Federal Communications Commission DA 12-1323 Before the Federal Communications Commission Washington, DC 20554 In the Matter of ) ) Request for Review of ) Decisions of the ) Universal Service Administrator by ) ) Assumption-All Saints School, et al. ) SLD File Nos. 357472, et al. Jersey City, New Jersey ) ) Schools and Libraries Universal Service ) CC Docket No. 02-6 Support Mechanism ) ORDER Adopted: August 10, 2012 Released: August 10, 2012 By the Chief, Telecommunications Access Policy Division, Wireline Competition Bureau: 1. Consistent with precedent,1 we deny an appeal filed by 10 applicants and their service provider, Future Generation, Inc. (collectively, petitioners)2 seeking review of decisions of the Universal Service Administrative Company (USAC) under the E-rate program (more formally know as the schools and libraries universal service support program) for funding year 2003.3 In each decision, USAC found that by providing an e-mail address affiliated with their selected service provider, Future Generation, on their FCC Forms 470, the applicants tainted the competitive bidding process.4 USAC subsequently issued commitment adjustment (COMAD) letters rescinding the applicants’ funding commitments.5 1 See Request for Review by Mastermind Internet Services, Inc., Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Order, 16 FCC Rcd 4028, 4033, para.10 (stating that “the contact person exerts great influence over an applicant’s competitive bidding process by controlling the dissemination of information regarding the services requested…when an applicant delegates that power to an entity that also will participate in the bidding process as a prospective service provider, the applicant irreparably impairs its ability to hold a fair and open competitive bidding process,” and concluding “that a violation of the Commission’s competitive bidding requirements has occurred where a service provider that is listed as the contact person on the Form 470 also participates in the competitive bidding process as a bidder”) (Mastermind Order). 2 See Letter from Raymond Barto, Kaps & Barto, to Marlene H. Dortch, Secretary, Federal Communications Commission, CC Docket No. 02-6 (dated Dec. 22, 2006) (Request for Review); Appendix. 3 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). 4 See, e.g., Letter from USAC, Schools and Libraries Division, to Raymond Barto, St. Mary High School (dated Nov. 16, 2006). 5 In the Commitment Adjustment Implementation Order, the Commission established procedures to recover funds disbursed to parties that obtained the funds in violation of the Commission’s E-rate program. See Changes to the Board of Directors of the National Exchange Carrier Association, Inc., Federal-State Joint Board on Universal Service, 97-21, 96-45, Order, 15 FCC Rcd 22975 (2001). Subsequently, in the Schools and Libraries Fourth Report (continued…) Federal Communications Commission DA 12-1323 2 2. In accordance with the Commission’s competitive bidding rules, applicants must submit to USAC for posting to USAC’s website an FCC Form 470, which describes the applicants planned service requirements and information regarding the applicant’s competitive bidding process.6 The FCC Form 470 must be completed by the entity that will negotiate with prospective service providers and the applicant must name a person whom prospective service providers may contact for additional information.7 The competitive bidding process must be fair and open, not compromised because of improper conduct by the applicant and/or the service provider, and all potential bidders must have access to the same information and must be treated the same throughout the bidding procurement process.8 In this case, Future Generations was a service provider for each of the applicants and the ultimate winner in the competitive bidding process involving each of the applications at issue in this appeal. In each instance, the applicants provided Future Generation’s email address as the preferred method for contacting the applicant on the relevant FCC Forms 470.9 3. The Commission has previously determined that a violation of the Commission’s competitive bidding requirements occurs when a service provider is listed as the contact person on the FCC Form 470 and also participates in the competitive bidding process as a bidder.10 Consistent with that precedent, we find that by listing an email address affiliated with Future Generation and by instructing potential bidders to contact Future Generations, concerning their E-rate applications, each applicant committed a violation of the Commission’s competitive bidding requirements. We therefore deny the request for review and direct USAC to continue recovery actions against the party or parties responsible for the violation. 