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FCC Seeks Comments on Disbarment Waiver Request

The Federal Communications Commission is seeking comments on a request by NEC Business Network Solutions Inc. (BNS) to waive the FCC's rules stipulating that persons convicted of fraud or criminal acts related to the E-rate program be suspended from participating in the program for a period of at least three years.

In late May, the U.S. Department of Justice announced that the company had agreed to plead guilty and to pay $20.6 million to settle charges of collusion and wire fraud in connection with E-rate activities in California and four other states. At the same time, BNS petitioned the FCC to waive its suspension and debarment rules.

In its waiver request, BNS argued that when it became aware, in fall of 2002, that a grand jury investigation had been launched concerning matters related to its involvement in the E-rate program, it voluntarily cooperated with the government and froze all of its E-rate-related activities. It said that the improper conduct arose out of its Public Sector Sales Group, which includes 800 employees, and not its regional sales offices which, it said, had never been the subject of an investigation and which had complied with all applicable rules. BNS said that the E-rate program accounted for fewer than 3 percent of the company's total revenues during the period at issue in its plea and settlement.

BNS said it has appointed a Chief Compliance Officer and was working with government officials to put control measures in place. It said the Public Sector Sales Group has been disbanded, two of the individuals who were part of the group are no longer with the company and the others have been reassigned to work on other matters besides government procurement and the E-rate program.

"In sum," it said, "it is plain that mistakes were made by a few BNS employees related to the E-rate program and that the company has acknowledged and accepted responsibility for those mistakes and cooperated fully with the government."

BNS argued that in a decision in which the Commission instructed the SLD to move forward with reviewing the E-rate applications of the Puerto Rico Department of Education, the FCC had chosen not to debar the whole department when the secretary of education had been indicted and convicted. It also noted that the Commission had made a distinction between unlawful activities that had occurred before new operating procedures were put in place. The decision, BNS said, "illustrates that while the Commission may not accept assurances from an individual that he or she will mend their ways and while debarment of an individual may be necessary, the Commission typically treats corporations and institutions differently."

BNS also argued that permitting BNS to continue to participate in the program would be in the public interest by promoting more competition.

The text of the BNS petition, which provides interesting insights into its business activities, is available by clicking here.

FCC's instructions on how to comment on the waiver request are available at Comments are due by July 19 and reply comments by July 29.

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