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FCC Gives USAC Further “Pattern Analysis” Guidance

Last week the FCC sided with Send Technologies and eight of their customers in Louisiana who were denied E-rate funds from FY 2002-2004 because of a perceived competitive bidding violation.  These appeals are involving approximately $1.4 million.  The order also addressed a ninth applicant, Jackson Parish School District, in which the FCC denied the district's request for review.

The FCC laid the groundwork for its rules and interpretations in the Academy of Careers and Technologies Order which was released in which May of 2006.  In this order "…the Commission determined that USAC improperly denied requests for funding based on its pattern analysis procedure when USAC stopped its review after identifying a pattern in certain applications without sufficiently examining whether the Commission's rules were actually violated due to improper third-party participation in the competitive bidding process…"  In response to this decision USAC began to send Pattern Analysis Information Request (PAIR) letters to applicants where they suspected that service providers were improperly involved seeking additional information.

In the case of Send's customers, USAC denied applicants based on their PAIR responses asserting that applicants did not sufficiently explain service provider involvement in their competitive bidding process.  In its order, the FCC found that the PAIR letters are often times confusing to applicants who receive them and that these eight successful appelants did sufficiently explain their particular issues. The FCC is now directing USAC to "…conduct further investigation and analysis prior to denying funding for suspected competitive bidding violations of the type…in particular, during the initial and selective review processes, we direct USAC to be more specific when seeking information from and making document requests from applicants and to explain the consequences of not providing the requested documentation or information when it makes the requests…." 

Based on an analysis by Funds For Learning, USAC has denied approximately $266 million since FY 2002 based on their perception of these types of competitive bidding violations.  It is important for applicants as well as service providers to understand their proper roles in the E-rate procurement process.  Specific information on how E-rate stakeholders can work together can be found in the November 2007 eSchool News "E-rate Survival Guide" which can be found here .

The full details of this FCC Appeal Decision can be viewed here.

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