BOB CORKER TfNNf-SSEf htur www r.or~ur :K!natu.IJovl ilnitcd ~tatts ~cnotc The Honorable Thomas Wheeler Chairman federal Communications Commission Washington, D.C. 20554 Dear Mr. Chairman: June 29, 2015 425 DoHI<: (2021 228 0~,66 COMM!rt\:lS. BANKING, HOUSING, AND URBAN ArT AIRS 8UOGE1 FoREIGN RnAnONS S~c.•A!. CoMMITTH ON AmNG I write to express my concerns about the impact ofUnjversal Service Administrative Company's (USAC) intent to deny funding through the FCC's E-Rate program to the "Sweetwater School District Consortium" (the Consortium), a group of 45 school d · stricts in Tennessee that rely on this funding for school broadband and connectivity services. On May 2 1,2015, USAC notified the Consortium in the enclosed letter of its intent to deny E-Rate funding. According to USAC, the funding will be denied because the Consortium did not award the contract to the most cost-effective bidder and failed to demonstrate a valid contract with Education Networks of America Services, LLC (ENA). I understand from the Consortium that this determination came more than 30 months after USAC initially began withholding E-Rate payments without explanation, and that the Consortium repeatedly inquired about the missing payments. I have enclosed a copy of a letter from the Tennessee Department of Education outlining what is at stake for these schools in the pending decision. The Consortium collectively faces financial exposure for two and a half years of services rendered under the contract, totaling over $50 million. Moreover, funding for the 2015-2016 school year is now at risk, and I understand it could cost these schools up to $12 million to ensure that broadband connectivity is not di rupted in the coming year as the schools are transitioning to online testing. Given the potential impact on 240,000 Tennessee students, please explain in detail why the Consortium's procurement is ineligible for funding, and why that dctc1mination took more than two years to reach. Thank you for your attention to this important matter and for your efforts to ensure that we continue to support access to reliable broadband in Tennessee sch ols. United States Senator Enclosures. USAC Schools and libraries Division E-rate Application Information Request Date: 5/21/2015 Larry Stein/ Diana Howard Sweetwater City School District Phone: 423-337-7051 Fax:423-337-6773 E-mail: larry.stein@scstn.net; Diana.howard@scstn.net I Response Due Date: 5/28/2015 Dear Applicant, We have completed our review of FY2013 FCC Form 471917099 FRN 2500725 and FCC Form 471 919406 FRNs 2508370 & 2508549. Based on the documentation you provided, you failed to demonstrate that a valid contract exists between Sweetwater City School District Consortium and ENA Services, LLC (ENA). In response, you provided a contract between Metropolitan Nashville Public Schools (MNPS) and ENA (Contract Number 2-225071-00). That contract was signed an executed March 7, 2011. In your response, you also stated "the cost proposals [from AT&T and ENA] to the Sweetwater bid were lower than the cost proposed in the previous consortium procurement with MNPS." You selected MNPS pricing instead of executing a contract with ENA based on the lower pricing offered to Sweetwater. Thus, there was not a contract between Sweetwater City School District Consortium and ENA to provide to USAC demonstrating you selected the most cost effective solution. In addition, the FCC Form 470 issued by Sweetwater City School District Consortium, FCC Form 470# 283390001111946, was issued 1/29/13 and has an Allowable Contract Date (ACD) of 2/26/13. There is no provision in the Metropolitan Nashville Public Schools contract with ENA, or in the underlying RFP and ENA bid proposal, that allows for the Sweetwater City School District Consortium to piggy-back onto that contract. This contract was established prior to the ACD of the Form 470 issued by the Sweetwater City School District Consortium. You have not established that a valid contract exists between Sweetwater City School District Consortium and ENA and all FRNs are denied. Consequently, FY2014 FCC Form 471 945733 FRN 2574934, FY2014 FCC Form 471 947375 FRN 2579179 and FY2015 FCC Form 4711012581 FRNs 2752206 and 2755911 are denied. Sweetwater Consortium did not choose the