Yesterday, the FCC issued the latest wave of appeal decisions affecting appeals filed from Funding Years 1999-2008. In its Order, the FCC granted thirty-nine appeals and denied thirty-one. This latest ruling again emphasizes the Commission’s stance on ceasing the denial of funding to applicants on procedural grounds, when the errors committed by the applicants did not confer any benefit to the applicant. Of the thirty-nine appeals that were granted, eighteen were based on ministerial or clerical errors on forms that were timely submitted. Twelve appeals were granted based on the application of the 28 day waiting period before an applicant is allowed to enter into an agreement with a service provider for the requested services. Another nine appeals were granted on the merits. The thirty-one denials were on the grounds of failing to comply with the Commission’s competitive bidding rules.
The Commission focused on two issues in the thirty-one appeals that were denied. The Commission denied the appeals based on “1) failure to comply with the Commission’s 28-day competitive bidding requirements; or 2) failure to post an FCC Form 470 that included the service requested on its Form 471.” Petitioners that did not file a Form 470 or “entered into agreements with a selected service provider before posting an FCC Form 470 did not seek competitive bids required by section 54.504 of the Commission’s rules and these petitioners’ contracts were therefore not subject to the competitive bidding process.” In particular, Hemphill Independent School District relied on a Form 470 that was filed in Funding Year 2003 to support a contract for month-to-month Internet access for the following funding year. On appeal the petitioner claimed that the contract was for a multi-year term. However, the District listed a contract expiration date of June 30, 2004 on its 2003 Form 471. Since the contract expiration date was June 30, 2004, the District was required to rebid the contract and submit a new Form 470 for Funding Year 2004.
Similarly, applicants who filed Forms 470 that did not include services which were later requested on the Form 471 for E-rate funding did not seek competitive bids for those services. As such, although the applicant timely submitted a Form 470, the petitioner “did not properly provide notice to service providers that they were seeking bids on omitted services “and were thus in violation of the Commission’s competitive bidding regulations.”
Of the thirty-nine appeals that were granted, the petitioners argued that they made clerical or ministerial errors on their Forms 470 or 471 or misunderstood E-rate program rules. Specifically the grounds for these appeals concern incorrect contract dates, erroneous classification of services and incorrect Form 470 numbers listed on the Form 471. Many applicants were denied funding by UASC because the contracts for services were signed prior to the mandatory 28 day waiting period. However, while these applicants did not wait the full 28 days, they only missed the deadline by a minimal number of days (i.e. 1-3 days) and “therefore their requests for discounted services were subject to competitive bidding for a meaningful period of time.”
One petitioner, Autauga County Board of Education inadvertently supplied USAC with an erroneous contract date on their Form 470, making it appear that there was a three-year gap between the filing of the Form 470 and the contract award date listed on the Form 471. USAC denied funding due to this clerical mistake. Clerical mistake aside, the actual contract award date was 88 days after the posting of the Form 470 and 34 days after the allowable contract date. The decision in this appeal is consistent with the Bishop Perry Order which the Commission waived section 54.504 (c) of its rules in situations where an applicant’s ministerial or clerical errors caused USAC to deny funding.
In the thirty-nine appeals that were granted, the Commission finds that “the petitioners’ errors here could not have resulted in an advantage for them in the processing of their E-rate applications” and “the petitioners’ mistakes, if not caught by USAC, could not have resulted in the petitioners receiving more E-rate funding that they were entitled to receive.” Moreover, as affirmed in the Bishop Perry Order, “rigid adherence to certain E-rate requirements that are procedural in nature does not promote the goals of section 254 of the Communications Act of 1934 as amended (the Act)–ensuring access to discounted telecommunications and information services to schools and libraries–and therefore does not serve the public interest.”
A number of appeals that were granted involved petitioners’ mistakenly signing their contracts or certifying their Form 471 before the allowable contract date. Based on the individual circumstances of each petitioner, the Commission finds that these mistakes were not intentional, did not benefit the applicant nor did they result in any substantial harm to any service provider and thus did not merit the complete denial of funding by USAC.
Nine appeals were granted on the merits. These nine petitioners did not indicate on the Form 470 that they were seeking a multi-year contract or one with voluntary contract renewal provisions. Since this information was excluded from the Form 470, USAC denied funding based on a violation of the Commission’s rules requiring applicants to post requests for services for 28 days. Notwithstanding, the applicants were not in violation of the competitive bidding rules because the Form 470 in effect at the time did not require an applicant to disclose whether it was seeking multi-year contracts.
In this Order, the Commission explicitly emphasizes that most E-rate applicants fully comply with the competitive bidding rules and that “applicants are not free to disregard the 28-day rules based on their own determination that only one service provider can provide the desired services–they must use the bidding process to determine whether this is the case.” While the rulings of the Commission seem to lean toward granting appeals that involve procedural rather than substantive errors, this Order makes it clear that the “interpretation” of the E-rate guidelines should be done so at the discretion of the Commission, as is clear from the summary language in this Order: “we emphasize that we retain the discretion to evaluate the uses of monies disbursed through the E-rate program and to determine on a case-by-case basis that waste, fraud or abuse of program funds occurred and that recovery is warranted.”
Appeals Denied-Grounds for Denial:
Applicants entered into agreements with service providers before the end of the 28 day waiting period
- Birmingham City Schools
- Maud Independent School District
- Morris Hills Regional School District
- Wells Central School District
No Form 470 filed that included type of service applicant requested on Form 471
- Alden-Hebron School District 19
- Cardinal McCarrick high School
- Charleston County School District
- Cochise County Library District
- Edgewood Independent School District
- Finger Lakes Library System
- Garvey School District
- Grenora Public School District No.99
- Hoquiam School District #28
- Moore Public Library
- Morris County School of technology
- Pasadena Independent School District
- Port Angeles School Dist. 21
- Richland County School District 1
- Star independent School District
- Visitation BVM School
- Wagner Public Library
- Western Wayne School District
- Wolfe County Board of Education
Requested services on Form 471 without first filing a Form 470
- Hemphill Independent School District
- Klamath Falls City Schools
- Lourdesmount School
- Mineral Elementary School District
- Valley Union High School District #22
- Virden Community Unit School District 4
- West Iron County School District
