WASHINGTON-Key House lawmakers want the General Accounting Office to again examine a $2.25 billion federal program that subsidizes Internet links to schools and libraries and plan to hold a hearing early next year on allegations of corruption associated with it, raising the stakes in an ongoing congressional probe that last month saw the head of the firm that oversees the tech grants announce her resignation.
The House’s investigation of government-subsidized Internet connections for schools and libraries-known as E-rate-comes as wireless technology increasingly is viewed as an attractive, cost-effective option for providing Internet access to students in schools new and old. How the probe might impact that trend and any reforms that result are unclear.
Previous GAO reviews of E-rate-authorized in the 1996 telecom act as an expansion of universal service, but not implemented by the Federal Communications Commission until the following year-brought to light weaknesses in the administration and operation of the program.
House Commerce Committee Chairman Billy Tauzin (R-La.) and Rep. James Greenwood (R-Pa.), chairman of the oversight and investigations subcommittee, have subpoenaed thousands of pages of documents from the Universal Services Administrative Co. and various companies. They are troubled by what they have learned so far. Now they want GAO to drill deeper for more information.
“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. 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,” said Tauzin and Greenwood in a Dec. 2 letter to U.S. Comptroller General David Walker.
“In light of these ongoing problems and questions,” the two lawmakers stated, “we request that GAO 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.”
Where Tauzin and Greenwood want to take the investigation remains a question. They could write new legislation, refer the matter to the Justice Department, or do nothing. While E-rate has strong backing across the political spectrum, at least one lawmaker-Rep. Tom Tancredo (R-Colo.)-wants to eliminate what he calls “nothing more than an additional hidden tax on the already overtaxed American people.”
At the same time, E-rate-offering schools discounts from 20 percent to 90 percent based on their financial situations-has enabled scores of schools around the country to exploit the Internet as a powerful learning tool.
The FCC’s inspector general, seeking an additional $3 million for E-rate oversight, is monitoring more than two dozen E-rate fraud investigations by local, state and federal authorities. In a semi-annual report due for release next week, the FCC’s IG is expected to highlight areas of concern in the E-rate program. In two previous reports, the FCC watchdog has attempted to draw attention to a problem that could turn out to be a case of massive, unprecedented fraud in a government-sponsored telecom program.
Already, two men-one in New York and another in California-have pleaded guilty to federal violations associated with E-rate grant competition.
“I think this is part of normal oversight,” said Mel Blackwell, a spokesman for USAC, the private firm that manages the E-rate program.
Blackwell said GAO has made helpful suggestions on how to improve E-rate governance. “I think we’ll look on the bright side . I think what they [Congress] are doing is trying to get a complete picture before they do anything,” he said.
Blackwell said USAC has yet to name a successor to Cheryl Parrino, who early last month said she was stepping down Jan. 31 to become a consultant. He said a replacement is likely to be announced at USAC’s board of directors meeting here Jan. 27.
At the epicenter of the controversy is IBM Corp., recipient of hundreds of millions of dollars in government contracts for wireline and wireless E-rate solutions.
“They were too involved in the bidding process. They slanted the bidding their way,” said Blackwell.
IBM has denied any wrongdoing.
The FCC has before it nine appeals from losing E-rate applicants, most of which were aligned with IBM as their primary vendor.
