[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


                    REAUTHORIZATION OF THE FEDERAL 
  COMMUNICATIONS COMMISSION: THE FCC'S FISCAL YEAR 2016 BUDGET REQUEST

=======================================================================

                                HEARING

                               BEFORE THE

             SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 4, 2015

                               __________

                           Serial No. 114-19
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           


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                   COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Missouri               JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
             Subcommittee on Communications and Technology

                          GREG WALDEN, Oregon
                                 Chairman
ROBERT E. LATTA, Ohio                ANNA G. ESHOO, California
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee          PETER WELCH, Vermont
STEVE SCALISE, Louisiana             JOHN A. YARMUTH, Kentucky
LEONARD LANCE, New Jersey            YVETTE D. CLARKE, New York
BRETT GUTHRIE, Kentucky              DAVID LOEBSACK, Iowa
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas                  DIANA DeGETTE, Colorado
ADAM KINZINGER, Illinois             G.K. BUTTERFIELD, North Carolina
GUS M. BILIRAKIS, Florida            DORIS O. MATSUI, California
BILL JOHNSON, Missouri               JERRY McNERNEY, California
BILLY LONG, Missouri                 BEN RAY LUJAN, New Mexico
RENEE L. ELLMERS, North Carolina     FRANK PALLONE, Jr., New Jersey (ex 
CHRIS COLLINS, New York                  officio)
KEVIN CRAMER, North Dakota
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     1
    Prepared statement...........................................     3
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     4
Hon. Robert E. Latta, a Representative in Congress from the State 
  of Ohio, opening statement.....................................     6
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................    43

                               Witnesses

Jon Wilkins, Managing Director, Federal Communications Commission     7
    Prepared statement...........................................    10
    Answers to submitted questions...............................    46

