| Wave 24, that was released on March 10th, may be one of the most important waves in E-rate history - not for the amount of funding awarded (only $49 million), but for the amount of funding denied ($590 million). |
| My daddy always told me that, if you have to fight, the best way to make a point is to pick the largest guy, not the smallest. Daddy sure would have been proud of the SLD. In this case, the largest guy was IBM which is associated with $1 billion in total funding requests for FY 2002. In Wave 24, the SLD denied $470 million of IBM-related requests. Of the other $120 million in denials, most were casualties on the same IBM-dominated applications.
As indicated in the table below, the Wave 24 decisions dramatically affected E-rate funding of a number of major applicants.
|
| 10 Largest Applicants |
Funding Denied |
Funding Approved |
| Dallas, TX |
$ 117,600,190 |
$ 3,239,420 |
| Fort Worth, TX |
87,383,545 |
1,238,222 |
| Atlanta, GA |
70,070,076 |
0 |
| Cleveland, OH |
63,512,669 |
2,266,932 |
| El Paso, TX |
44,774,476 |
1,320,359 |
| Oklahoma City, OK |
44,547,986 |
38,102 |
| Navajo Ed. Tech. Consort., NM |
41,305,748 |
1,804,698 |
| New Orleans, LA |
32,791,147 |
1,412,247 |
| Danna, TX |
28,641,209 |
371,192 |
| Galena, TX |
23,902,562 |
440,155 |
|
| With few exceptions (totaling less than $1 million), the IBM denials were based on alleged procurement violations. In the vast majority of cases, the SLD's denial summary indicated that "services for which funding sought not defined when vendor selected; price of services not a factor in vendor selection; price of services set after vendor selection." This brief explanation appears to parallel a situation that first arose in December when the SLD denied all the IBM-related FRNs for the Ysleta Independent School District in Texas and that was the subject of the SLD's "Warning to Funding Year 2003 Applicants and Service Providers Regarding Application Patterns That Violate FCC Rules" (see SLD Warning).
Our reading of the subsequent Ysleta appeals indicates that Ysleta filed a Form 470 for FY 2002 services, then issued a RFP to select a "Technology Implementation and Systems Integration Partner" to "assist the District in effectively infusing technology" utilizing E-rate funding. Under the terms of the proposed partnering agreement, the "selected vendor [would] serve as the prime contractor for any projects funded through E-rate, and all E-rate applications [would] be submitted using the successful bidder's single SPIN number." The specific pricing elements of the RFP appeared to be related to hourly consulting charges for the partnering functions rather than for the E-rate eligible products and services that were subsequently requested in Ysleta's Form 471 application.
One interesting aspect of the SLD's funding decisions in Wave 24 is that the denial of FRNs associated with IBM did not necessarily result in the denial of all FRNs. A spot check of the largest decisions suggests the following patterns:
(1) The decisions addressed all pending Form 471s filed by an individual applicant.
(2) All other Priority 2 Internal Connection FRNs were denied.
(3) Priority 1 Telecommunications and Internet Access FRNs were evaluated on a case-by-case basis. For El Paso, as an example, Southwestern Bell was funded but AT&T was not. In cases involving Priority 1 FRNs denials, the explanations generally paralleled the procurement reasons cited in the Priority 2 denials. This is important because it reflects a greater degree of scrutiny of procurement practices for Priority 1 requests (even for those filed as tariffed services) than seems to have occurred in the past during selective reviews.
|
|
|
| The review of FY 2003 Form 471 applications by the SLD's Program Integrity Assurance ("PIA") teams is now in full swing. Most applicants can expect at least one call from a PIA reviewer to confirm information or material included with an application or to request additional documentation. These are obviously critical calls.
Last year, about this time, the SLD posted a notice on its Web site discussing the procedures and response deadlines for applicant inquiries by PIA. Although the SLD has not posted a similar notice this year, last year's notice is still valid and worthy of review (see PIA Notice).
Generally, when contacted by PIA, an applicant will be given 7 calendar days to respond. It is important to understand that the 7-day deadline begins when the SLD makes contact with the applicant. Under SLD procedures, this does NOT necessarily mean when PIA talks to the applicant. The SLD deems that contact has been made when a fax or e-mail is successfully sent, a voicemail is left, or when someone else at the school or library has been reached. Applicants who have provided fax numbers or e-mail addresses, even if they have not indicated a preference for those contact modes, must make sure that fax and e-mail messages are monitored.
If an applicant does not respond to a request for additional information (or the SLD cannot make contact with the applicant), the SLD's final course of action is to process the application solely on the basis of the original submission. Usually this means reducing or, more likely, denying individual funding requests or an entire application. The normal explanation, in such cases, is that the "Applicant has not provided sufficient documentation to determine the eligibility of this item" or ".has not provided sufficient documentation to substantiate the requested level of funding for this item."
In our experience, the SLD will be flexible on the 7-day deadline if - and this is an important "if" - an applicant is clearly being responsive and justifies a request for additional time to gather information. It is important to stress that ducking PIA inquiries is NOT a successful E-rate strategy!
|