If your state’s procurement rules and E-rate’s competitive bidding rules seem to point in different directions, a new FCC decision has a clear answer: following your state’s rules doesn’t excuse you from following E-rate’s. The FCC’s Wireline Competition Bureau recently granted a waiver to the North Carolina Department of Public Instruction (NCDPI) covering funding years 2022 through 2025, but it used the same Order to reinforce that point sharply.
What Happened
The case centered on NCDPI’s statewide procurement of internet access services for more than 2,700 public and charter schools. During its procurement process, NCDPI conducted an E-rate competitive bidding process and identified the most cost-effective bidder. After finishing that evaluation, it compared the results to pricing available through a state-managed telecommunications contract, and went with the cheaper state option.
USAC later determined this didn’t comply with E-rate competitive bidding requirements. It denied funding for FY2024 and FY2025, and started recovery actions, meaning efforts to claw back money already paid, for FY2022 and FY2023.
What the FCC Said About the Rule
In its September 11, 2026 Order, the FCC acknowledged that NCDPI had not strictly complied with E-rate competitive bidding and documentation requirements.
The Bureau was specific about the rule: you have to consider all responsive bids as part of your E-rate bid evaluation, with the price of E-rate-eligible services as the primary factor. If you’re considering pricing from a state master contract that wasn’t competitively bid under E-rate rules, that pricing needs to be considered as part of the E-rate competitive bidding process, not after you’ve completed your evaluation. The FCC also rejected the argument that earlier decisions gave applicants blanket permission to compare state network pricing after the E-rate bid evaluation was complete.
Why the Waiver Was Granted Anyway
Even so, the Bureau granted the waiver, because of the unusual circumstances here. The FCC emphasized several factors supporting relief: the state contract offered the lowest available pricing, the applicant faced an apparent conflict between state procurement requirements and federal E-rate procedures, the primary service provider under the state contract was the same vendor identified through the competitive bidding process, and there was no evidence of waste, fraud, abuse, or misuse of funds.
So the FCC waived the competitive bidding and documentation requirements at issue for the affected years, told USAC to stop recovery efforts for FY2022 and FY2023, and sent the FY2024 and FY2025 applications back for another look.
Key Takeaways
While the outcome was favorable for the applicant, don’t read this as a relaxation of E-rate competitive bidding requirements. The Bureau used the Order to reinforce several longstanding principles.
Consider every responsive bid during your evaluation and keep documentation showing how you picked the winner.
Compliance with state or local procurement rules does not excuse noncompliance with FCC requirements.
The FCC also made clear that future waiver requests involving similar circumstances will be evaluated individually and may not receive the same outcome. The Bureau specifically warned that it doesn’t expect to grant similar waivers in future funding years and told NCDPI to change its procurement practices going forward. The Order reiterates that E-rate applicants are responsible for ensuring compliance with both state procurement requirements and federal E-rate rules.
Why This Matters
Waiver requests involving competitive bidding are usually a hard sell, because the FCC treats competitive bidding as a cornerstone of the program. This decision is notable because the Bureau found that strict enforcement wouldn’t serve the public interest under these particular facts. But don’t read it as a reason to count on a waiver instead of getting your procurement right the first time.
Whether you’re a school, a library, or a consortium, the lesson is the same: document your vendor evaluations, keep your procurement records, and make sure every pricing option you consider gets considered inside the E-rate bidding process, not after it. Even when state procurement rules create challenges, you remain responsible for satisfying federal program requirements.
We’ll keep watching how the Bureau applies this reasoning in future decisions and will flag anything that shifts.
Not sure whether your procurement process satisfies both your state’s rules and E-rate’s? Sign up for a consultation with a Guide today.
About the Author: Verlyne Jolley is a Director at Funds For Learning with more than 20 years of experience helping schools and libraries navigate the E-rate program. Her work focuses on regulatory compliance, program administration, and helping applicants understand and adapt to evolving FCC and USAC requirements.
