On January 8, 2013, the Federal Communications Commission granted an appeal for 52 applicants on the subject of competitive bidding, “use of equipment, eligibility of services, and the availability of funding.” In its decision, the Commission states that although “right-of-first-refusal provisions violate…competitive bidding requirements,” a limited waiver of the relevant competitive bidding rules is warranted in this instance given the circumstances presented.”

Further discussion in the appeal decision reads:

By their very nature, right-of-first refusal provisions give the holder of the right of first refusal an unfair advantage in the bidding process by enabling it to wait until all of the bids have been submitted to match the lowest bid. None of the other potential bidders have the same opportunity. We recognize that in commercial contexts, right-of-first refusal provisions may be widely accepted and frequently incorporated in many types of contracts involving the purchase, sale, or lease of assets, goods, or services, especially where there are long standing relationships between customers and suppliers. These provisions benefit suppliers by giving them the opportunity to match the lowest price that their customer can get elsewhere. They also benefit customers, by providing a ceiling, but not necessarily a floor, for the price of the product or service the customer wants to purchase. But such provisions are not appropriate for contracts between service providers and applicants seeking funding under the E-rate program where fair and open competitive bidding is required.

The full text of the appeal decision may be obtained here.