Federal Communications Commission DA 11-1554
Before the
Federal Communications Commission
Washington, DC 20554
In the Matter of
Request for Review of a
Decision of the
Universal Service Administrator by
Tulsa Technology Center
Tulsa, OK
File No. SLD-35 1405
Schools and Libraries Universal Service ) CC Docket No. 02-6
Support Mechanism )
ORDER
Adopted: September 14, 2011 Released: September 14, 2011
By the Deputy Chief, Telecommunications Access Policy Division, Wireline Competition Bureau:
I. INTRODUCTION
1. In this order, we grant a request by the Tulsa Technology Center, Tulsa, Oklahoma
(Tulsa) seeking review of a decision by the Universal Service Administrative Company (USAC) denying
funding for discounted services under the B-rate program (more formally known as the schools and
libraries universal service support program).1 USAC rescinded the funding commitment of one of Tulsa's
funding requests on the ground that Tulsa violated the Commission's competitive bidding requirements
by including the price of ineligible items in its evaluation of the most cost-effective proposal during its
vendor selection process.2 Upon review of the record, we find that Tulsa did not violate the
Commission's competitive bidding requirements. We therefore direct USAC to discontinue recovery
actions against Tulsa and its service provider, AT&T Wireless (AT&T). To the extent any funds have
already been recovered from the parties for this funding request, we direct USAC to refund any such
amounts to the parties no later than 60 days from the release date of this order.
II. BACKGROUND
2. If-rate Program Rules and Requirements. Under the B-rate program, eligible schools,
libraries, and consortia that include eligible schools and libraries may apply for discounts for eligible
See Letter from Deborah Sovereign, Consultant, Kellogg & Sovereign Consulting, LLC, on behalf of Tulsa
Technology Center, to Marlene H. Dortch, Office of the Secretary, Federal Communications Commission, CC
Docket No. 02-6 (filed July 26, 2008) (regarding FCC Form 471 application number 351405, funding request
number (FRN) 980351) (Request for Review). In this order, we use the term "appeal" to generically refer to Tulsa's
request for review of USAC's decision. Section 54.719(c) of the Commission's rules provides that any person
aggrieved by an action taken by a division of USAC may seek review from the Commission. 47 C.F.R. § 54.719(c).
2 See Letter from USAC, Schools and Libraries Division, to Debi Sovereign, Tulsa Technology Center (dated July
17, 2008) (Notification of Commitment Adjustment Letter (COMAD); Request for Review at 1.
Federal Communications Commission DA 11-1554
telecommunications services, Internet access services and internal connections.3 The Commission's rules
provide that these entities must seek competitive bids for all services eligible for support.4 In accordance
with the Commission's competitive bidding requirements, each applicant must submit for posting on
USAC's website an FCC Form 470 requesting discounts for F-rate eligible services. The Commission's
rules require that an applicant must carefully consider all submitted bids prior to entering into a contract,
and that the price of eligible products and services must be the primary factor in selecting the winning
bid.5 Applicants cannot consider the cost of ineligible services in selecting a winner bidder.6 Once the
applicant has selected a provider and entered into a service contract, the applicant must file an FCC Form
471 requesting support for eligible services.7 USAC then assigns a FRN to each request for discounted
services and issues funding commitment decision letters (FCDLs) approving or denying the requests for
discounted services.8
3. Applicants may only seek sup port for services eligible for support.9 Each year, the
Commission releases a revised list of eligible services to assist applicants in their efforts to request only
eligible services.'0 When USAC reviews an application and identifies an ineligible service, it will deny
funding for that service.
4. Request for Review. In November 2002, Tulsa submitted an FCC Form 470 to USAC to
initiate the competitive bidding process for E-rate eligible services for funding year (FY) 2003.11 Tulsa
subsequently entered into service contracts and filed its FCC Form 471 application with USAC for FY
47 C.F.R. § 54.50 1-54.502.
47 C.F.R. § 54.503. The Commission's rules provide one exception to the competitive bidding requirement for
existing, binding contracts signed on or before July 10, 1997. See 47 C.F.R. § 54.511(c).
