FEDERAL COMMUNICATIONS COMMISSION WASHINGTON OFFICE OF THE CHAIRMAN The Honorable Lamar Alexander United States Senate 455 Dirksen Senate Office Building Washington, D.C. 20510 Dear Senator Alexander: July 21 , 2015 Thank you for your inquiry regarding the letter sent by the Universal Service Administrative Company (USAC) to the Sweetwater City School District Consortium (Sweetwater or the Consortium) notifying Sweetwater that USAC intends to deny E-rate funding to the Consortium. Upon receiving your letter, I asked FCC staff to look into the matter. In light of the fact that any USAC decision may come to the Commission on appeal, it would not be appropriate for me to offer an opinion on the merits ofUSAC's review of the Sweetwater applications at this stage in the process. However, I can tell you that USAC has followed and will continue to follow its standard practice for reviewing this type of application, and Sweetwater will continue to be given every opportunity to offer evidence and explain how its applications are consistent with the E-rate rules. As you know, the E-rate program is designed to provide eligible schools, libraries and consortia of schools and libraries with discounts on eligible Telecommunications, Internet access, and internal connections (WiFi equipment). Broadband connectivity to and within schools and libraries is not a luxury- it is absolutely necessary to prepare our students for the 21 st Century. Recognizing the importance ofE-rate to our nation's schools and libraries, in 2014 the FCC adopted two orders reorienting the program to focus on broadband support and otherwise modernizing the program. A hallmark of the program has always been its competitive bidding rules . In order to maximize the benefit of the federal and local money spent forE-rate eligible services, E-rate participants must seek competitive bids on eligible services. E-rate applicants do not necessarily need to select the lowest price bid, but when evaluating the bids they receive, E-rate applicants must use price as the primary factor in their bid evaluation and they must select the most cost­ effective option. These requirements are a crucial part of protecting the integrity of the program and safeguarding it against waste, fraud , and abuse. It is essential to ensure that funds collected from ratepayers are being used as efficiently as possible. Failing to strictly enforce these requirements would also frustrate the program's ability to meet the broadband funding needs of all participating schools and libraries. With respect to Sweetwater's applications, for each of the funding years at issue, USAC has sought, received, and reviewed the documentation supporting the Consortium ' s application. That documentation shows that Sweetwater selected ENA as its broadband provider despite the fact that AT&T offered to provide equivalent services for substantially less money. According to USAC' s letter notifying Sweetwater of its intent to deny funding, the annual difference in price between ENA and AT&T for essentially the same services is more than $3 million: ENA bid more than $9 million and AT&T bid slightly more than $6 million. As I am sure you can Page 2-The Honorable Lamar Alexander appreciate, USAC had an obligation to inquire further about the basis for the Consortium's decision upon learning of the significant price differential between the bids received by the Consortium for broadband services. In addition to the cost-effectiveness issue, USAC has sought evidence from Sweetwater that a signed contract with ENA exists for the services at issue. During the time at issue, the program rules required applicants to have a signed contract in place prior to applying forE-rate support. According to USAC's intent to deny letter, ENA has not provided evidence that a signed contract was in place between Sweetwater and ENA. It is my understanding that Sweetwater has responded to USAC's requests for information, and USAC is reviewing that response. lfUSAC ultimately determines that Sweetwater violated the E-rate rules, USAC will notify Sweetwater of its determination, and Sweetwater will have a full opportunity to appeal that ruling, first to USAC and then to the Commission. In closing, I want you to know that I share your concern about the length of time it has taken to address Sweetwater' s applications. We are working closely with USAC to improve the application and review processes and will continue to push forward on such improvements. I have asked my staff to keep your staff apprised of the status of the matter. If you have any further questions, please reach out to us for more information. Please let me know if I can be of any further assistance. ;;; /it;;_ Tom Wheeler FEDERAL COMMUNICATIONS COMMISSION WASHINGTON OFFICE OF THE CHAIRMAN The Honorable Diane Black U.S. House of Representatives 153 I Longworth House Office Building Washington, D.C. 20515 Dear Congresswoman Black: July21,2015 Thank you for your inquiry regarding the letter sent by the Universal Service Administrative Company (USAC) to the Sweetwater City School District Consortium (Sweetwater or the Consortium) notifying Sweetwater that USAC intends to deny E-rate funding to the Consortium. Upon receiving your letter, I asked FCC staff to look into the matter. ln light of the fact that any USAC decision may come to the Commission on appeal, it would not be appropriate for me to offer an opinion on the merits ofUSAC's review of the Sweetwater applications at this stage in the process. However, I can tell you that USAC has followed and will continue to follow its standard practice for reviewing this type of application, and Sweetwater will continue to be given every opportunity to offer evidence and explain how its applications are consistent with the E-rate rules. As you know, the E-rate program is designed to provide eligible schools, libraries and consortia of schools and libraries