules (CD April 24 p3).

While the letter to the GAO requested a review of FCC and USAC procedures, Tauzin’s committee has requested specific documents concerning where E-rate funds are spent. In July, his committee sent specific requests for information to more than a dozen companies, including IBM (CD July 15 p2).