E-RATE CONSULTANTS’ CONFLICT OF INTEREST

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Aug 132012
 

E-Rate consultants – and applicants using the services of an E-Rate consultant – should take note of a recent Order released by the FCC (DA 12-1189, released July 25, 2012). In that Order, the FCC rejected three appeals of USAC decisions to deny E-Rate funding because the E-rate consultant had a financial relationship with the selected service provider. In the first instance, the applicant had entered into a multi-year service agreement with a company owned by the E-Rate consultant. In the second and third instances, the applicants’ consultant was paid a sales commission by the selected service provider.

The FCC stated that “[a] consultant, acting on behalf of the applicant, exerts great influence on an applicant’s bidding process and thus, should not have a financial relationship with a service provider which it selects (or recommends) on behalf of the applicant.” In the cases before it, the FCC found that the relationships between the consultants and the service providers impaired the applicants’ ability to hold fair and open competitive bidding processes. Such relationships constituted prohibited conflicts of interest in the competitive bidding process, and thus USAC’s denial of E-Rate funds was proper.

For more information about any of this decision or other E-Rate topics, please contact the Troy Law Group (www.troylawgroup.com).

BREAKING NEWS

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Aug 012012
 

Funding thresholds for Priority 2 services in FY2012 and FY2011 have been set. The FCC and USAC Board have approved the following:

• FY2012 Priority 2 funding requests will be approved at 90% and denied at 89% and below for lack of funds.

• FY2011 Priority 2 funding requests will be approved at 88% and denied at 87% and below for lack of funds.

USAC has said that it is targeting next week to issue commitments and denials at these thresholds.

Remember, though, that Program Integrity Assurance (PIA) reviews are ongoing and USAC cannot issue funding decisions until the reviews for all funding requests at all discounts levels on an application are complete.

Approved Priority 1 funding requests will continue to be funded at all discount levels for both FY2012 and FY2011.

For more information about funding thresholds or other E-Rate topics, please contact the Troy Law Group (www.troylawgroup.com).