with discounts on eligible Telecommunications, Internet access, and internal connections (WiFi equipment). Broadband connectivity to and within schools and libraries is not a luxury- it is absolutely necessary to prepare our students for the 21 51 Century. Recognizing the importance of E-rate to our nation 1s schools and libraries, in 2014 the FCC adopted two orders reorienting the program to focus on broadband support and otherwise modernizing the program. A hallmark of the program has always been its competitive bidding rules. In order to maximize the benefit of the federal and local money spent forE-rate eligible services, E-rate participants must seek competitive bids on eligible services. E-rate applicants do not necessarily need to select the lowest price bid, but when evaluating the bids they receive, E-rate applicants must use price as the primary factor in their bid evaluation and they must select the most cost­ effective option. These requirements are a crucial part of protecting the integrity of the program and safeguarding it against waste, fraud, and abuse. lt is essential to ensure that funds collected from ratepayers are being used as efficiently as possible. Failing to strictly enforce these requirements would also frustrate the program's ability to meet the broadband funding needs of all participating schools and libraries. With respect to Sweetwater's applications, for each of the funding years at issue, USAC has sought, received, and reviewed the documentation supporting the Consortium's application. That documentation shows that Sweetwater selected ENA as its broadband provider despite the fact that AT&T offered to provide equivalent services for substantially less money. According to USAC's letter notifying Sweetwater of its intent to deny funding, the annual difference in price between ENA and AT&T for essentially the same services is more than $3 million: ENA bid more than $9 million and AT&T bid slightly more than $6 million. As I am sure you can Page 2-The Honorable Diane Black appreciate, USAC had an obligation to inquire further about the basis for the Consortium' s decision upon learning of the significant price differential between the bids received by the Consortium for broadband services. In addition to the cost-effectiveness issue, USAC has sought evidence from Sweetwater that a signed contract with ENA exists for the services at issue. During the time at issue, the program rules required applicants to have a signed contract in place prior to applying forE-rate support. According to USAC' s intent to deny letter, ENA has not provided evidence that a signed contract was in place between Sweetwater and ENA. It is my understanding that Sweetwater has responded to USAC' s requests for information, and USAC is reviewing that response. lfUSAC ultimately determines that Sweetwater violated the E-rate rules, USAC will notify Sweetwater of its determination, and Sweetwater will have a full opportunity to appeal that ruling, first to USAC and then to the Commission. In closing, I want you to know that I share your concern about the length of time it has taken to address Sweetwater' s applications. We are working closely with USAC to improve the application and review processes and will continue to push forward on such improvements. I have asked my staff to keep your staff apprised of the status of the matter. If you have any further questions, please reach out to us for more information. Please let me know if I can be of any further assistance. Sincerely, II: f- ~er OFFICE OF THE CHAIRMAN FEDERAL COMMUNICATIONS COMMISSION WASHINGTON July 21 , 2015 The Honorable Marsha Blackburn U.S . House of Representatives 217 Cannon House Office Building Washington, D.C. 20515 Dear Congresswoman Blackburn: Thank you for your inquiry regarding the letter sent by the Universal Service Administrative Company (USAC) to the Sweetwater City School District Consortium (Sweetwater or the Consortium) notifying Sweetwater that USAC intends to deny E-rate funding to the Consortium. Upon receiving your letter, I asked FCC staff to look into the matter. In light of the fact that any USAC decision may come to the Commission on appeal, it would not be appropriate for me to offer an opinion on the merits ofUSAC's review of the Sweetwater applications at this stage in the process. However, I can tell you that USAC has followed and will continue to follow its standard practice for reviewing this type of application, and Sweetwater will continue to be given every opportunity to offer evidence and explain how its applications are consistent with the E-rate rules. As you know, the E-rate program is designed to provide eligible schools, libraries and consortia of schools and libraries with discounts on eligible Telecommunications, Internet access, and internal connections (WiFi equipment). Broadband connectivity to and within schools and libraries is not a luxury - it is absolutely necessary to prepare our students for the 21 st Century. Recognizing the importance of E-rate to our nation's schools and libraries, in 2014 the FCC adopted two orders reorienting the program to focus on broadband support and otherwise modernizing the program. A hallmark of the program has always been its competitive bidding rules. In order to maximize the benefit of the federal and local money spent forE-rate eligible services, E-rate participants must seek competitive bids on eligible services. E-rate applicants do not necessarily need to select the lowest price bid, but when evaluating the bids they receive, E-rate applicants must use price as the primary factor in their bid evaluation and they must select the most cost­ effective option. These requirements are a crucial part of protecting the integrity of the program and safeguarding it against waste, fraud, and abuse. It is essential to ensure that funds collected from ratepayers are being used as efficiently as possible. Failing