                           Submitted Material

Statement of Consumers Union, submitted by Ms. Eshoo.............    45

 
  REAUTHORIZATION OF THE FEDERAL COMMUNICATIONS COMMISSION: THE FCC'S 
                    FISCAL YEAR 2016 BUDGET REQUEST

                              ----------                              


                        WEDNESDAY, MARCH 4, 2015

                  House of Representatives,
     Subcommittee on Communications and Technology,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:33 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Greg 
Walden (chairman of the subcommittee) presiding.
    Members present: Representatives Walden, Latta, Shimkus, 
Lance, Guthrie, Olson, Pompeo, Kinzinger, Bilirakis, Johnson, 
Collins, Cramer, Eshoo, Clarke, and Pallone (ex officio).
    Staff present: Ray Baum, Senior Policy Advisor for 
Communications and Technology; Leighton Brown, Press Assistant; 
Andy Duberstein, Deputy Press Secretary; Gene Fullano, 
Detailee, Telecom; David Redl, Counsel, Telecom; Charlotte 
Savercool, Legislative Clerk; Jeff Carroll, Democratic Staff 
Director; David Goldman, Democratic Chief Counsel, 
Communications and Technology; Tiffany Guarascio, Democratic 
Deputy Staff Director and Chief Health Advisor; Margaret 
McCarthy, Democratic Professional Staff Member; and Ryan 
Skukowski, Democratic Policy Analyst.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. We will call to order the subcommittee on 
Communications and Technology. And I certainly welcome our 
witness, Mr. Wilkins, from the Federal Communications 
Commission. We are honored to have you with us today.
    We are here today to talk about the FCC's fiscal year 2016 
budget request. Today, as we commence a series of hearings into 
the agency's reauthorization, I hope to start with the basics 
and take a close look at the Federal Communication Commission's 
budget request for fiscal year 2016. This is similar to the 
hearing we had last year on the FCC's budget request, and I 
believe fully, as the oversight committee, we need to always 
take this action.
    This year is a request for $530 million in spending 
authority that, if approved, would be the highest spending 
authority in the history of the agency. When the FCC was last 
formally reauthorized in 1990, its appropriated budget was a 
little shy of $117 million.
    Much has changed since the last reauthorization of the 
commission. The industries and markets, certainly, that the 
commission overseas have, without question, undergone dramatic 
changes and continue to evolve at a rapid pace. But in the 
intervening years the FCC has struggled to reflect the 
evolution of technology that has brought about the integration 
of voice, video, and data services and the significant shifts 
in consumer consumption patterns that have resulted.
    On the contrary, because it is structured in much the same 
way as its governing legislation, the Communications Act of 
1934, the agency continues to reflect a regulatory scheme 
predicated on separate titles for specific network technologies 
and services. Now, this siloed scheme is out of touch with the 
convergence of technologies in the modern digital era and 
deserves reform. Nowhere is the Communications Act's failure of 
imagination more evident than in the FCC's decision to 
reclassify broadband service under rules developed to regulate 
the telegraph's heyday, by restructuring a regulatory scheme 
that had been going the way of the single-use copper line 
telephone network it was intended to govern, three FCC 
commissioners repudiated years of light touch regulation of the 
Internet under both Republican and Democratic administrations.
    Now, all this is something some of have differing opinions 
on in this subcommittee. Our purpose today is not to delve into 
the issues of net neutrality, but rather to get into the issues 
of the way the agency has operated and the budget they propose.
    The FCC has requested an increase in its budget to $505 
million, including $388 million in budget authority from 
regulatory fee collections, and $117 million from auction 
funds. That is an increase of $59 million from the fiscal year 
2015 appropriation. Specific items noted in the request 
includes the usual pay raises for personnel, but also includes 
funds for the implementation of the public safety answering 
points do-not-call registry, as required by the Middle Class 
Tax Relief and Job Creation Act of 2012, $3 million in costs 
for the National Broadband Map that the FCC inherited from NTIA 
when it ran out of stimulus funds to pay for it, a $5.8 million 
increase in recurring and a $11.7 million one-time increase in 
IT costs, $51 million in additional funds as the agency 
prepares to move or restack as their building lease expiration 
date approaches.
    One component of the request that resonates in particular, 
and is in addition to the $59 million increase in funding, is a 
request for a $25 million transfer from the Universal Service 
Fund to pay the FCC's costs related to administration of the 
fund, raising the total increase to $84 million.
    In the past, Congress funded the FCC's Office of Inspector 
General with a transfer of USF funds for the purpose of 
bolstering audits and investigations to address waste, fraud, 
and abuse in the fund following a GAO report, and those funds 
have been expended by the Office of Inspector General over the 
last several years. The request for $25 million is not for 
audits and investigations by the Office of Inspector General 
which, based on our last hearing, appears to have a rocky 
relationship with the chairman's office, but to reimburse the 
commission for the costs of performing the core function of 
implementing section 254 of the Communications Act. This is a 
disturbing proposal, I would tell you from my perspective. Mr. 
Wilkins states in his testimony that recovering these costs 
from the fund will relieve the burden on companies with no 
relationship to USF that pay fees to the commission. However, 
this realignment, as it is called, would create a separate 
funding stream for the agency that comes directly out of the 
pockets of consumers to implement and support a subsidy program 
the size of which is determined by the FCC and that has become 
so large and burdensome that it appears that it has outgrown 
the FCC's capacity for adequate oversight. It is even more 
disturbing when we recognize the fact that the Universal 
Service Administrative Company, USAC, an independent 
organization designated to manage the fund, already draws in 
excess of $100 million a year from the fund for its 