See 47 C.F.R. § 54.503(b) (stating that an eligible entity shall seek competitive bids for all services eligible for
support); 47 C.F.R. § 54.511(a) (stating that when selecting a provider of eligible services, the applicant shall select
the most cost-effective service offering with price being the primary factor considered). See also USAC website,
Schools and Libraries, Construct an Evaluation, http ://www.usac.org/sl/applicants/stepo4/construct-evaluation. aspx
(last visited July 21, 2011) (stating that price of the eligible products and services must be the primary factor when
constructing the evaluation of bid responses).
6See 47 C.F.R. § 54.503(b), 54.511(a); USAC website, Schools and Libraries, Construct an Evaluation,
http://www.usac.org/sL/applicants/stepo4/construct-evaluation.aspx (last visited July 21, 2011).
See Schools and Libraries Universal Service, Services Ordered and Certification Form, 0MB 3060-0806 (October
2000) (FCC Form 471); Schools and Libraries Universal Service, Services Ordered and Certification Form, 0MB
3060-0806 (November 2004) (current FCC Form 471).
8 See USAC website, Schools and Libraries, Funding Commitment Decision Letter,
hitp/www.universalservice.org/sl/applicants/stepO9/funding-commitment-decision-letteiap, (last visited July 19,
2011).
See 47 C.F.R. § 54.502; Instructions for Completing the Schools and Libraries Universal Service, Services Ordered
and Certification Form, 0MB 3060-0806 (October 2000), at 17 (FCC Form 471 Instructions) (stating that applicants
may not seek support for ineligible services, entities, or uses); see also Request for Review by C'helmsford Public
Schools, Federal-State Joint Board on Universal Service, Changes to the Board of Directors of the National
Exchange CarrierAssociation, Inc., File No. SLD-121771, CC Dockets No. 96-45 and 97-2 1, Order, 17 FCC Rcd
761, 762, para. 3 (Com. Car. Bur. 2002).
'° See 47 C.F.R. § 54.502b).
' See FCC Form 470, Tulsa Technology Center (posted Sept. 10, 2002).
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Federal Communications Commission DA 11-1554
200112 In March 2004, USAC approved Tulsa's FY 2003 FCC Form 471 application for
telecommunications services and Internet access.'3 During post-funding review, however, USAC
rescinded Tulsa's funding commitment for FRN 980351 from its FY 2003 FCC Form 471 application on
the ground that Tulsa violated the Commission's competitive bidding requirements.'4 Specifically,
USAC found that Tulsa included the price of ineligible items (i.e., "costs associated with changing phone
numbers") in its evaluation of the most cost-effective proposal during the vendor selection process.'5
Tulsa then filed an appeal of USAC 's notification of commitment adjustment letter with the
Commission.16
5. In its appeal, Tulsa argues that it did not include ineligible products and services in its
vendor selection process.'7 Tulsa maintains that during post-funding review, it informed USAC that it
selected AT&T because it offered the lowest price and was the most cost-effective solution.'8 Tulsa also
explains that AT&T was the existing provider and that the "[c]osts to change to another provider (change
phone numbers and incur activation fees) [was] too high in comparison to any cost savings gained from
switching providers."9 Tulsa argues that USAC's decision to rescind funding was based on a
misunderstanding of what Tulsa meant by this explanation.2° Tulsa asserts that the cost to change
providers was meant to denote activation fees and primary interexchange carrier change charges, both of
which are eligible charges.2' Thus, Tulsa maintains that its vendor selection process did not violate the
Commission's competitive bidding requirements and that staying with AT&T was the most cost-effective
solution.22
IlL DISCUSSION
6. We grant Tulsa's appeal. After review of the record, we find that Tulsa complied with the
Commission's competitive bidding requirements for FRN 980351 23 Specifically, we conclude that
USAC erred in rescinding Tulsa's funding commitment for FRN 980351 as part of its FY 2003 FCC
Form 471 application on the ground that Tulsa included the prices of ineligible products and services in
12SeeFCC Form 471, Tulsa Technology Center (filed Feb. 3,2003).