to strictly enforce these requirements would also frustrate the program's ability to meet the broadband funding needs of all participating schools and libraries. With respect to Sweetwater' s applications, for each of the funding years at issue, USAC has sought, received, and reviewed the documentation supporting the Consortium's application. That documentation shows that Sweetwater selected ENA as its broadband provider despite the fact that AT&T offered to provide equivalent services for substantially less money. According to USAC's letter notifying Sweetwater of its intent to deny funding, the annual difference in price between ENA and AT&T for essentially the same services is more than $3 million: ENA bid more than $9 million and AT&T bid slightly more than $6 million. As I am sure you can Page 2-The Honorable Marsha Blackburn appreciate, USAC had an obligation to inquire further about the basis for the Consortium 's decision upon learning of the significant price differential between the bids received by the Consortium for broadband services. In addition to the cost-effectiveness issue, USAC has sought evidence from Sweetwater that a signed contract with ENA exists for the services at issue. During the time at issue, the program rules required applicants to have a signed contract in place prior to applying forE-rate support. According to USAC's intent to deny letter, ENA has not provided evidence that a signed contract was in place between Sweetwater and ENA. It is my understanding that Sweetwater has responded to USAC's requests for information, and USAC is reviewing that response. IfUSAC ultimately determines that Sweetwater violated the E-rate rules, USAC will notify Sweetwater of its determination, and Sweetwater will have a full opportunity to appeal that ruling, first to USAC and then to the Commission. In closing, I want you to know that I share your concern about the length of time it has taken to address Sweetwater' s applications. We are working closely with USAC to improve the application and review processes and will continue to push forward on such improvements. I have asked my staff to keep your staff apprised of the status of the matter. If you have any further questions, please reach out to us for more information. Please let me know if I can be of any further assistance. Sincerely, ~eler FEDERAL COMMUNICATIONS COMMISSION WASHINGTON OFFICE OF THE CHAIRMAN The Honorable Steve Cohen U.S. House of Representatives 2404 Rayburn House Office Building Washington, D.C. 20515 Dear Congressman Cohen : July 21 , 2015 Thank you for your inquiry regarding the letter sent by the Universal Service Administrative Company (USAC) to the Sweetwater City School District Consortium (Sweetwater or the Consortium) notifying Sweetwater that USAC intends to deny E-rate funding to the Consortium. Upon receiving your letter, I asked FCC staff to look into the matter. In light of the fact that any USAC decision may come to the Commission on appeal, it would not be appropriate for me to offer an opinion on the merits ofUSAC's review of the Sweetwater applications at this stage in the process. However, I can tell you that USAC has followed and will continue to follow its standard practice for reviewing this type of application, and Sweetwater will continue to be given every opportunity to offer evidence and explain how its applications are consistent with theE-rate rules. As you know, the E-rate program is designed to provide eligible schools, libraries and consortia of schools and libraries with discounts on eligible Telecommunications, Internet access, and internal connections (WiFi equipment). Broadband connectivity to and within schools and libraries is not a luxury- it is absolutely necessary to prepare our students for the 21 51 Century. Recognizing the importance of E-rate to our nation's schools and libraries, in 2014 the FCC adopted two orders reorienting the program to focus on broadband support and otherwise modernizing the program. A hallmark of the program has always been its competitive bidding rules. ln order to maximize the benefit of the federal and local money spent forE-rate eligible services, E-rate participants must seek competitive bids on eligible services. E-rate applicants do not necessarily need to select the lowest price bid, but when evaluating the bids they receive, E-rate applicants must use price as the primary factor in their bid evaluation and they must select the most cost­ effective option. These requirements are a crucial part of protecting the integrity of the program and safeguarding it against waste, fraud , and abuse. lt is essential to ensure that funds collected from ratepayers are being used as efficiently as possible. Failing to strictly enforce these requirements would also frustrate the program's ability to meet the broadband funding needs of all participating schools and libraries. With respect to Sweetwater' s applications, for each of the funding years at issue, USAC has sought, received, and reviewed the documentation supporting the Consortium 's application . That documentation shows that Sweetwater selected ENA as its broadband provider despite the fact that AT&T offered to provide equivalent services for substantially less money. According to USAC's letter notifying Sweetwater of its intent to deny funding, the annual difference in price between ENA and AT&T for essentially the same services is more than $3 million: ENA bid more than $9 million and AT&T bid slightly more than $6 million. As [am sure you can Page 2-The Honorable Steve Cohen appreciate, USAC had an obligation to inquire further about the basis for the Consortium' s decision upon learning of the significant price differential between the bids received by the Consortium for broadband services. In addition to the cost-effectiveness issue, USAC has sought evidence from Sweetwater that a signed contract with ENA exists for the