administration and oversight, and that the FCC's Office of 
Inspector General dedicates a portion of its funding to USF 
audits and investigations. According to its last report, USAC 
had 356 employees at a cost of $41.6 million.
    We have more work to do, obviously. We welcome you here.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    Welcome to this morning's hearing on the FCC's Fiscal Year 
2016 Budget Request. Today, as we commence a series of hearings 
into the agency's reauthorization, I hope to start with the 
basics and take a close look at the FCC's budget request for 
Fiscal Year 2016--a request for $530 million in spending 
authority that if approved, would be the highest funding level 
in the agency's history. When the FCC was last formally 
reauthorized in 1990, its appropriated budget was a little shy 
of $117 million.
    Much has changed since the last reauthorization of the 
commission. The industries and markets the Commission oversees 
have without question undergone dramatic changes and continue 
to evolve at a rapid pace. But in the intervening years the FCC 
has struggled to reflect the evolution of technology that has 
brought about the integration of voice, video, and data 
services and the significant shifts in consumer consumption 
patterns that have resulted. On the contrary, because it is 
structured in much the same way as its governing legislation, 
the Communications Act of 1934, the agency continues to reflect 
a regulatory scheme predicated on separate titles for specific 
network technologies and services: this ``siloed'' scheme is 
out of touch with the convergence of technologies in the modern 
digital era and deserves reform.
    Nowhere is the Communications Act's failure of imagination 
more evident than in the FCC's decision to reclassify broadband 
service under rules developed to regulate the telegraph's 
heyday--By resurrecting a regulatory scheme that had been going 
the way of the single-use copper line telephone network it was 
intended to govern, three FCC commissioners repudiated years of 
light touch regulation of the Internet under both Republican 
and Democratic administrations. This action suggests an agency 
seemingly illsuited to address the needs of the modern 
communications ecosystem and aggressively expanding its 
regulatory ambit to compensate for its growing obsolescence.
    During my time as chairman of this subcommittee, we have 
held several hearings focused on oversight of the FCC. The FCC 
chairman and commissioners have joined us multiple times to 
discuss agency process and the wide range of issues before the 
commission, and just last fall, the Managing Director and 
Inspector General were here to examine the agency's budget and 
management. Today's hearing is an opportunity to continue this 
work. In many respects, the budget request is like a window 
into the agency itself. By following the money we can identify 
the agency's priorities and those functions that have evolved 
to define the agency.
    The FCC has requested an increase in its budget to $505 
million, including $388 million in budget authority from 
regulatory fee collections and $117 million from auction 
funds--an increase of $59 million from the FY2015 
appropriation. Specific items noted in the request includes the 
usual pay raises for personnel, but also includes funds for the 
implementation of the public safety answering points do-not-
call registry, as required by the Middle Class Tax Relief and 
Job Creation Act of 2012, $3 million in costs for the National 
Broadband Map that the FCC inherited from NTIA when it ran out 
of stimulus funds to pay for it, a $5.8 million increase in 
recurring and a $ 11.7 million one-time increase in IT costs, 
and $51 million in additional funds as the agency prepares to 
move or restack as their building lease expiration date 
approaches.
    One component of the request that resonates in particular, 
and is in addition to the $59 million increase in funding, is a 
request for a $25 million transfer from the Universal Service 
Fund to pay the FCC's costs related to administration of the 
fund--raising the total increase to $84 million. In the past, 
Congress funded the FCC's Office of Inspector General with a 
transfer of USF funds for the purpose of bolstering audits and 
investigations to address waste, fraud, and abuse in the Fund 
following a GAO report--and those funds have been expended by 
the Office of Inspector General over the last several years. 
The request for $25 million is not for audits and 
investigations by the Office of Inspector General--which based 
on our last hearing appears to have a rocky relationship with 
the chairman's office--but to reimburse the commission for the 
costs of performing the core function of implementing section 
254 of the Communications Act. This is a disturbing proposal. 
Mr. Wilkins states in his testimony that recovering these costs 
from the fund will relieve the burden on companies with no 
relationship to USF that pay fees to the commission. However, 
this ``realignment'' as it is called would create a separate 
funding stream for the agency that comes directly out of the 
pockets of consumers to implement and support a subsidy program 
the size of which is determined by the FCC and that has become 
so large and burdensome that it appears that it has outgrown 
the FCC's capacity for adequate oversight. It is even more 
disturbing when we recognize the fact that the Universal 
Service Administrative Company--USAC, an independent 
organization designated to manage the Fund already draws in 
excess of $100 million a year from the Fund for its 
administration and oversight and that the FCC's Office of 
Inspector General dedicates a portion of its funding to USF 
audits and investigations. According to its last annual report, 
USAC had 356 employees at a cost of $41.6 million.
    This proposed transfer of funds out of the Universal 
Service Fund alone raises significant questions about the FCC's 
budget and the ever increasing size of the Fund. Taken in 
conjunction with the request for the first $51 million of an 
estimated the $71 million in costs for the FCC's relocation and 
other proposed increases there is much to discuss. We are 
fortunate to have the individual responsible for managing the 
Commission's budget and financial programs with us again, Mr. 
Jon Wilkins, the Managing Director of the FCC. It is my hope 
that our conversations today will pull back the curtain and 
provide the committee and the American people with a better 
understanding of the Commission's financial and performance 
goals for Fiscal Year 2016 and what the Commission is really up 
to.

