By Cara Branigan,
Associate Editor, eSchool News
March 12, 2003
The Schools and Libraries Division (SLD) of the Universal
Service Administrative Co., the agency that administers the eRate, denied nearly
$590 million worth of 2002 applications in its March 10 wave of funding decision
letters because they allegedly violated the program’s competitive-bidding
requirements. About $470 million of these applications reportedly listed IBM
Corp. as the primary service provider.
The SLD had announced in early December that it had
identified a “pattern” of competitive-bidding violations and had warned
eRate applicants not to list vendors guilty of the same practices on their 2003
applications.
At the time of its warning, the agency confirmed that
IBM—which is listed on applications requesting more than $1 billion in 2002
eRate funding—was the chief service provider involved in this alleged pattern.
The SLD had denied only one application listing IBM as a vendor at the time, but
a precursory review of other applications listing IBM as a service provider
indicated that a larger pattern of violations likely existed, the agency said.
This week, the SLD rejected an additional $470.2 million
in applications involving IBM, according to figures from eRate consulting firm
Funds for Learning LLC, which calculated the data using the SLD’s Data
Retrieval Tool.
“IBM has $1 billion worth of [2002] applications and
... half of them got shot down today,” confirmed Greg Weisiger, state eRate
coordinator for the Virginia Department of Education, who also calculated this
information using the SLD’s Data Retrieval Tool. “IBM has $312 million worth
of denials in Texas alone.”
In most cases, the agency denied funding because
applicants incorrectly selected their vendors with a request for proposals (RFP)
and not with a Form 470. In addition, the price of services was set after the
vendor was selected, in direct violation of the program’s competitive-bidding
requirements.
IBM spokesman Andy Kendzie told eSchool News that the
company has seen information on the SLD web site pertaining to the rejections,
but IBM has not heard anything directly from the agency itself.
“We’re going to assess it at that point,” Kendzie
said. “We really need to look at the reasons behind each of the denials.”
IBM already has appealed to the Federal Communications
Commission (FCC) to overturn the SLD’s decision to deny funds to the Ysleta
Independent School District in Texas, the first IBM customer to be denied
funding on the basis of alleged competitive-bidding violations. IBM has asked
the FCC for an expedited ruling in this case.
Besides IBM, 13 other vendors had at least $1 million in
funding requests rejected March 10, according to Funds for Learning. These
include Ameritech Advanced Data Services Inc. ($27.9 million), BellSouth
Communications Systems ($16.7 million), Multimedia Communications Services Corp.
($16.3 million), and Atlanta Datacom Inc. ($11.9 million).
More denial notices are expected in the next few weeks,
as the SLD has awarded only $1.83 billion of the $2.25 billion in funding
available for the 2002 program year.
March 10 was the SLD’s goal for completing its review
of all remaining 2002 applications, but the close scrutiny required of a number
of applications for possible program violations has prolonged the review process
even further.
So far, the SLD has reviewed more than 28,550
applications for the 2002 program year, which began last July 1 and ends this
June 30.
The agency has made “a significant amount of progress,
but a significant amount of people aren’t happy that more applications [have
not yet been] approved,” said Sara Fitzgerald of Funds for Learning.
Some applicants are in a bind because the 2002 and 2003
program years are now overlapping. The deadline for 2003 applications was Feb.
6—but many applicants had not received notification of their 2002 funding by
that date, which made it difficult to plan for the 2003 program year.
Applicants who receive notification of their 2002 funding
after March 1 have until Sept. 30 of this year—an extra three months—to use
their funds for non-recurring expenses, such as internal wiring projects.
“The thing that has caused some schools pain is that
the rule does not apply to recurring expenses,” said Fitzgerald, who noted
that schools have been forced to pay in full for recurring expenses—such as
monthly telephone and internet service bills—since last July 1 without knowing
whether they’d be funded.
Related Links:
Schools and Libraries Division IBM Corp. Funds for Learning LLC
http://www.sl.universalservice.org
http://www.ibm.com
http://www.fundsforlearning.com