services at issue. During the time at issue, the program rules required applicants to have a signed contract in place prior to applying forE-rate support. According to USAC's intent to deny letter, ENA has not provided evidence that a signed contract was in place between Sweetwater and ENA. It is my understanding that Sweetwater has responded to USAC' s requests for information, and USAC is reviewing that response. IfUSAC ultimately determines that Sweetwater violated the E-rate rules, USAC will notify Sweetwater of its determination, and Sweetwater will have a full opportunity to appeal that ruling, first to USAC and then to the Commission. In closing, I want you to know that I share your concern about the length of time it has taken to address Sweetwater's applications. We are working closely with USAC to improve the application and review processes and will continue to push forward on such improvements. I have asked my staff to keep your staff apprised of the status of the matter. If you have any further questions, please reach out to us for more information. Please let me know if I can be of any further assistance. Tom Wheeler OFFICE OF THE CHAIRMAN FEDERAL COMMUNICATIONS COMMISSION WASHINGTON July 21 , 2015 The Honorable Jim Cooper U.S . House of Representatives 1536 Longworth House Office Building Washington, D.C. 20515 Dear Congressman Cooper: Thank you for your inquiry regarding the letter sent by the Universal Service Administrative Company (USAC) to the Sweetwater City School District Consortium (Sweetwater or the Consortium) notifying Sweetwater that USAC intends to deny E-rate funding to the Consortium. Upon receiving your letter, I asked FCC staff to look into the matter. In light of the fact that any USAC decision may come to the Commission on appeal, it would not be appropriate for me to offer an opinion on the merits ofUSAC's review of the Sweetwater applications at this stage in the process. However, I can tell you that USAC has followed and will continue to follow its standard practice for reviewing this type of application, and Sweetwater will continue to be given every opportunity to offer evidence and explain how its applications are consistent with the E-rate rules. As you know, the E-rate program is designed to provide eligible schools, libraries and consortia of schools and libraries with discounts on eligible Telecommunications, Internet access, and internal connections (WiFi equipment). Broadband connectivity to and within schools and libraries is not a luxury - it is absolutely necessary to prepare our students for the 21 st Century. Recognizing the importance of E-rate to our nation's schools and libraries, in 2014 the FCC adopted two orders reorienting the program to focus on broadband support and otherwise modernizing the program. A hallmark of the program has always been its competitive bidding rules. In order to maximize the benefit of the federal and local money spent forE-rate eligible services, E-rate participants must seek competitive bids on eligible services. £-rate applicants do not necessarily need to select the lowest price bid, but when evaluating the bids they receive, £-rate applicants must use price as the primary factor in their bid evaluation and they must select the most cost­ effective option. These requirements are a crucial part of protecting the integrity of the program and safeguarding it against waste, fraud , and abuse. It is essential to ensure that funds collected from ratepayers are being used as efficiently as possible. Failing to strictly enforce these requirements would also frustrate the program' s ability to meet the broadband funding needs of all participating schools and libraries. With respect to Sweetwater' s applications, for each of the funding years at issue, USAC has sought, received, and reviewed the documentation supporting the Consortium's application. That documentation shows that Sweetwater selected ENA as its broadband provider despite the fact that AT&T offered to provide equivalent services for substantially less money. According to USAC's letter notifying Sweetwater of its intent to deny funding, the annual difference in price between ENA and AT&T for essentially the same services is more than $3 million: ENA bid more than $9 million and AT&T bid slightly more than $6 million. As I am sure you can Page 2-The Honorable Jim Cooper appreciate, USAC had an obligation to inquire further about the basis for the Consortium's decision upon learning of the significant price differential between the bids received by the Consortium for broadband services. In addition to the cost-effectiveness issue, USAC has sought evidence from Sweetwater that a signed contract with ENA exists for the services at issue. During the time at issue, the program rules required applicants to have a signed contract in place prior to applying forE-rate support. According to USAC' s intent to deny letter, ENA has not provided evidence that a signed contract was in place between Sweetwater and ENA. It is my understanding that Sweetwater has responded to USAC' s requests for information, and USAC is reviewing that response. lfUSAC ultimately determines that Sweetwater violated the E-rate rules, USAC will notify Sweetwater of its determination, and Sweetwater will have a full opportunity to appeal that ruling, first to USAC and then to the Commission. In closing, I want you to know that I share your concern about the length of time it has taken to address Sweetwater' s applications. We are working closely with USAC to improve the application and review processes and will continue to push forward on such improvements. I have asked my staff to keep your staff apprised of the status of the matter. If you have any further questions, please reach out to us for more information. Please let me know if I can be of any further assistance. J;-/;4! Tom Wheeler FEDERAL COMMUNICATIONS COMMISSION WASHINGTON OFFICE