Federal Communications Commission DA 13-1173 Before the Federal Communications Commission Washington, DC 20554 In the Matter of ) ) Requests for Review of ) Decisions of the ) Universal Service Administrator by ) ) La Joya Independent School District ) File Nos. SLD-744699, 745640, La Joya, TX ) 745681, 745720, 745879, 745908, ) 745964, 746017, 746036, 746065 ) 746145, 748103 ) Schools and Libraries Universal Service ) CC Docket No. 02-6 Support Mechanism ) ORDER Adopted: May 29, 2013 Released: May 29, 2013 By the Chief, Telecommunications Access Policy Division, Wireline Competition Bureau: 1. In this Order, we address 13 requests from La Joya Independent School District (La Joya) See Appendix A. seeking review of decisions made by the Universal Service Administrative Company (USAC) denying funding under the E-rate program (more formally known as the schools and libraries universal service support program). 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). In its decisions, See Appendix B. USAC determined that La Joya violated the Commission’s competitive bidding requirements by considering the price of eligible and ineligible items as the primary factor in its vendor selection process. Upon review of the record, we find that the particular facts of this matter support a waiver of the requirements in sections 54.504 and 54.511 of the Commission’s rules that applicants use price of eligible services as the primary factor in selecting the winning offer for E-rate supported services. See 47 C.F.R. §§ 54.504, 54.511 (2009); 47 C.F.R. §§ 54.503, 54.511 (2011). Generally, the Commission’s rules may be waived if good cause is shown. 47 C.F.R. § 1.3. The Commission may exercise its discretion to waive a rule where the particular facts make strict compliance inconsistent with the public interest. Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990) (Northeast Cellular). In addition, the Commission may take into account considerations of hardship, equity, or more effective implementation of overall policy on an individual basis. WAIT Radio v. FCC, 418 F.2d 1153, 1159 (D.C. Cir. 1969); Northeast Cellular, 897 F.2d at 1166. Waiver of the Commission’s rules is appropriate only if both (i) special circumstances warrant a deviation from the general rule, and (ii) such deviation will serve the public interest. Northeast Cellular, 897 F.2d at 1166. We therefore grant these appeals and remand the associated applications to USAC for further action consistent with this order. 2. Under the E-rate program, eligible schools, libraries, and consortia that include eligible schools and libraries may apply for discounts for eligible services. 47 C.F.R. §§ 54.501-54.502 (2009); see also 47 C.F.R. §§ 54.501-54.502 (2011). The Commission’s rules provide that eligible entities must seek competitive bids for all services eligible for support. 47 C.F.R. § 54.504 (2009); see also 47 C.F.R. § 54.503 (2011). Applicants must submit for posting on USAC’s website an FCC Form 470 requesting discounts for E-rate eligible services or any services for which the applicant is seeking a new contract. See id.; Schools and Libraries Universal Service, Description of Services Requested and Certification Form, OMB 3060-0806 (October 2004) (FCC Form 470). The Commission’s rules require applicants to carefully consider all submitted bids prior to entering into a contract, and that the price of eligible products and services must the primary factor in selecting the winning bid. See 47 C.F.R. § 54.504 (2009); 47 C.F.R. § 54.503 (2011) (stating that an eligible entity shall seek competitive bids for all services eligible for support); 47 C.F.R. § 54.511 (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); USAC, Schools and Libraries, Competitive Bidding, available at http://www.usac.org/sl/applicants/step03/evaluation.aspx (last visited May 22, 2013) (Competitive Bidding Guidance) (noting that the most heavily weighted price factor cannot include ineligible costs, although those costs can be included in an evaluation as long as they are in a separate price factor that is weighted less heavily). See also Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776, 9029-30, para. 481 (1997) (subsequent history omitted) (noting that price should be the primary factor in selecting a bid, but acknowledging that applicants may also take other factors into consideration); Request for Review by Ysleta Independent School District of the Decision of the Universal Service Administrator, CC Docket Nos. 96-45, 97-21, Order, 18 FCC Rcd 26407, 26429-31, paras. 50-53 (2003) (stating that applicants may take other factors into consideration, but in selecting the winning bid, price [of eligible items] must be given more weight than any other single factor); Request for Review of a Decision of the Universal Service Administrator by Tulsa Technology Center; Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, Order, 26 FCC Rcd 13006 (Wireline Comp. Bur. 2011) (specifying that “[a]pplicants cannot consider the cost of ineligible services in selecting a winning bidder”). 