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).