OF THE CHAIRMAN The Honorable Scott DesJarlais U.S. House of Representatives 413 Cannon House Office Building Washington, D.C. 20515 Dear Congressman DesJarlais: July 21 , 2015 Thank you for your inquiry regarding the letter sent by the Universal Service Administrative Company (USA C) to the Sweetwater City School District Consortium (Sweetwater or the Consortium) notifying Sweetwater that USAC intends to deny E-rate funding to the Consortium. Upon receiving your letter, I asked FCC staff to look into the matter. In light of the fact that any USAC decision may come to the Commission on appeal, it would not be appropriate for me to offer an opinion on the merits ofUSAC' s review of the Sweetwater applications at this stage in the process. However, I can tell you that USAC has followed and will continue to follow its standard practice for reviewing this type of application, and Sweetwater will continue to be given every opportunity to offer evidence and explain how its applications are consistent with the E-rate rules. As you know, theE-rate program is designed to provide eligible schools, libraries and consortia of schools and libraries with discounts on eligible Telecommunications, Internet access, and internal connections (WiFi equipment). Broadband connectivity to and within schools and libraries is not a luxury- it is absolutely necessary to prepare our students for the 21 51 Century. Recognizing the importance of £-rate to our nation's schools and libraries, in 2014 the FCC adopted two orders reorienting the program to focus on broadband support and otherwise modernizing the program. A hallmark of the program has always been its competitive bidding rules. In order to maximize the benefit of the federal and local money spent for £-rate eligible services, £-rate participants must seek competitive bids on eligible services. E-rate applicants do not necessarily need to select the lowest price bid, but when evaluating the bids they receive, £-rate applicants must use price as the primary factor in their bid evaluation and they must select the most cost­ effective option. These requirements are a crucial part of protecting the integrity of the program and safeguarding it against waste, fraud, and abuse. It is essential to ensure that funds collected from ratepayers are being used as efficiently as possible. Failing to strictly enforce these requirements would also frustrate the program' s ability to meet the broadband funding needs of all participating schools and libraries. With respect to Sweetwater' s applications, for each of the funding years at issue, USAC has sought, received, and reviewed the documentation supporting the Consortium 's application. That documentation shows that Sweetwater selected ENA as its broadband provider despite the fact that AT&T offered to provide equivalent services for substantially less money. According to USAC' s letter notifying Sweetwater of its intent to deny funding, the annual difference in price between ENA and AT&T for essentially the same services is more than $3 million: ENA bid more than $9 million and AT&T bid slightly more than $6 million. As I am sure you can Page 2-The Honorable Scott DesJarlais appreciate, USAC had an obligation to inquire further about the basis for the Consortium' s decision upon learning of the significant price differential between the bids received by the Consortium for broadband services. In addition to the cost-effectiveness issue, USAC has sought evidence from Sweetwater that a signed contract with ENA exists for the services at issue. During the time at issue, the program rules required applicants to have a signed contract in place prior to applying for £-rate support. According to USAC' s intent to deny letter, ENA has not provided evidence that a signed contract was in place between Sweetwater and ENA. It is my understanding that Sweetwater has responded to USAC's requests for information, and USAC is reviewing that response. lfUSAC ultimately determines that Sweetwater violated the E-rate rules, USAC will notify Sweetwater of its determination, and Sweetwater will have a full opportunity to appeal that ruling, first to USAC and then to the Commission. In closing, I want you to know that I share your concern about the length oftime it has taken to address Sweetwater' s applications. We are working closely with USAC to improve the application and review processes and will continue to push forward on such improvements. I have asked my staff to keep your staff apprised of the status of the matter. If you have any further questions, please reach out to us for more information. Please let me know if 1 can be of any further assistance. ~'/14i Tom Wheeler FEDERAL COMMUNICATIONS COMMISSION WASHINGTON OFFICE OF THE CHAIRMAN The Honorable John J. Duncan U.S. House of Representatives 2207 Rayburn House Office Building Washington, D.C. 20515 Dear Congressman Duncan: July 21 , 2015 Thank you for your inquiry regarding the letter sent by the Universal Service Administrative Company (USAC) to the Sweetwater City School District Consortium (Sweetwater or the Consortium) notifying Sweetwater that USAC intends to deny E-rate funding to the Consortium. Upon receiving your letter, I asked FCC staff to look into the matter. In light of the fact that any USAC decision may come to the Commission on appeal , it would not be appropriate for me to offer an opinion on the merits ofUSAC' s review of the Sweetwater applications at this stage in the process. However, I can tell you that USAC has followed and will continue to follow its standard practice for reviewing this type of application, and Sweetwater will continue to be given every opportunity to offer evidence and explain how its applications are consistent with the E-rate rules. As you know, the E-rate program is designed to provide eligible schools, libraries and consortia of schools and libraries with discounts on eligible