In the FCC Office of Inspector General’s latest report, they recommend that USAC step up efforts to help ensure that E-rate disbursements are made only for those items which are approved under a funding commitment and eligible under program rules. This is nothing new, of course. The OIG has consistently encouraged USAC to put tighter controls in place over invoice review and payment. But, what’s different this time is how the OIG says it:
“USAC needs to take a substantially more aggressive role in improving the quality and accuracy of the information that is submitted to it by applicants for USF payments, acknowledge that responsibility and take active ownership of that process.”
This statement by the OIG sounds like something a disappointed teacher would say of a student during a parent conference. Taken on its own, it sounds like USAC issues blank checks and has no concern about ensuring that funds are disbursed properly. This is pretty far from reality.
I will say that I don’t envy USAC’s job to administer the E-rate program. And, I know there are times when it feels that the SLD is more concerned about the bureaucracy of the program than the program’s goals. But, when dealing with such a bureaucratic structure, that’s going to happen at times. Even with the onerous procedures put in place, the E-rate program still moves at a pretty good pace when things don’t deviate too far from what’s considered “normal.”
As we’ve covered in blog entries in the past, the E-rate program is basically audited by USAC through all of the reviews that are currently in place. Currently, any invoice submitted to USAC is first reviewed by those submitting it. When using the BEAR invoicing method, both the applicant and service provider must sign off that things are correct. And, many SPI submissions result in applicant Service Certifications that must be made before it is processed.
Then, there is USAC’s review of invoices before payment is made. We are sure that USAC has an automated system in place to review invoices and flag those that don’t look quite right for additional review (invoicing PIA). So, what else could USAC do to satisfy the OIG’s criticism about the invoice payment process?
There are already thousands of people throughout the country that are reviewing invoices before requesting reimbursement. Think of the combined number of hours spent by each employee of each applicant organization that sifts through thousands of pages of invoices looking for the line items which aren’t eligible for discounts‚Äîand that’s just for the telephone bills!
And, there is a “common sense” trade off to look for here, too. What’s the point of spending $40,000 to $60,000 (and sometimes more) per audit to look for the $0.50 and $1 line items on invoices that may have been paid inappropriately? Is the public’s money being well spent to find that Hobart Independent School District may have been improperly disbursed $9 in E-rate funding? I bet it costs more than $9 just to deal with the improper payment.
Should USAC hire a few hundred additional staff members just for invoice review?
Short of requiring applicants and service providers to submit copies of every invoice on which it would like to receive E-rate discounts and then requiring USAC or review each line item of these invoices, there’s not much else that USAC can do to put tighter invoice review controls in place. Doing this would bring the E-rate program to a screeching halt. Improper payments can’t be made if no payments are made. Maybe this is what the OIG wants.