    Mr. Walden. I have used up the balance of my time. I now 
recognize my friend and colleague from California, Ms. Eshoo.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Thank you very much, Mr. Chairman. And good 
morning to you and to the Members, and to Mr. Wilkins. Welcome.
    Today's topic is an important one; the FCC's budget, and we 
again welcome you back to the subcommittee, Mr. Wilkins.
    I noticed that we have some very young people in the 
audience, and it occurred to me, I wonder if they know what we 
are talking about, if they are going to get this. So let us see 
if we can't keep it at an elemental level so that you 
understand what the committee is doing and why we are here 
today. It is very important because we are reviewing the 
proposed budget for a very important agency, the Federal 
Communications Commission.
    I think the questions that I would like to see addressed 
anyway, because I think that they are very high import, are the 
following. And that is, will the agency have the necessary 
staff to carry out the world's first voluntary incentives 
spectrum auction, along with the IP transition, the review of 
pending mergers, and USF reform. These are all topline 
priorities, not only for the agency, but for this committee 
that has really shaped those policies that are carried out by 
the FCC. So I want to make sure that you have the resources to 
do that.
    Will the agency be able to upgrade its IT infrastructure so 
that public comments on issues that are important to the 
American people can be filed without crashing your Web site. We 
saw what happened last year when there were over four million 
people that weighed in, voicing their support for enforceable 
net neutrality rules, and I would like to hear about that, what 
plan do you have and what is built into your budget to handle 
that. Will the agency remain on track to move its headquarters 
within the next 2 years? It is my understanding that by 
reducing the agency's footprint, that it is estimated that 
approximately $119 million of taxpayer dollars would be saved 
over 15 years. Now, that may not be the biggest number in the 
Federal Government, but I think anyone that is in the room 
would welcome having $119 million in their checking account 
over the next 15 years. Finally, will the FCC be able to 
develop and implement, and I think the chairman raised this, a 
do-not-call registry for telephone numbers used by 911 call 
centers. This is, again, another high priority of ours. 
Certainly, it has been mine, going back to the '90s. This 
provision was included in the Public Safety and Spectrum Act 
that we wrote in this committee in 2012 to ensure that 
automatic dialing or robo-call equipment does not tie up public 
safety lines, and unnecessarily divert critical emergency 
resources.
    So I don't think these are small questions. They are 
important ones, and they track on a parallel track what the 
subcommittee's priorities and legislation has been, and 
especially when the agency, and this is my understanding, you 
can confirm it or deny it, that the agency is employing today 
the lowest number of full-time staff in 30 years. The agency 
has to have the tools and the resources to fulfill its mission, 
which means more successful spectrum auctions, like the nearly 
$45 billion, we are so proud of that, we really are very proud 
of that, that was raised earlier this year.
    So whether it is protecting the public interest, promoting 
competition, enhancing innovation, these are all of the core of 
the mission of the FCC, and we look forward to hearing your 
testimony. Thank you for your service, and I look forward to 
your directing answers to us on the questions that I pose.
    And with that, I yield back. Thank you, Mr. Chairman.
    Mr. Walden. Gentlelady yields back the balance of her time.
    The chairman recognizes the gentleman from----
    Ms. Eshoo. I forgot something, Mr. Chairman. May I ask 
for----
    Mr. Walden. Of course.
    Ms. Eshoo [continuing]. Unanimous consent to submit a 
letter for the record from Consumers Union? It regards the 
importance of the FCC's IT modernization for American 
consumers.
    Mr. Walden. Without objection.
    Ms. Eshoo. Thank you.
    [The information appears at the conclusion of the hearing.]
    Mr. Walden. Now we recognize the gentleman from Ohio, the 
vice chair of the subcommittee on Communications and 
Technology, Mr. Latta, for 5 minutes.

OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Latta. Well, thank you very much, Mr. Chairman. And, 
Mr. Wilkins, thanks for being with us today.
    Oversight of the FCC serves as a critical function in 
maintaining accountability and transparency at the agency. 
Given the FCC's integral role in the information and 
communications technology marketplace, we have a responsibility 
to ensure that the processes at the commission are not 
wasteful, and reflect a capability to handle such significant 
parts of our Nation's economy. With that said, today's hearing 
represents a valuable opportunity to examine the commission's 
budget management and spending practices. Additionally, it is 
important for us to gain a better understanding of the 
challenges facing the agency that contribute to limiting the 
efficiency of its operations. As a Representative, I take great 
responsibility in ensuring that taxpayer dollars are spent 
wisely and effectively.
    I look forward to discussing how Congress can work with the 
commission to ensure the advancement of the communications and 
technology economy in a fiscally-responsible manner.
    And, Mr. Chairman, I yield back the balance of my time.
    Mr. Walden. Gentleman yields back the balance of his time.
    Chair recognizes the ranking member of the full committee, 
the gentleman from New Jersey, Mr. Pallone, for 5 minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. I want to thank the chairman and our Ranking 
Member Eshoo for having this hearing, and welcome Managing 
Director Wilkins.
    We are here today to take a look at the Federal 
Communications Commission's fiscal year 2016 budget estimates. 
The FCC has broad jurisdiction. It oversees industries that 
account for approximately \1/6\ of the economy, and growing, 
but it also has been operating with the same budget for the 
better part of a decade now, and that does not account for the 
damage done by the sequester. So I should note that the FCC 
operates with fewer than 1,700 full-time employees, and I would 
say that that is certainly a small but efficient agency.
    This year, the FCC asked for a $48 million increase in its 
budget authority over last year. The vast majority of that 
increase would pay to move the commission's headquarters to a 
new home. Overall, the move would create a smaller footprint 
for the agency, which will save $119 million over the next 15 
years. Most of the remaining increase is to upgrade the 
commission's aging and creaky information technology 
infrastructure, which Ms. Eshoo mentioned, and that is an 
update that will net a savings of up to $10 million over the 
next 5 years. This is the same computer system that famously 
ground to a halt under the weight of 4,000,000 Americans 
writing in to voice their opinions about network neutrality, 
and 4,000,000 is certainly an eye-popping number when it comes 
to comments on a single proceeding. Modern computers, however, 
should be able to handle that load without blinking.
    Now, together, these temporary budget increases will save 
the government nearly $130 million in the long run. Rejecting 
these costs out-of-hand would be penny wise but pound foolish, 
and fortunately, this subcommittee is practiced at reviewing 
these types of budget requests.
    Today's hearing is actually different than other FCC budget 
hearings for a couple of reasons. First, it is the start of an 
effort to revive an FCC reauthorization process that has been 
dormant for 25 years, with the struggle Republicans have been 
facing to fund the Department of Homeland Security, however, I 
doubt the public wants us to create a brand new funding cliff. 
Second, the timing of today's budget hearing has raised some 
eyebrows, coming just days after the commission adopted new 
network neutrality protections. And now, that might be a 
coincidence, and I am hopeful it is because I think we should 
all agree that this committee has a responsibility to conduct a 
genuine oversight. We must make sure the FCC's dollars go as 
far as possible, but we should also ask whether the commission 
has sufficient funding to maintain its critical services for 
the public, and together, it is our job to make sure that we 
strike the right balance.
    And I guess there is nobody else, so I will yield the 
balance of my time.
    Mr. Walden. Gentleman yields back the balance of his time.
    As I said in my opening statement, this is an annual 
process authorization committees are supposed to go through to 
review budgets, so that is why we are here today.
    And, Mr. Wilkins, we are delighted you could join us today 
as the managing director for the Federal Communications 
Commission, a big duty, and we welcome your testimony and the 
work you do down there. Please go ahead.

