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SLD Announces Rejection of Sizable Number of 2002 Applications

The Schools and Libraries Division announced December 3 that it has begun denying a "sizable" number of 2002 applications associated with "a particular service provider" because they were not consistent with Federal Communications Commission rules regarding the competitive bidding process.

A Schools and Libraries spokesman today said that the service provider in question was IBM, but that the SLD wanted to alert applicants that the questionable competitive bidding practices may also involve other service providers. IBM had more than $1 billion worth of funding requests pending in the 2002 application year, including $729 million worth of requests for internal connections support at the 90 percent discount rate. The SLD spokesman said that not all of IBM's pending funding requests involved questionable competitive bidding practices; the New York City public schools, for example, recently received approval for a 2002 funding request in the name of IBM.

The SLD said it was posting the information now to provide an opportunity for applicants whose requests were rejected to have sufficient time to revise their procurement processes for the 2003 application cycle. The day before, the SLD had announced it was extending the 2003 application filing window because of technical issues associated with its online application form.

Here is the full text of the announcement that was posted today, with additional warnings about some of the business practices that it had identified in last year's application cycle.

"SLD has determined that a sizable number of Funding Year 2002 applications associated with a particular service provider are not consistent with Federal Communications Commission (FCC) regulations governing the Schools and Libraries Universal Service Support Mechanism. SLD has begun denying these applications.

Application and competitive bidding processes involving some or all of the following patterns and practices are not consistent with FCC rules:

  • Applicants may not post FCC Form(s) 470 indicating that there is no Request for Proposals (RFP) for the services sought in the FCC Form 470 when there is, in fact, an RFP or other solicitation method which provides that the service provider selected through the RFP or other solicitation method will appear on the applicant's FCC Form(s) 471 funding request(s).
  • This type of procurement activity misleads potential bidders to the detriment of the competitive process mandated by the FCC.

  • FCC rules require applicants to select their service provider through the FCC Form 470 posting process and after complying with competitive bidding requirements.

  • FCC rules do not allow applicants to select service providers through a process other than the process specified in Schools and Libraries Support Mechanism regulations.
  • Any FCC Form(s) 470 or RFP(s) issued by applicants that will form the basis for an FCC Form 471 application must define the specific services for which funding will be sought and applicants must obtain specific cost information, including prices for products and services to be provided.
  • Applicants are required to choose the most cost-effective alternative, with price being the single most heavily weighted factor.

  • Applicants may not receive funding for services rendered by a "technology partner," "program architect," "strategic partner," or other systems integrator, unless the goods and services to be provided are specified.
  • By not being specific about the services sought and not seeking prices for those services, selecting a service provider through this type of FCC Form 470, RFP or other method violates the requirement to choose the most cost-effective provider.
  • Service Providers cannot assist the applicant in developing its technology plan after the FCC Form(s) 470 has been posted. Prior to posting the Form 470 for any services other than basic telephone service, applicants are required to have a technology plan that defines the educational objectives and specifies the products and services sought. These products and services must then be sought by means of the Form 470 and, if available, RFP. If the technology plan is not sufficiently developed before posting of the Form 470, the competitive process is undermined.

  • Winning proposals cannot specify a range of ineligible services, including ineligible services such as training, consulting, and program assistance, to be provided and paid for with Schools and Libraries Universal Service Support Mechanism funding. Providing "free" ineligible services is prohibited by program rules.

  • The RFPs and the winning proposals cannot be designed merely with the goal of "maximizing" funding. The intent of the Schools and Libraries Universal Service Support Mechanism is to help schools and libraries afford communication services required to meet educational objectives. An emphasis on maximizing SLD funding is incompatible with the FCC's objective of only providing funding for the most cost-effective alternative to meet legitimate educational objectives.

  • RFPs or other solicitation methods must be tailored to the needs of each applicant. SLD has found nearly identical language in RFPs from a variety of applicants that resulted in awards to the same service provider. Applicants and service providers undermine the competitive process if they structure RFPs and competitive bidding processes that favor one service provider.

Funding Year 2002 requests for support based on some or all of the practices listed above either have been or will be denied.

SLD is posting this notice now in order to alert applicants for Funding Year 2003 about this application pattern and to urge applicants to avoid application processes that are not consistent with FCC rules.

Applicants for Funding Year 2003 who signed multi-year contracts in prior years based on the pattern discussed here should expect their Funding Year 2002 applications to be denied and may want to initiate a new process to select service providers for Funding Year 2003.

Applicants who may have started a process for Funding Year 2003 similar to that described in this notice are advised to consider starting a new selection process for their Funding Year 2003 service providers.

Note that the filing window for Funding Year 2003 has been extended from a closing date of January 16, 2003, to a closing date of February 6, 2003.

Questions regarding this notice should be directed to the Client Service Bureau."

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