E-Rate Deal May Not Draw Multiple Bidders, Brownback Tells Martin
A flaw in a proposal for a new administrator of the E-Rate program may keep qualified vendors from bidding on the contract, Sen. Sam Brownback, R-Kan., told FCC Chairman Kevin Martin in an April 11 letter we obtained. “I am concerned that the RFP [request for proposal] may be flawed,” Brownback said in the letter, requesting many documents on commission work with the Universal Service Administrative Company, which oversees the program.
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“If the RFP fails to attract multiple bids, it would represent a failure on the part of the FCC and USAC to stop the mismanagement of these programs,” the letter said. The FCC hasn’t supplied the information, according to Brownback’s office. The commission got Brownback’s letter and “will respond directly” to his office, an FCC spokesman said, not saying when.
Bids are due May 5 for the $175 million, five-year contract to run the $2.5 billion program, which helps schools and libraries get online. USAC advertised the proposal Oct. 12. Fifteen bidders were pre-qualified, and 11 attended a Jan. 17 conference on the bidding process. Five bidders were deemed serious -- they visited a document room for research -- but so far only Solix, the current contractor, has bid, according to those familiar with the process.
The FCC asked USAC in April 2007 to solicit multiple bidders for the contract, the spokesman told us. Originally it sought a sole source bid.
Solix can’t comment since it’s an “ongoing procurement,” a company spokeswoman said. Brownback said the bidder shortage is “troubling,” given reports of significant errors in E-Rate program payments. The FCC inspector general’s office last year released a Universal Service Fund audit showing an “erroneous payment rate” of 12.9 percent for the program. It blamed “inadequate documentation… and lack of proper data collection” for faulty payments. The Office of Management and Budget uses a benchmark of 2.5 percent for program errors.
USAC has “gone to great lengths to ensure a full and open competitive bidding process,” said External Relations Director Eric Iversen. “We believe we have provided more than sufficient information to potential bidders to enable them to make competitive proposals. Among other things, we prepared a comprehensive request for proposals containing detailed information and data concerning the services, held a bidders conference… and made thousands of pages of program documentation available to qualified bidders.” USAC can’t comment further because of the approaching RFP deadline, he said. “We do not want to do anything to jeopardize the competitive process.”
GAO is investigating the payment at the request of House Commerce Committee ranking member Joe Barton, R- Texas. Barton led a 2005 congressional investigation of problems with the fund. That inquiry found structural weaknesses with the program “that needed to be addressed legislatively.”