     STATEMENT OF JON WILKINS, MANAGING DIRECTOR, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. Wilkins. Thank you, Chairman Walden, Ranking Member 
Eshoo, members of the subcommittee. I do appreciate the chance 
to be here today to talk to you about our budget request.
    I submitted my written testimony. What I thought I would 
use my introductory time for is just to say a few words about 
each of the four slides that I submitted, because they provide 
some good context for our budget.
    [Slide shown.]
    The first slide. So just taking the historical perspective, 
the FCC does have a two-plus decades record of being a very 
good fiscal steward for the U.S. Government. So the left-hand 
side of the chart shows that we are now closing in on $100 
billion of revenue raised for the Treasury since 1994, 
overwhelmingly from our auctions proceeds. Over that same time 
frame, we have spent less than $8 billion on agency operation. 
So for the U.S. Treasury, that means that 8 cents spent on the 
FCC generates $1, and of course, even that 8 cents doesn't come 
from general revenues, it comes either from retained auction 
proceeds for a very tiny portion of those auction revenues, or 
from our Section 9 reg. fees.
    Now, our budget request for '16 is significant, and exactly 
as you said, Chairman Walden, it is for $84 million. I just 
want to make three points about that request. The first one is 
that the lion's share of that request, 71 percent, is from a 
management standpoint, these are unavoidable costs; these are 
not costs that management is, for example, seeking as a new 
initiative. The bulk of it is for the move. Our current lease 
expires in October 2017, and we do have to spend some money to 
reap the long-term benefits of lower lease costs. We are 
requesting $21 million for IT. The bulk of that is to finish 
the job that we started to truly transform and modernize our IT 
infrastructure. It is by far our most important management 
initiative. It will bring benefits and costs in efficiency and 
in operations. And then the third point, these are the only 
things we are requesting more funds for. In the last several 
years, we have asked for more money from more people, for 
example. We are not doing that. We heard the message and, in 
fact, over the last year we have had a chance to look at our 
workforce. We think we can do the job with the people we have 
if we can upgrade the IT. So it is a big request, but it is 
really just for these things.
    Now, to put that budget request in context, for the last 6 
fiscal years, on the left-hand side, the FCC has been 
essentially flat. Our auctions funds was at $85 million for 9 
years. It has gone up 2 of the last 3 years, specifically for 
the incentive auctions. We appreciate that, and that work is 
going well. In our non-auctions area though, we have been 
actually flat in nominal terms. We had a very small increase 
from '11 to '12 that was more than offset by sequestration, and 
in real terms, our purchasing power has gone down. So we are 
mainly a people-centered agency. Federal pay increase alone 
increases our cost by a couple of million dollars a year. Our 
rent goes up a little bit every year. So to put that in 
context, fiscal year 2015, our flat budget was paired up 
against almost $7 million of increased costs just for our 
people and our rent and other contracts. That is about 40 to 50 
people. In a given year, the FCC loses about 100, 120 people, 
just to retirement and other attrition. So what the flat line 
really means is that for every two people that leave the 
commission right now, we can only replace one. And the right-
hand side shows the results of that. As Member Eshoo said, our 
staffing is at its lowest, again, in '15, and our current 
management plan is for it to go even lower in 2016; more than 
100 lower than 6 years ago, and more than 200 lower from the 
20-year average.
    Finally, IT we think really is the solution to this. There 
is no question that we can use IT to do our work more 
efficiently, more transparently, and to support all the things 
that Congress wants us to do. Over the last year, we have put 
in place a very strong plan. We have actually started to move 
it down the field. Three main areas, infrastructure costs. As 
of today, we still have over 200 very expensive large servers 
sitting in very expensive downtown real estate, being serviced 
by very expensive direct contractors. Using some reprogramming 
money we got last year, we have just finalized a contract to 
move those to an off-site facility. It is the first step in 
moving to a truly low-cost, secure cloud, efficient 
environment. When you do that, you can improve the way you work 
with data. So at the FCC, we have over 100,000 data objects, 
including multiple definitions of the same basic thing that, to 
a business person, seems ridiculous, 40 terabytes of data, very 
expensive. When we have the infrastructure upgraded, we can 
then essentially put all that data into a similar shared 
environment that we can use much more efficiently. And that 
then gets to the third piece; mission systems. That is where we 
really saved the most money. We right now do most of our 
software development on kind of a custom model. Everything is 
a, you know, it is a custom renovation, if you will. We want to 
get to a world where it is, you know, it is IKEA, you know, you 
just have the pieces, it is pretty easy to build. When the 
infrastructure and the data are modernized, we think that we 
can cut our development costs by 50 to 75 percent and the times 
to be shorter. So this is a thing that, from a management 
perspective, we just want to plant our flag. We want to be able 
to do this, and it will allow us to do a lot of things more 
efficiently, and better do what Congress needs us to do.
    And with that, I am happy to take any questions. Thank you 
again.