Telecommunications, Internet access, and internal connections (WiFi equipment). Broadband connectivity to and within schools and libraries is not a luxury - it is absolutely necessary to prepare our students for the 21 st Century. Recognizing the importance of E-rate to our nation's schools and libraries, in 2014 the FCC adopted two orders reorienting the program to focus on broadband support and otherwise modernizing the program. A hallmark of the program has always been its competitive bidding rules. In order to maximize the benefit of the federal and local money spent forE-rate eligible services, E-rate participants must seek competitive bids on eligible services. E-rate applicants do not necessarily need to select the lowest price bid, but when evaluating the bids they receive, E-rate applicants must use price as the primary factor in their bid evaluation and they must select the most cost­ effective option. These requirements are a crucial part of protecting the integrity of the program and safeguarding it against waste, fraud, and abuse. It is essential to ensure that funds collected from ratepayers are being used as efficiently as possible. Failing to strictly enforce these requirements would also frustrate the program' s ability to meet the broadband funding needs of all participating schools and libraries. With respect to Sweetwater' s applications, for each of the funding years at issue, USAC has sought, received, and reviewed the documentation supporting the Consortium 's application . That documentation shows that Sweetwater selected ENA as its broadband provider despite the fact that AT&T offered to provide equivalent services for substantially less money. According to USAC's letter notifying Sweetwater of its intent to deny funding, the annual difference in price between ENA and AT&T for essentially the same services is more than $3 million: ENA bid more than $9 million and AT&T bid slightly more than $6 million. As I am sure you can Page 2-The Honorable John J. Duncan appreciate, USAC had an obligation to inquire further about the basis for the Consortium' s decision upon learning of the significant price differential between the bids received by the Consortium for broadband services. In addition to the cost-effectiveness issue, USAC has sought evidence from Sweetwater that a signed contract with ENA exists for the services at issue. During the time at issue, the program rules required applicants to have a signed contract in place prior to applying forE-rate support. According to USAC' s intent to deny letter, ENA has not provided evidence that a signed contract was in place between Sweetwater and ENA. It is my understanding that Sweetwater has responded to USAC's requests for information, and USAC is reviewing that response. If USAC ultimately determines that Sweetwater violated the E-rate rules, USAC will notify Sweetwater of its determination, and Sweetwater will have a full opportunity to appeal that ruling, first to USAC and then to the Commission. In closing, I want you to know that I share your concern about the length of time it has taken to address Sweetwater' s applications. We are working closely with USAC to improve the application and review processes and will continue to push forward on such improvements. 1 have asked my staff to keep your staff apprised of the status of the matter. If you have any further questions, please reach out to us for more information. Please let me know if 1 can be of any further assistance. Sincerely, _ __ ;:/ j -etA~~"!~ Tom Wheeler OFFICE OF THE CHAIRMAN FEDERAL COMMUNICATIONS COMMISSION WASHINGTON July 21 , 2015 The Honorable Stephen Fincher U.S. House of Representatives 1118 Longworth House Office Building Washington, D.C. 20515 Dear Congressman Fincher: Thank you for your inquiry regarding the letter sent by the Universal Service Administrative Company (USAC) to the Sweetwater City School District Consortium (Sweetwater or the Consortium) notifying Sweetwater that USAC intends to deny E-rate funding to the Consortium. Upon receiving your letter, I asked FCC staff to look into the matter. ln light of the fact that any USAC decision may come to the Commission on appeal , it would not be appropriate for me to offer an opinion on the merits ofUSAC' s review of the Sweetwater applications at this stage in the process. However, I can tell you that USAC has followed and will continue to follow its standard practice for reviewing this type of application, and Sweetwater will continue to be given every opportunity to offer evidence and explain how its applications are consistent with the E-rate rules. As you know, the E-rate program is designed to provide eligible schools, libraries and consortia of schools and libraries with discounts on eligible Telecommunications, Internet access, and internal connections (WiFi equipment). Broadband connectivity to and within schools and libraries is not a luxury - it is absolutely necessary to prepare our students for the 21 st Century. Recognizing the importance of E-rate to our nation's schools and libraries, in 2014 the FCC adopted two orders reorienting the program to focus on broadband support and otherwise modernizing the program. A hallmark of the program has always been its competitive bidding rules. In order to maximize the benefit of the federal and local money spent forE-rate eligible services, E-rate participants must seek competitive bids on eligible services. E-rate applicants do not necessarily need to select the lowest price bid, but when evaluating the bids they receive, E-rate applicants must use price as the primary factor in their bid evaluation and they must select the most cost­ effective option. These requirements are a crucial part of protecting the integrity of the program and safeguarding it against waste, fraud, and abuse. It is essential to ensure that funds collected from ratepayers are being used as efficiently as possible. Failing