FY 2008— FY 2009 Funding Status

Wave 9 for FY 2009 is scheduled to be released on Tuesday, June 23rd, for $35 million. Total FY 2009 funding is currently $451 million. Only Priority 1 services for FY 2009 are being funded at this time.

Wave 57 for FY 2008 is scheduled to be released on Wednesday, June 24th, for $4 million. Total FY 2008 funding is now $2.32 billion. Priority 2 services continue to be funded at 88% and above, and denied at 86% and below.

Large-Scale Vendor Investigation

Traditionally, when USAC has become concerned with procurement issues revolving around a service provider and its E-rate clients, USAC has held up funding for those applicants until the issues are resolved - a process that can take well over a year. In the interim, very little information is made available to applicants as to the SLD's specific concerns. With the exception of USAC investigations of Form 470 similarities, applicants can only make reasonable guesses as to the problem based on the nature of the Selective Reviews or Special Compliance Reviews they receive.

Last week, USAC embarked on a far different approach by sending detailed requests for information to what we estimate are over 190 applicants in at least 27 states who applied for funding on services provided by either Trillion Partners or Trillion Digital Communications in FY 2009 or earlier years. This large-scale effort has its roots in a procurement investigation of the Tucson Unified School District ("TUSD") begun in 2005 by the Arizona Attorney General. The investigation was expanded in 2006 to include the District's E-rate related procurement activities.

As explained in USAC's letters, the Arizona E-rate investigation led to a complaint "alleging antitrust, bid rigging, procurement fraud, and conflict of interest violations" involving TUSD, Trillion, and TUSD's consultant E-Rate Consulting Services ("ERC"). The Arizona complaint contended, in part, that Trillion and its employees:

1. conspired with [E-Rate Consulting] to restrain intrastate trade and influence the bidding process in favor of Trillion by communicating..., before and during the District's procurement process, regarding the District's ROI analysis and RFPs, agreeing to work together to ensure both Trillion and ERC obtained District contracts, agreeing to influence the District's RFPs to give Trillion an advantage over other prospective vendors;
2. conspired with [TUSD] Defendants...to restrain intrastate trade and influence the bidding process in favor of Trillion by communicating..., both before and during the District's procurement process, regarding the District's ROI analysis, its plans for telecommunications and technology projects (WAN and VoIP), and its RFPs, agreeing to evade statutes, rules and policies on competitive purchasing and procurement processes, agreeing to ensure that Trillion would be awarded a District contract;
3. had improper contact and communication with other [TUSD] employees before and during competitive purchasing and procurement processes;
4. provided gifts and gratuities to [TUSD] employees; and
5. denied [TUSD] the benefit of free an open competition.

Both TUSD and Trillion settled the Arizona complaint earlier this year by entering into consent judgments. It should be noted that Trillion reportedly states in its consent judgment that it disputes and denies any liability for the violations outlined above.

Although Arizona has settled the complaint, USAC's letter expresses concern that E-rate rules may have been violated, not only with respect to TUSD, but to other Trillion clients. To this end, "USAC is holding funding requests and invoices associated with Trillion pending USAC's investigation of these issues." Somewhat surprisingly, given USAC's normal procedures and the fact that the Tucson situation developed several years ago, the Trillion funding hold is quite recent. Trillion clients have been funded for over $13 million in each of the last funding years (FY 2007 - FY 2008).

Most interesting is USAC's Trillion client letter. Not only does it include a comprehensive review of Arizona's TUSD/Trillion/ERC complaint, but it requests rather specific information from Trillion's past and present E-rate clients - even those who had been previously subjected to Selected Reviews that may have been triggered by the Trillion connection.

For each client FRN associated with Trillion, USAC is requesting the following:

1. Copies of any written agreement with an E-rate program consultant, together with a description of the assistance provided.
2. Copies of all correspondence between applicant staff members, Trillion employees, and/or consultant "starting prior to the posting of the relevant Form 470 through the signing of the agreement with Trillion."
3. List of all gifts offered or provided by Trillion to applicant staff members.
4. List of all meals, entertainment and/or trips offered or provided by Trillion to applicant staff members.
5. List of all Trillion-sponsored E-rate program seminars or workshops attended by applicant staff members, together with copies of agendas and all other material.

Fall E-Rate Training Opportunities

SLD Regional Workshops:

The SLD has posted the dates, and is accepting applications, for five of the eight regional E-rate workshops it will be offering this fall. This year's workshops will be one-day affairs offering three separate training tracks for attendees with different levels of E-rate experience. The three tracks will be:

• Beginner:  Basic program concepts
• Special topics:  Audits, CIPA compliance, contracts, etc.
• Advanced:  Consortia, large procurement, complicated eligibility issues, etc.

The SLD's preliminary workshop schedule is as follows:

Registration information is available on the SLD Web site

Due to a USAC system malfunction, early registrants (June 18-19) for Washington, Atlanta, Los Angeles, and Orlando are required to re-register.

E-Rate Updates and Reminders

ESL Comments Due:

Public comments to the FCC on the draft Eligible Services List ("ESL") for FY 2010 are due by Tuesday, June 23rd. Reply comments are due by June 30th.

Copies of submitted comments in this proceeding can be found in the Search for Filed Comments section of the FCC Web site. To find comments on this and other E-rate matters, enter "02-6" in the Proceeding box at the top left-hand corner of the search screen.

Technology Plan Approval Deadline:

Applicants with current technology plan approvals expiring June 30, 2009, should make sure that approvals are updated for plans covering at least 2009-2010 (or, better yet, 2009-2012) by July 1, 2009. Applicants without technology plans approved by this date will be ineligible for E-rate discounts on anything but "basic telephone" services until approvals are received.

A list of Certified Technology Plan Approvers is available by state and applicant type on the SLD Web site. Any applicant who cannot find a certified approver within their state should contact the SLD’s Steve Mitchell (smitchell@usac.org) for a referral to an "approver of last resort" (including E-Rate Central). Such approvers generally charge a modest fee for their plan reviews.

Another E-Rate Suspension:

The FCC has suspended, and has begun debarment proceedings for, Douglas Benit. Mr. Benit was convicted of mail fraud in connection with his role as an official at Ecorse Public School District in Michigan while steering contracts to various companies directly or indirectly benefiting his own company, Coral Technology, Inc. Mr. Benit was sentenced to 46 months in federal prison and ordered to pay $1.34 million in restitution.

Schools and Libraries News Brief Dated June 19th - Summer Tasks

The SLD's latest News Brief of June 19, 2009, provides a list of answers to the question "What Should I Be Doing This Summer," including:

1. Submit your Item 21 attachments if you have not already done so.
2. Verify your contact information and update if necessary.
3. Respond to any PIA and Selective Review questions.
4. Respond to any Problem Resolution (paper form processing) questions.
5. Submit your BEAR Forms for services already received for FY 2008.
6. Label and store program-related documents.
7. Make sure the technology plan that covers FY 2009 services has been approved.
8. Subscribe to the SLD News Brief from a personal account.
9. Start making plans to attend applicant training in the fall.

Personally, we would have added relax, work on your tan, and spend more time with your family, but the SLD appears to have a one-track mind.