    [The prepared statement of Mr. Wilkins follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Walden. I appreciate that, and I appreciate the 
leadership you have given.
    I want to go back to this ratio, the 13 times, because $79 
billion of that actually is from three auctions----
    Mr. Wilkins. True.
    Mr. Walden [continuing]. Correct? You are not going to sit 
here and guarantee me that you are going to return 13 times 
investment every year, year in and year out. It is really 
pretty lumpy in there.
    Mr. Wilkins. It is lumpy, and----
    Mr. Walden. Yes.
    Mr. Wilkins [continuing]. Actually, until the most recent 
AWS-3 auction, the average was around $2.2 billion a year.
    Mr. Walden. Yes.
    Mr. Wilkins. Actually, when you add in $45 billion, that 
goes up quite a bit----
    Mr. Walden. Yes, right.
    Mr. Wilkins [continuing]. But it will be lumpy. That is the 
nature of auctions----
    Mr. Walden. Yes.
    Mr. Wilkins [continuing]. But on the long----
    Mr. Walden. But the commission itself is not generating 13 
times investment year in and year out.
    Mr. Wilkins. Certainly, it depends on auction proceeds.
    Mr. Walden. There you go. I believe you are aware that the 
committee sent an oversight request to the commission on 
February 18, asking for a set of information related to the 
commission's regulatory and administrative processes, that 
request was signed by me and Chairman Upton and Chairman 
Murphy, motivated by a concern with the variety of lapses that 
we perceive in the way the commission has been conducting its 
regulatory and administrative business. As you may be aware, 
the due date for that production of that information was today, 
and I was distressed to be informed by my staff a little while 
ago that that apparently is not going to be available today, 
which we had hoped. I don't know how much you have been 
involved in that matter, but I hope you will convey the 
following message to the chairman's office, that we understand 
the commission and staff is very busy, we do not intend to pose 
meaningless or trivial obligations, but we do take seriously 
our oversight responsibility. With respect to this specific 
request, I would strongly recommend the chairman's staff make 
available every effort to comply with our information request 
by today's deadline. Based on the rigor of the response, we 
will make every effort to work with the chairman and his staff 
to be fair and reasonable.
    Do you have anything to add to that?
    Mr. Wilkins. No. I absolutely will convey that back to the 
chairman's staff when I am back at the commission later.
    Mr. Walden. So there have been some issues come up lately I 
wanted to ask you about, given your expansive role there. Does 
the FCC have policies or rules regarding staff use of social 
media, such as Twitter, in their capacity as employees of the 
commission, and do these policies or rules proscribe a 
recordkeeping and retention policy for those communications?
    Mr. Wilkins. So any use of personal, whether it is e-mail 
or social media, certainly is subject to general Federal 
Records Act requirements----
    Mr. Walden. Right.
    Mr. Wilkins [continuing]. Including the schedules that we 
have in place. Those rules, as you know, certainly do require 
if you are doing things that are official government business 
in those environments, it is the responsibility of the employee 
to bring them back into our records environment.
    Mr. Walden. All right. Recently, it was reported that a 
senior member of the Greenhill and Company had left his 
position and joined the commission as a volunteer. I have a 
couple of questions here. Could you describe what he will be 
doing? Didn't the commission contract with Greenhill to perform 
work related to the auction? I would like to know about that 
contract, was it competitively bid, was Greenhill the lowest-
cost bidder, when was it awarded, you know, the basic sort of 
oversight that we need to do here. What can you tell me about 
this issue involving Greenhill and Company?
    Mr. Wilkins. So let me follow up on the exact details of 
that contract. Greenhill, as you know, it is an investment firm 
that we contracted with to do estimates of the value of 
broadcast licenses----
    Mr. Walden. OK.
    Mr. Wilkins [continuing]. For the spectrum auction, as part 
of that process.
    Mr. Walden. Right.
    Mr. Wilkins. The results of their work has been shared with 
quite a few broadcasters around the country.
    Mr. Walden. Yes.
    Mr. Wilkins. I think we have found them pretty valuable. In 
terms of that individual, we will follow up with you on the 
details.
    Mr. Walden. Yes, we will have more questions on that for 
the record, but the extent to which you can follow up, and we 
are trying to get this information back because, you know, the 
week after--when we return after next week, we will have all 
five commissioners here, and so it would be, I think, helpful 
for that hearing if we had----
    Mr. Wilkins. OK.
    Mr. Walden [continuing]. Some of this information. And so 
we will follow up with more of the questions related to 
Greenhill.
    So let me move on to the USF issue because that is one that 
has obviously gotten our attention. It appears that a little 
less than \1/2\ of the $25 million in the Universal Service 
Fund is going to the Wireline Competition Bureau, is that 
accurate?
    Mr. Wilkins. Yes.
    Mr. Walden. And is any of that money going to the Wireline 
Competition Bureau?
    Mr. Wilkins. Yes.
    Mr. Walden. And for what purpose and what kind of USF work 
does WCB do?
    Mr. Wilkins. Yes. So WCB, of course, are the program owners 
of each of the four main universal service programs. Everything 
from policy development to administration of policies, 
everything from rules to appeals, sort of all of the day-to-day 
operations of the program in the legal sense.