to strictly enforce these requirements would also frustrate the program' s ability to meet the broadband funding needs of all participating schools and libraries. With respect to Sweetwater's applications, for each of the funding years at issue, USAC has sought, received, and reviewed the documentation supporting the Consortium's application. That documentation shows that Sweetwater selected ENA as its broadband provider despite the fact that AT&T offered to provide equivalent services for substantially less money. According to USAC' s letter notifying Sweetwater of its intent to deny funding, the annual difference in price between ENA and AT&T for essentially the same services is more than $3 million: ENA bid more than $9 million and AT&T bid slightly more than $6 million. As I am sure you can Page 2-The Honorable Stephen Fincher appreciate, USAC had an obligation to inquire further about the basis for the Consortium' s decision upon learning of the significant price differential between the bids received by the Consortium for broadband services. ln addition to the cost-effectiveness issue, USAC has sought evidence from Sweetwater that a signed contract with ENA exists for the services at issue. During the time at issue, the program rules required applicants to have a signed contract in place prior to applying for E-rate support. According to USAC's intent to deny letter, ENA has not provided evidence that a signed contract was in place between Sweetwater and ENA. It is my understanding that Sweetwater has responded to USAC' s requests for information, and USAC is reviewing that response. lfUSAC ultimately determines that Sweetwater violated the E-rate rules, USAC will notify Sweetwater of its determination, and Sweetwater will have a full opportunity to appeal that ruling, first to USAC and then to the Commission. ln closing, I want you to know that I share your concern about the length of time it has taken to address Sweetwater' s applications. We are working closely with USAC to improve the application and review processes and will continue to push forward on such improvements. I have asked my staff to keep your staff apprised of the status of the matter. If you have any further questions, please reach out to us for more information. Please let me know if I can be of any further assistance. Sincerely, .. /A /t_ ~ j/%~--~eeler FEDERAL COMMUNICATIONS COMMISSION WASHINGTON OFFICE OF THE CHAIRMAN The Honorable Chuck Fleischmann U.S. House of Representatives 230 Cannon House Office Building Washington, D.C. 20515 Dear Congressman Fleischmann: July21 , 2015 Thank you for your inquiry regarding the letter sent by the Universal Service Administrative Company (USAC) to the Sweetwater City School District Consortium (Sweetwater or the Consortium) notifying Sweetwater that USAC intends to deny E-rate funding to the Consortium. Upon receiving your letter, I asked FCC staff to look into the matter. In light of the fact that any USAC decision may come to the Commission on appeal , it would not be appropriate for me to offer an opinion on the merits ofUSAC's review of the Sweetwater applications at this stage in the process. However, I can tell you that USAC has followed and will continue to follow its standard practice for reviewing this type of application, and Sweetwater will continue to be given every opportunity to offer evidence and explain how its applications are consistent with the E-rate rules. As you know, the E-rate program is designed to provide eligible schools, libraries and consortia of schools and libraries with discounts on eligible Telecommunications, Internet access, and internal connections (WiFi equipment). Broadband connectivity to and within schools and libraries is not a luxury- it is absolutely necessary to prepare our students for the 21 st Century. Recognizing the importance of E-rate to our nation's schools and libraries, in 2014 the FCC adopted two orders reorienting the program to focus on broadband support and otherwise modernizing the program. A hallmark of the program has always been its competitive bidding rules. In order to maximize the benefit of the federal and local money spent forE-rate eligible services, E-rate participants must seek competitive bids on eligible services. E-rate applicants do not necessarily need to select the lowest price bid, but when evaluating the bids they receive, E-rate applicants must use price as the primary factor in their bid evaluation and they must select the most cost­ effective option. These requirements are a crucial part of protecting the integrity of the program and safeguarding it against waste, fraud , and abuse. It is essential to ensure that funds collected from ratepayers are being used as efficiently as possible. Failing to strictly enforce these requirements would also frustrate the program's ability to meet the broadband funding needs of all participating schools and libraries. With respect to Sweetwater' s applications, for each of the funding years at issue, USAC has sought, received, and reviewed the documentation supporting the Consortium's application. That documentation shows that Sweetwater selected ENA as its broadband provider despite the fact that AT&T offered to provide equivalent services for substantially less money. According to USAC's letter notifying Sweetwater of its intent to deny funding, the annual difference in price between ENA and AT&T for essentially the same services is more than $3 million: ENA bid more than $9 million and AT&T bid slightly more than $6 million. As I am sure you can Page 2-The Honorable Chuck Fleischmann appreciate, USAC had an obligation to inquire further about the basis for the Consortium' s decision upon learning of the significant price differential between the bids received by the Consortium for broadband services. In addition to the cost-effectiveness issue, USAC has sought evidence from Sweetwater that a signed