Program Compliance

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Program Compliance

• Catriona Ayer and Ray Mendiola

Train-the-Trainer Workshop September 24-26,
2003 Schools Libraries Division
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PIA Review

• Purpose of PIA Review is to ensure that we fund
  only
• Eligible entities
• Eligible services
• Eligible use
• Services were selected based on free and open
  competitive bidding process
• Document your compliance!

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Roles and Responsibilities
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Roles for Applicants

• File Form 470
• Responsible for competitive bidding process
• Provide RFP or bid information to all bidders
• Select most cost-effective bid
• File and sign Form 471
• Respond to PIA inquiries about competitive
  bidding process, budget, discounts, tech plans,
  etc.
• Comply with certifications made on all forms

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Important Applicant Reminders

• Every Applicant will pay some amount as the
  non-discount share of the cost.
• Applicants must be involved in the Competitive
  Bidding process they cannot abrogate their
  responsibility to ensure fair and open
  competition.
• You must be able to show your compliance with all
  of the certifications made on all forms.

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Roles forIndependent Consultants

• Independent consultants cannot also be service
  providers bidding on the Form 470
• Signed Letter of Agency is the FIRST step. Do
  not allow independent consultants to act without
  one.
• Can assist applicants with their responsibilities
• Beware of service providers acting as independent
  consultants

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Roles for Service Providers

• Cannot file Form 470 on behalf of applicants.
• Cannot be involved in competitive bidding process
  except as bidders
• Respond to Form 470 / RFP
• Provide Attachment 21 information to applicant
• Support applicant on technical questions from PIA
• Provide discounted bills/reimbursement
• Comply with certifications made on all forms

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Competitive Bidding
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Competitive Bidding

• Avoid conflicts of interest
• Independent consultant Service Provider
• Applicant Service Provider
• Open competition and bid evaluation
• Follow the rules FCC and state/local
• Beware of unusual contract clauses
• Retain documentation to show your process

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Forms 470

• Must cite specific services that you are seeking
• If RPF is checked, RFP must be available for
  distribution to all potential bidders
• Using old Form 470
• If Form 470 is more than one year old, explain
  why the procurement process took so long

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Bid Evaluation

• Price must be the primary factor in selecting a
  service provider.
• Free services are never free.
• Must factor out the value of the free services
  when comparing bids.
• Retain documentation to show your process (bids,
  bid evaluation sheets, etc).

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Contracts

• Quotes are not contracts
• When applicant provides something other than a
  contract, then it must be prepared to prove such
  document constitutes a contract pursuant to state
  contract law

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Contracts

• Review carefully for unusual clauses
• The FCC requires that the applicant sign a
  contract prior to the filing of the Form 471.
• This does not apply to tariffed or month-to-month
  services.

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Non-discounted Share
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Obligation to Pay

• Support is never more than 90
• Applicants must pay their non-discount share
  and be prepared to prove that at the time they
  applied they had the money in the bank or
  firmly committed to them.
• Applicants ability to pay cannot be contingent
  on some other uncertain factor (like receipt of
  grant for which the applicant has applied)

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Help in Paying?

• Donations from outside sources must be secured at
  time of filing
• Applicant cannot get direct or indirect grant
  from service provider or their foundations to pay
  the non-discounted share.

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Deferred Payment Plans

• Applicants are required to pay their share at the
  same time that USAC pays the discounted amount.
• Service Provider certifies that the invoices they
  submit are for services that have been billed to
  service providers customers.
• Therefore, deferred payment plans that allow the
  applicant to pay after USAC has paid will
  jeopardize a funding request.

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Budget Documentation

• If we ask for your budget, you must
• Provide both Revenues AND Expenses
• If there is a deficit, show how it wont affect
  required E-rate match
• If there are unforeseen budget reductions later
  in the year, be able to show that you filed in
  good faith

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Funding Reductions Denials

• Less than 30 ineligible, modify dollars on FRN
• 30 or more ineligible, then deny FRN
• Fudge-factor not allowed
• Can explain some increases
• Additional lines, increased usage

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Antitrust Laws

• Federal and state laws that prohibit business
  practices that unreasonably deprive consumers of
  the benefits of competition, resulting in higher
  prices for inferior products and services.

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Antitrust Violations

• Federal prosecution can occur for these types of
  violations
• Applicants having an interest in a company that
  is listed on their Form 471
• Kickbacks and bribes
• Bid rigging (criminal)
• Price fixing (criminal)

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Take Certifications Seriously

• You make certifications on FCC forms under
  penalty of federal criminal law.
• Example
• Certify that you have secured access to
  sufficient funds to pay for your nondiscounted
  share AND YOU HAVE NOT, then this is a false
  statement that could be prosecuted.
• Certify that on the Form 486 that you have signed
  contracts AND THERE ARE NOT, then this is a false
  statement that could be prosecuted.

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Suspension and Debarment

• Individuals that are civilly liable or convicted
  of criminal offenses related to the E-rate will
  be suspended and then debarred from the program,
  thereby prohibiting them from consulting,
  assisting and advising applicants or providers,
  and receiving funds or discounted services from
  the schools and libraries support mechanism.
• List maintained on SLD web site

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Whistleblower Hotline

• USAC maintains a national Hotline in an effort to
  curb fraud, waste, and abuse.
• Hotline accepts information on possible rule
  violations.
• Callers can remain anonymous if they wish.
• Investigated by Special Investigations Function

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Schemes

• Non-Discount Share Here we go again The
  applicant WILL pay something.
  Letter of Credit Case
• Competitive Bidding Non-Compliance The
  applicant CANNOT turn over their responsibility
  to ensure a fair and open competitive bidding
  process to anyone associated with a service
  provider.
  The Unknown Consultant Case

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Letter of Credit Case

• Service Provider offers a Letter of Credit equal
  to the Applicants non-discount share.
• Letter states that the credit is pending E-Rate
  Funding.
• Applicant provides the LOC in response to
  Selective Review questions.
• They also send a budget document that contains a
  line item entitled, contributions and gifts.
  This line item has the exact amount of the LOC.
• Later, Applicant realizes that they should not
  have said that, and sends a second, unsolicited
  clarification.

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The Unknown Consultant

• Small, private religious schools show up
  requesting hundreds of thousands of dollars for
  Internal Connections.
• When PIA calls, the Contact Person clearly knows
  very little about the Program.
• Special Investigations starts to call the
  Applicants and quickly develops a group of
  several hundred applications.
• All have one thing in common they used the same
  E-Rate Consultant.
• Other commonalities
• Usually two apps one for around 20,000 and
  another of IC for 200,000
• The Consultant filed all the forms
• The Applicant ONLY saw the signature page of the
  contract with the Service Provider listed on the
  FCC Form 471.

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The Unknown Consultant (continued)

• Applicants we call tell us they cannot reach
  their Consultant.
• When we try, we cant reach them either. Later,
  we are told the consultant has gone out of
  business.
• Special Investigations identifies six Service
  Providers associated with this consultant.
• When we call the Service Providers we get
  disconnected phone numbers or people who say the
  SP is out of business.
• We send a simple one-page letter asking, Do you
  have the money for your share? Almost all say
  not if their share is 20-30,000.
• One said, 20,000 for Technology? Heck, thats
  my entire school budget!
• The Consultant and the SPs were all new to the
  Program this year.