' See Letter from USAC, Schools and Libraries Division, to Debi Sovereign, Tulsa Technology Center (dated Mar.
3, 2004) (Tulsa FCDL).
'4See COMAD.
'51d.
16 See Request for Review.
' Id. at 2, Attachment B.
'81d
' Id. at Attachment D-1.
201d. at3.
21 Id. at Attachment D-2.
221d at3.
23 The Bureau must conduct a de nOVO review of requests for review of decisions issued by USAC. 47 C.F.R. §
54.723.
Federal Communications Commission DA 11-1554
the vendor selection process.24 According to the eligible services list for FY 2003, presubscribed
interexchange carrier (PlC) change charges and change fees were eligible for discounts.25 We therefore
find that Tulsa's consideration of the costs associated with changing providers - i.e., PlC change charges
and activation fees - was consistent with the Commission's competitive bidding rules.
7. We thus conclude that rejecting Tulsa's funding request on the ground that Tulsa's vendor
selection process violated the Commission's competitive biding rules is not warranted in this instance. In
addition, we find no evidence in the record at this time of waste, fraud or abuse, or misuse of funds, or a
failure to adhere to core program requirements with respect to this procurement. We therefore grant
Tulsa's appeal and direct USAC to discontinue recovery actions against Tulsa and AT&T concerning
FRN 980351 as part of Tulsa's FY 2003 FCC Fonn 471 application.26 To the extent any funds have
already been recovered from the parties under this underlying funding request, we direct USAC to refund
the parties no later than 60 days from the release date of this order.
IV. ORDERING CLAUSES
8. ACCORDINGLY, IT IS ORDERED, pursuant to the authority contained in sections 1-4
and 254 of the Communications Act of 1934, as amended, 47 U.S.C. § 151-154 and 254, and pursuant to
authority delegated under sections 0.91, 0.291, 1.3, and 54.722(a) of the Commission's rules, 47 C.F.R.
§ 0.91, 0.291, 1.3, 54.722(a), that the request for review filed by Tulsa Technology Center on July 26,
2008, IS GRANTED.
9. IT IS FURTHER ORDERED, pursuant to the authority contained in sections 1-4 and 254
of the Communications Act of 1934, as amended, 47 U.S.C. § 151-154 and 254, and pursuant to
authority delegated under sections 0.91, 0.291, and 54.722(a) of the Commission's rules, 47 C.F.R. §
0.9 1, 0.29 1, 54.722(a), that USAC SHALL DISCONTINUE its recovery actions against Tulsa
Technology Center and AT&T Wireless to the extent provided herein.
10. IT IS FURTHER ORDERED, pursuant to the authority contained in sections 1-4 and 254
of the Communications Act of 1934, as amended, 47 U.S.C. § 151-154 and 254, and pursuant to
authority delegated under sections 0.91, 0.291, 1.3, and 54.722(a) of the Commission's rules, 47 C.F.R.
§ 0.91, 0.291, 1.3, 54.722(a), that USAC SHALL REFUND Tulsa Teclmology Center and AT&T
Wireless any funds that have already been recovered no later than 60 days from the release date of this
order.
24See COMAD.
25 See 2003 ESL at 7, 30 (stating that PIG change charges and change fees are eligible for discounts). A PIG change
is described as a change from one long distance company to another at the request of the customer. See 2003 ESL.
There is a one-time PIG change charge assessed by the local telephone company to cover the cost of re-
programming the telephone company central office switch. Id. at 7. Telephone companies also assess change fees
when the customer modifies an existing eligible service to another eligible service. Id. at 30.
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Federal Communications Commission DA 11-1554
11. IT IS FURTHER ORDERED that, pursuant to section 1.102(b)(1) of the Commission's
rules, 47 C.F.R. § 1 .102(b)(1), this order SHALL BE EFFECTIVE upon release.
FEDERAL COMMUNICATIONS COMMISSION
Gina Spade
Deputy Division Chief
Telecommunications Access Policy Division
Wireline Competition Bureau
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