4. ACCORDINGLY, IT IS ORDERED, pursuant to the authority contained in sections 1-4 (Continued from previous page) and Order, the Commission modified the rules governing COMAD recovery actions to allow USAC to pursue recovery actions against the party responsible for the violation such as the school, library, or service provider. See Federal-State Joint Board on Universal Service, Changes to the Board of Directors for the National Exchange Carrier Association, Inc., Schools and Libraries Universal Service Support Mechanism, CC Docket Nos. 96-45, 97- 21 and 02-6, Order on Reconsideration and Fourth Report and Order, 19 FCC Rcd 15252, 15255-15257, para. 10-15 (2004). The Commission stated that the modified rules should apply to COMAD recovery actions that were under appeal to USAC or the Commission. See id. at 15255-15256, para. 10. 6 47 C.F.R. § 54.503, see Instructions for Completing the Schools and Libraries Universal Service Description of Services Requested and Certification Form, OMB 3060-0806 (April 2002) (FCC Form 470). 7 See FCC Form 470. 8 See, e.g., Schools and Libraries Universal Service Support Mechanism, Third Report and Order and Second Further Notice of Proposed Rulemaking, CC Docket No. 02-6, 18 FCC Rcd 26912, 26939, para. 66 (stating that a fair and open competitive bidding process is critical to preventing waste, fraud, and abuse of program resources); See Mastermind Order, 16 FCC Rcd at 4033, para. 10 (finding that the FCC Form 470 contact person influences an applicant's competitive bidding process by controlling the dissemination of information regarding the services requested and, when an applicant delegates that power to an entity that also participates in the bidding process as a prospective service provider, the applicant impairs its ability to hold a fair competitive bidding process); Request for Review by Approach Learning and Assessment Center, Federal-State Joint Board on Universal Service, CC Docket No. 96-45, 22 FCC Rcd 5296, 5303, para. 19 (Wireline Comp. Bur. 2007) (finding that service provider participation may have suppressed fair and open competitive bidding). See Schools and Libraries Universal Service Support Mechanism and A National Broadband Plan for Our Future, Sixth Report and Order, CC Docket 02-6, 25 FCC Rcd 18762, 18798-800, paras. 85-86 (2010) (codifying the existing requirement that the E-rate competitive bidding process be fair and open); 47 C.F.R. § 54.503. 9 See e.g., FCC Form 470, St. Patrick School (dated Dec. 5, 2002). 10 Mastermind Order, 16 FCC Rcd at 4033, para. 10. Federal Communications Commission DA 12-1323 3 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. §§ 0.91, 0.291, 54.722(a), that the request for review filed by the petitioners listed in the Appendix IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Trent B. Harkrader Chief Telecommunications Access Policy Division Wireline Competition Bureau Federal Communications Commission DA 12-1323 4 APPENDIX Petitioner Application Number Funding Year Date Appeal Filed Assumption-All Saints School Jersey City, New Jersey 357472 2003 Dec. 22, 2006 Blessed Sacrament School Newark, New Jersey 358234 2003 Dec. 22, 2006 Holy Trinity Elementary School Hackensack, New Jersey 357557 2003 Dec. 22, 2006 Mother Seton Parochial School Union City, New Jersey 357662 2003 Dec. 22, 2006 Our Lady Help of Christians School East Orange, New Jersey 357752 2003 Dec. 22, 2006 Our Lady of Good Counsel Elementary School Newark, New Jersey 359187 2003 Dec. 22, 2006 Our Lady of Good Counsel Schools Newark, New Jersey 358346 2003 Dec. 22, 2006 St. Lucy’s School Newark, New Jersey 359178 2003 Dec. 22, 2006 St. Mary’s High School Jersey City, New Jersey 359171 2003 Dec. 22, 2006 St. Patrick School Jersey City, New Jersey 358142 2003 Dec. 22, 2006 Future Generation, Inc. Oradell, New Jersey 357472 358234 357557 357752 359187 358346 359178 359171 358142 2003 Dec. 22, 2006