3. In this instance, the record shows that La Joya considered five criteria in its vendor evaluation processes: “price” (representing 75 percent of the total evaluation weighting), “reputation of the vendor” (representing 5 percent of the total evaluation weighting), “quality of the vendor’s goods or services” (representing 10 percent of the total evaluation weighting), “vendor’s past relationship with the district” (representing 4 percent of the total evaluation weighting), and “K-12 construction experience” (representing 6 percent of the total evaluation weighting). See Requests for Review. La Joya does not dispute USAC’s finding that it included the price of both E-rate eligible and ineligible items as the primary factor in its vendor selection processes. Id. However, according to La Joya, if the price of ineligible items had been excluded from the “price” criterion, the contract awards would have been the same. Id. In support of its claim, La Joya provides spreadsheets and bid evaluation matrixes for each application identifying: (1) the name of each bidder; (2) the total proposed cost of each bid including both E-rate eligible and ineligible services; (3) the total proposed cost of each bid including only E-rate eligible services; (4) the total number of points each bid received in the bid evaluation with both E-rate eligible and ineligible services under consideration; and (5) the total number of points each bid received in the bid evaluation with only the costs of E-rate eligible services under consideration. Id. 4. The record supports La Joya’s argument that the same vendor would have been selected for each funding request if the price of ineligible items had been excluded from the “price” criterion. By contrast, in Requests for Review of Decisions of the Universal Service Administrator by Spokane School District 81; Schools and Libraries Universal Service Support Mechanism, CC Docket No. 02-6, Order, DA 13-885 (Wireline Comp. Bur. rel. May 10, 2013), we found that the record did not support the applicant’s claim that the same vendor would have been selected if the price of ineligible items had been excluded from the price criterion. The spreadsheets and bid evaluation matrixes provided by La Joya identify the E-rate eligible and ineligible items included in each bid for the funding requests at issue, and the price for those items. See Requests for Review. A comparison of the bid evaluation sheets for those items to the bid evaluation sheets for E-rate eligible items confirms that the winning vendor would have been the same if the price of ineligible items had been excluded from consideration. Given the overall circumstances here, we find that La Joya’s vendor selection processes were not compromised by its technical violation of the Commission’s competitive bidding requirements. Further, we find that La Joya has demonstrated that good cause exists for us to waive sections 54.504 (2009) and 54.511 of the Commission’s rules for the FRNs at issue, and that such waivers are in the public interest and consistent with the policy goals underlying the Commission’s competitive bidding rules. See supra n.4. In addition, at this time, there is no evidence of waste, fraud and abuse in the record. We therefore remand the underlying applications to USAC for further action consistent with this order. To ensure that the underlying applications are resolved expeditiously, we direct USAC to complete its review of each application and issue an award or a denial based on a complete review and analysis no later than 90 calendar days from the release date of this order. In remanding these applications to USAC, we make no finding as to the ultimate eligibility of the services or La Joya’s applications. 5. Additionally, on our own motion, we waive section 54.507(d) of the Commission’s rules and applicable USAC procedural deadlines, such as the invoicing deadline, that are necessary to effectuate our ruling. 47 C.F.R. § 54.507(d) (requiring non-recurring services to be implemented by September 30 following the close of the funding year). We find good cause to waive section 54.507(d) and applicable USAC procedural deadlines because filing an appeal is likely to cause the petitioner to miss the program’s subsequent procedural deadlines in that funding year. 6. 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 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 and 54.722(a), that the Requests for Review filed by La Joya Independent School District ARE GRANTED and the underlying applications ARE REMANDED to USAC for further consideration in accordance with the terms of this Order. 7. 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 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 and 54.722(a), that sections 54.504 (2009), 54.507(d) and 54.511 of the Commission’s rules, 47 C.F.R. §§ 54.504 (2009), 54.507(d) and 54.511, ARE WAIVED for La Joya Independent School District to the limited extent provided herein. FEDERAL COMMUNICATIONS COMMISSION Kimberly A. Scardino Chief Telecommunications Access Policy Division Wireline Competition Bureau APPENDIX A FCC Form 471 Application Number Funding Request Number Date of Appeal 744699 2012235 Jan. 30, 2013 745640 2012328 Jan. 30, 2013 745681 2012426 Jan. 30, 2013 745720 2012579 Jan. 30, 2013 745879 2012975 Jan. 30, 2013 745908 2013082 Jan. 30, 2013 745964 2013209 Jan. 30, 2013 746017 2013377 Jan. 30, 2013 746036 2013425 Jan. 30, 2013 746065 2013558 Jan. 30, 2013 746100 2013664 Jan. 30, 2013 746145 2013796 Jan. 30, 2013 748103 2019696 Jan. 30, 2013 APPENDIX B FCC Form 471 Application Number Funding Request Number Date of USAC Funding Commitment Decision Letter 744699 2012235 Sept. 4, 2012 745640 2012328 Sept. 4, 2012 745681 2012426 Sept. 4, 2012 745720 2012579 Sept. 4, 2012 745879 2012975 Sept. 4, 2012 745908 2013082 Sept. 4, 2012 745964 2013209 Sept. 4, 2012 746017 2013377 Sept. 4, 2012 746036 2013425 Sept. 4, 2012 746065 2013558 Sept. 4, 2012 746100 2013664 Sept. 4, 2012 746145 2013796 Sept. 4, 2012 748103 2019696 Sept. 4, 2012 5