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House Committee Asks GAO to Review E-rate Again

Key members of the House Energy and Commerce Committee December 2 asked the General Accounting Office to "review the E-rate program's structure and operations to determine whether federal funds are being used in accordance with program rules, whether the funds are being used effectively to achieve program goals and whether the program needs fundamental changes to ensure program goals are met."

In their letter, Committee Chairman W.J. "Billy" Tauzin, R-LA, and James Greenwood, R-PA, chairman of the Oversight and Investigations Subcommittee, said that they anticipated holding a hearing on the E-rate program in early 2004, at which time, they said, they might ask GAO to testify on its work to date.

In March 2003, the committee subpoenaed records of the Universal Service Administrative Company and the Federal Communications Commission as it began to review allegations of possible waste, fraud and abuse in the program. Later it subpoenaed the E-rate-related records of several companies that participated in the program.

The members noted that GAO had previously conducted several reviews of the program, which had led to administrative changes, including establishing a "quality assurance function" to ensure that funding decisions matched eligibility rules and developing "effective internal controls over disbursements" to ensure that the money was appropriately spent.

The members' letter said, "Although USAC has taken corrective actions, such as strengthening its application review process, allegations of waste, fraud and abuse continue to be raised" since GAO last reviewed the program. The letter added, "Questions have also been raised about the basic effectiveness of the program's structure in meeting the goal of connecting schools and libraries to the Internet."

Since the committee began reviewing the program, the Schools and Libraries Division convened a task force of program stakeholders to make recommendations on ways that the program could address concerns about waste, fraud and abuse. On November 26, USAC released the task force's final recommendations, along with its response on the progress it had made on implementing them.

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