most cost-effective bid offering. ENA Services, Inc. (ENA) and AT&T submitted bids to provide E-rate services. Sweetwater selected ENA to provide its E-rate services. ENA's bid proposal was $9,336,396, $ 3 million more than AT&T's $6,053,804.04 bid. USAC evaluated Sweetwater's competitive bidding process and the services requested and determined that the applicant did not select the most-cost effective offering. Sweetwater awarded maximum points or near maximum points to ENA in all categories besides eligible cost. Sweetwater scored AT&T lower in the categories that are not eligible cost of goods and services. Sweetwater was also afforded an opportunity to explain if special circumstances existed that influenced its selection decision. Sweetwater I Schools and Libraries Division - Correspondence Unit 30 Lanidex Plaza West, PO Box 685, Parsippany, NJ 07054-0685 Vic:it 11C: nnlin,. ~t· WIAilAI 11<::nr nrn lc:l Special Compliance Review Information Request Page 2 of3 Response due: 5/28/2015 stated AT&T's bid had "defects" and provided "incomplete and/or inadequate responses" which "had the cumulative effect of offsetting the value of a lower sticker price." Sweetwater also stated they had a "lack of confidence in A IT's ability to deliver the services requested by the RFP" and indicated "the bid team clearly determined that A IT's bid was deficient and therefore, scored the RFP consistent with that determination." Sweetwater acknowledged that the price differential is "significant." Lastly, Sweetwater indicated that ENA's service offering was unique and was not comparable to AT&T services. A thorough review of the bids provided by ENA and AT&T shows that the bids are similar in the services offered. The Managed Internet Access service, Managed VoiP, and Managed Video Conferencing services offered by both of the services providers in their bids contain similar Network infrastructure, similar Network Support, similar On Premise Network Equipment, similar Monitoring Service, both have similar experience and operate in Tennessee, both have extensive experience with the e-rate program, and both service providers provided references from past customers who were satisfied with the service providers. The circumstancls presented by Sweetwater do not justify the selection of a bid over $3 million more than a competmg bid and it has been determined that Sweetwater failed to adhere to the requirements tha, applicant's select the most cost-effective bid offering; therefore, FY2013 FCC Form 471 917099 FRN 2500725 and FCC Form 471919406 FRNs 2508370 & 2508549 are denied. Consequently, FY2014 FCC Form 471 945733 FRN 2574934, FY2014 FCC Form 471947375 FRN 2579179 and FY2015 FCC Form 4711012581 FRNs 2752206 and 2755911 are denied. We are providing you with an opportunity to submit further documentation and/or any special circumstances that we should consider during the rev·ew. Lastly, please complete, sign, and date the attached certification and return with your response. Response Reminders Please fax or email the requested information to my attention. If you have any questions or you do not understand what we are requesting, please feel free to contact me. It is important that we receive all of the information requested within 7 calendar days so we can complete our review. Failure to respond may result /" a reduction, denial, or rescinding of funding. If ·you need additional time to prepare your response, please let me !know as soon as possible. Thank you for your cooperation and continued support of the Universal Service Program. Fabio Nieto Associate Manager, Special Compliance 30 Lanidex Plaza West I Parsippany, NJ 07054 T: 973.581.5045 I F: 973.599.6552 Fabio.Nieto@sl.universalservice.org Schools and Libraries Division- Correspondence Unit 30 Lanidex Plaza West, PO Box 685, Parsippany, NJ 07054-0685 \/ic;it 11<: nnlinP ~t· tAIIAIIAI 11c:nr nrn /c;/ Special Compliance Review Information Request Page 3 of 3 Response due: 5/28/2015 Special Compliance Information Request Certification Complete and return the enclosed Certification to th~ Schools and libraries Division (SLD). If the applicant's authorized representative completed the information in this document, please attach a copy of the letter of agency or other agreement between