contract with ENA exists for the services at issue. During the time at issue, the program rules required applicants to have a signed contract in place prior to applying forE-rate support. According to USAC' s intent to deny letter, ENA has not provided evidence that a signed contract was in place between Sweetwater and ENA. It is my understanding that Sweetwater has responded to USAC' s requests for information, and USAC is reviewing that response. If USAC ultimately determines that Sweetwater violated theE-rate rules, USAC will notify Sweetwater of its determination, and Sweetwater will have a full opportunity to appeal that ruling, first to USAC and then to the Commission. ln closing, I want you to know that I share your concern about the length of time it has taken to address Sweetwater' s applications. We are working closely with USAC to improve the application and review processes and will continue to push forward on such improvements. I have asked my staff to keep your staff apprised of the status of the matter. If you have any further questions, please reach out to us for more information. Please let me know if I can be of any further assistance. Sincerely~ /4/ L ~tc~ FEDERAL COMMUNICATIONS COMMISSION WASHINGTON OFFICE OF THE CHAIRMAN The Honorable Phil Roe U.S. House of Representatives 407 Cannon House Office Building Washington, D.C. 20515 Dear Congressman Roe: July 21 , 2015 Thank you for your inquiry regarding the letter sent by the Universal Service Administrative Company (USAC) to the Sweetwater City School District Consortium (Sweetwater or the Consortium) notifying Sweetwater that USAC intends to deny E-rate funding to the Consortium. Upon receiving your letter, I asked FCC staff to look into the matter. In light of the fact that any USAC decision may come to the Commission on appeal, it would not be appropriate for me to offer an opinion on the merits ofUSAC's review of the Sweetwater applications at this stage in the process. However, I can tell you that USAC has followed and will continue to follow its standard practice for reviewing this type of application, and Sweetwater will continue to be given every opportunity to offer evidence and explain how its applications are consistent with the E-rate rules. As you know, theE-rate program is designed to provide eligible schools, libraries and consortia of schools and libraries with discounts on eligible Telecommunications, Internet access, and internal connections (WiFi equipment). Broadband connectivity to and within schools and libraries is not a luxury - it is absolutely necessary to prepare our students for the 21 51 Century. Recognizing the importance of E-rate to our nation's schools and libraries, in 2014 the FCC adopted two orders reorienting the program to focus on broadband support and otherwise modernizing the program. A hallmark of the program has always been its competitive bidding rules. In order to maximize the benefit of the federal and local money spent forE-rate eligible services, E-rate participants must seek competitive bids on eligible services. E-rate applicants do not necessarily need to select the lowest price bid, but when evaluating the bids they receive, E-rate applicants must use price as the primary factor in their bid evaluation and they must select the most cost­ effective option. These requirements are a crucial part of protecting the integrity of the program and safeguarding it against waste, fraud , and abuse. It is essential to ensure that funds collected from ratepayers are being used as efficiently as possible. Failing to strictly enforce these requirements would also frustrate the program 's ability to meet the broadband funding needs of all participating schools and libraries. With respect to Sweetwater' s applications, for each of the funding years at issue, USAC has sought, received, and reviewed the documentation supporting the Consortium' s application . That documentation shows that Sweetwater selected ENA as its broadband provider despite the fact that AT&T offered to provide equivalent services for substantially less money. According to USAC' s letter notifying Sweetwater of its intent to deny funding, the annual difference in price between ENA and AT&T for essentially the same services is more than $3 million: ENA bid more than $9 million and AT&T bid slightly more than $6 million. As I am sure you can Page 2-The Honorable Phil Roe appreciate, USAC had an obligation to inquire further about the basis for the Consortium' s decision upon learning of the significant price differential between the bids received by the Consortium for broadband services. In addition to the cost-effectiveness issue, USAC has sought evidence from Sweetwater that a signed contract with ENA exists for the services at issue. During the time at issue, the program rules required applicants to have a signed contract in place prior to applying forE-rate support. According to USAC' s intent to deny letter, ENA has not provided evidence that a signed contract was in place between Sweetwater and ENA. It is my understanding that Sweetwater has responded to USAC's requests for information, and USAC is reviewing that response. IfUSAC ultimately determines that Sweetwater violated theE-rate rules, USAC will notify Sweetwater of its determination, and Sweetwater will have a full opportunity to appeal that ruling, first to USAC and then to the Commission. In closing, I want you to know that I share your concern about the length of time it has taken to address Sweetwater' s applications. We are working closely with USAC to improve the application and review processes and will continue to push forward on such improvements. I have asked my staffto keep your staff apprised ofthe status ofthe matter. If you have any further questions, please reach out to us for more information. Please let me know if I can be of any further assistance. Sincerely, • !JI / ~~j//~(_,., ]{~~heeler