FCC ‘Abdicated’ E-Rate Program Oversight, Brownback Says
FCC “unwillingness to cooperate” with a Senate inquiry raises concern that the E-Rate program “has been grossly mismanaged,” Sen. Sam Brownback, R-Kan., said in a letter sent Tuesday to FCC Chairman Kevin Martin. “As of today I have not received a single document I requested” in a letter sent to the commission April 11 (WID April 28 p1), Brownback said.
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The lack of response “is deepening my concern” about the E-Rate program, said Brownback, the Senate Appropriations Financial Services Subcommittee’s ranking member. The April 11 letter sought documents describing the relationship between the FCC and the Universal Service Administrative Co. It runs all USF programs including E-Rate, also known as the schools and libraries fund.
“I am extremely troubled that the FCC has abdicated its statutory responsibility to properly supervise the schools and libraries and rural health care programs,” Brownback said. “This lack of oversight has resulted in an outrageous payment error rate in both programs.” Of $2.2 billion spent yearly on the E-Rate and rural health programs, some $200 million is improperly accounted for, the letter said.
The problem centers on the programs’ “error payment rate,” which is 20 percent for the rural health program and 12 percent for schools and libraries. This exceeds Office of Management and Budget guidelines that set an acceptable rate of 2.5 percent for federal programs. Carriers have complained that the system’s complexity can lead to problems (CD Jan 10 p6). Instead of using contractors, carriers have suggested the agency should give money directly to schools, which they say would be more efficient.
Companies said to be interested in bidding on the $175 million, five-year contract to run the E-Rate program complain about not getting enough information on which to base credible bids, say those familiar with the process. Bids are due May 5. Only one company, incumbent Solix, has bid. USAC officials said they've provided adequate documents.
“It’s a mess,” an industry official familiar with the program and participating carriers said, suggesting that the system’s complexity may alienate potential bidders.
“I understand that the FCC approved the initial RFP (Request for Proposal), even though the FCC now claims that it has no control over the process of finding a bidder that can eradicate waste, fraud, and abuse in this program,” Brownback said. “As the Ranking Member of the Appropriations subcommittee which funds your agency, I expect a written response to all the questions posed in my April 11, 2008 by [close of business] tomorrow, April 30.”