t~e applicant and consultant authorizing them to act on the school or library's behalf. Please note that if an authorized representative signslthis form, an authorized school or library official is also required to sign in the space provided below. Note: If a consultant was used, a school official MUST sign below. CERTIFICATION I certify that I am authorized to make the representations set forth in the responses to the inquiry on behalf of Sweetwater City sbhool District the entity represented on and responding to the inquijry, and am the most knowledgeable person with regard to the information set forth therein. I certify that the responses and supporting documentation to the inquiry are true a 1 nd correct to the best of my knowledge, information and belief. I acknowledge that FCC rules pmvide that persons who have been convicted of criminal violations or held civilly liable for certain acts arising from their participation in the schools and libraries support mechanism are subject to suspension and debarment from the progrJm. I acknowledge that false statements can be punished by fine or forfeiture under t 1 he Communications Act, 47 U.S.C. §§ 502, 503(b), or fine or imprisonment under Titlk 18 of the United States Code, 18 U.S.C. § 1001 and civil violations of the False ClaimsiAct. I declare under penalty of perjury that the foregoing is true and correct. Executed on _day of 2015 at I [city], [state]. Signature I Date Print Name I Title I Employer I Telephone Number I Fax Nuimber Email Address I Address I Authorized School or Library Official's Date Signature and Title I Print Name of Authorized School or Library Official Named Above I Schools and Libraries Divisi~n - Correspondence Unit 30 Lanidex Plaza West, PO Box 685, Parsippany, NJ 07054-0685 \licit 11<: nnlinP ::~t· I+ MIAI ucnr nrnlc:J BILL HASLAM GOVERNOR June 18, 2015 The Honorable Lamar Alexander United States Senator 455 Dirksen Senate Office Building Washington, DC 20510 STATE OF TENNESSEE DEPARTMENT OF EDUCATION NINTH FLOOR, ANDREW JOHNSON TOWER 710 JAMES ROBERTSON PARKWAY NASHVILLE, TN 37243-0375 RE: The Federal Communications Commission I Sweetwater E-rate Consortium Dear Senator Alexander: .. , . CANDICE MCQUEEN COMMISSIONER The Tennessee Department of Education is in the unique po 1 sition to support school districts across our state in an appeal t o the Universal Services Administrative Company (~SAC), the ent ity that reviews applications for E-rate for the Federal Communications Commission (FCC). In Tennessee, 45 districts are part of a district-led consortium, which provides them with technology services and associated E-rate reimbursement. Last month, USAC indicated that it would deny an E-rate application for this district-led consortium. As a result, these districts face two deeply concerning consequences: 1. Districts are at risk ot losing E-rate funds tor 2015·16, severely impacting their ability to maintain internet connectivity for 12 months. Without the E-rate ben~fits these districts will collectively need to pay ;:~h:iil~;t~~;~~~~~c~~~;~t~ ;~~h2:!~~~~:~hd~::r~c~~r~:~::1o;: ~~~n;;~~t:~~~:~~::~::o0~1:1~~~::~imental Additionally, in the next school year, the state is moring to an online testing environment for all high-stakes assessments. The impact of this change requires th tall districts have sustainable connectivity ~o administer both the assessment and practice tools to students. 2. Districts are at risk of having to reimburse amounts subsidized by the vendor over the past two and half years of this agreement. The total exposure of this oblfga~ion is in excess of $50 million. Our desire is to find an immediate solution for the 2015-16 l chool year for these districts regardless of the vendor provider. Our ask of your office is to bring to the attention ~f the FCC the dire consequences of this pending decision to districts, families, and students in Tennessee. We ask that your office seek the FCC's assistance in finding a solution to ensure that our districts are held harmless while this pro~ess is concluded. Our goal, as stated, is to support our d!istricts, and in turn, p}ovlde the resources necessary to support the nearly one million students in Tennessee. We appreciate your attention to this important matter. Sincerely, Gt