On April 17, 2012, the Federal Communications Commission published two appeal decisions overturning denials made by USAC due to competitive bidding violations.

USAC denied funding for Widefield School District, stating that the district had improper discussions with a service provider which gave that provider an unfair advantage in the competitive bid process. USAC’s denial explanation stated:

    The FRN will be denied because you did not conduct a fair and open competitive bidding process. The documentation provided by you and/or the service provider indicates that the school district engaged in numerous meetings, e-mail discussions, and/or verbal discussions with Trillion employees prior to the posting of the Form 470 and throughout the competitive bidding process which tainted the competitive bidding process. Trillion was consulted and/or offered details about services and products you were requesting on your FCC Form 470 and/or Request for Proposal (RFP). The competitive bidding process was influenced by Trillion when they assisted you in developing your services specifications for your FCC Form 470/or RFP. You failed to conduct a fair and open competitive bidding process free from conflicts of interest.

In its appeal decision, the FCC found that the “the communications at issue here did not impede the fair and open nature of Widefield’s competitive bidding processes. We also find that at this time there is no evidence of waste, fraud and abuse in the record.”

In a similar instance, USAC issued a denial for the Kings Canyon Unified School District, stating that the district accepted gifts in violation of competitive bidding rules. Kings Canyon’s denial explanation stated:

    This FRN is denied because the documents provided by you and/or your vendor indicates that there was not a fair and open competitive bid process free from conflicts of interest. The documentation provided by you and/or your service provider indicates that prior to/throughout your contractual relationship with the service provider listed on the FRN, that you were offered and accepted either gifts, meals, gratuities, entertainment from the service provider, WHICH resulted in a competitive process that was no longer fair and open and therefore funding is denied.

In its appeal decision, the FCC found that USAC retroactively applied the gift-giving rules first published in the FCC’s Sixth Report & Order in September 2010. The FCC stated in their appeal decision that “King’s Canyon complied with the E-rate procedures and rules that existed at the time it selected Trillion as its service provider… We emphasize, however, that our analysis of this matter could be different under our current rules, because the Commission established clear guidelines on permissible gifts in the Schools and Libraries Sixth Report and Order, which became effective on January 3, 2011.”

Additional information on competitive bidding rules included the Sixth Report & Order can be found here.