    Mr. Walden. And is any of that money going to the 
International Bureau, and if so, for what purpose and what kind 
of work do they do?
    Mr. Wilkins. No. That should not go to the International 
Bureau unless I am missing some small detail, but no.
    Mr. Walden. All right.
    Mr. Wilkins. It is definitely intended to focus on 
activities related to USF.
    Mr. Walden. And is any of that money going to the Office of 
Legislation Affairs? There are other bureaus and offices that 
are slated to get some of this money, correct?
    Mr. Wilkins. No. Just more broadly, we developed that $25 
million figure based on the amount of activities related to USF 
across the commission, and it is all activities, it is not 
just----
    Mr. Walden. Right.
    Mr. Wilkins [continuing]. Audits, for example. A very small 
portion of that, if there was leg. affairs work-related to USF 
communications with Congress, for example----
    Mr. Walden. Right.
    Mr. Wilkins [continuing]. I think we would include that. 
The idea was to fully capture the costs related to USF work.
    Mr. Walden. All right. I have a couple of other issues for 
the record that I will add to that, but my time has expired. 
And again, I thank you for your testimony and the good work you 
do.
    And now, I would recognize the gentlelady from California, 
Ms. Eshoo.
    Ms. Eshoo. Thank you, Mr. Chairman, and thank you again for 
having this hearing. It is always an important one, and our 
oversight is just essential. It is one of the major 
responsibilities that we have in the Congress.
    And, Mr. Wilkins, you are a terrific testifier.
    Mr. Wilkins. Thank you.
    Mr. Eshoo. You were brief in your opening statement, you 
didn't have to read anything, you are smart, you know the 
agency, and it is very helpful to us because you give very 
direct answers.
    You testified that the FCC plans a net reduction of 37 
full-time employees for fiscal year 2016. We know that agencies 
can essentially cook the books by reducing the number of full-
time employees, but then hire them back as contractors. Is that 
anywhere near the case with the agency? Can we just dispense of 
this as something that is not going to take place? Can you 
assure us that it is not----
    Mr. Wilkins. Yes.
    Ms. Eshoo [continuing]. Going to?
    Mr. Wilkins. Absolutely.
    Ms. Eshoo. Well, that is good news.
    I want to congratulate the agency on its recent efforts to 
crackdown on consumer billing fraud. Just last week, the FCC 
announced a $9 million fine against a company that was 
illegally billing consumers, and switching their telephone 
company without the consent of the consumers. It makes me 
really wonder why people will do what they do. I guess they 
think they can get away with it, but it is an important 
function of the FCC.
    So specifically, how does your budget request help the FCC 
continue this important consumer protection work?
    Mr. Wilkins. Yes.
    Ms. Eshoo. Where is that buried in the budget----
    Mr. Wilkins. Sure.
    Ms. Eshoo [continuing]. And do you know how much it is?
    Mr. Wilkins. Well, the Enforcement Bureau is around 240 
people right now----
    Ms. Eshoo. Yes.
    Mr. Wilkins [continuing]. But we are not projecting staff 
increases for any bureau including the Enforcement Bureau.
    Ms. Eshoo. Yes.
    Mr. Wilkins. The Enforcement Bureau, actually, is a great 
example of how our IT actually can enable more effective use of 
the people that we have.
    Ms. Eshoo. Yes.
    Mr. Wilkins. And it actually relates to process reform. 
Process reform in my office is an internal support exercise. 
Interestingly, the Enforcement Bureau is the first large bureau 
at the commission that has, what I would call, a real tracking 
system of how they do work. That was put in place in 2012.
    Ms. Eshoo. Yes.
    Mr. Wilkins. We have a new bureau chief there who, I can 
tell you, is very aggressively using that sort of metrics to 
make sure he is deploying his staff on them most important 
areas, such as the ones that you mentioned.
    Ms. Eshoo. Yes.
    Mr. Wilkins. So the way we think about it is, we don't need 
to add dozens of people to any given bureau to deliver those 
results. We think we have very good people, we just want to use 
them more efficiently----
    Ms. Eshoo. Yes.
    Mr. Wilkins [continuing]. And we see a lot of opportunities 
for the IT to do that.
    Ms. Eshoo. Right.
    Ms. Eshoo. On the whole issue of IT, I think the chairman 
raised this, you mentioned it in your opening statement, my 
experience in Congress, both on this committee and as a member 
of the Intelligence Committee, is that the government is really 
lousy when it comes to procurement of IT. People don't know 
what they are buying.
    Mr. Wilkins. Yes.
    Ms. Eshoo. And I mean you can have a GS-14 and they may 
know the agency really well, but they really don't know what 
they are buying. People can sell them just about anything. A 
lot of taxpayer dollars wasted.
    My question to you is, and you started to mention a part of 
this is, what you plan to purchase relative to the IT system to 
make it robust and 21st century and effective, and all of that. 
Is this being built for you, or is it off-the-shelf?
    Mr. Wilkins. Right. Off-the-shelf.
    Ms. Eshoo. Great. That is the best answer you could have 
given me. Nothing to pursue there. That was just what I wanted 
to hear.
    On the AWS-3 auction, and the near $45 billion that it 
raised, we were very specific about where those dollars were to 
be applied. What I would like to know is when will these funds 
be available for obligation?
    Mr. Wilkins. OK. So we have over $40 billion in our FCC 
accounted treasury----
    Ms. Eshoo. Yes.
    Mr. Wilkins [continuing]. For the close of the auction. 
There is the usual post-auction--any disputes, all issues have 
to be resolved. The licenses then can be issued by the Wireless 
Bureau----
    Ms. Eshoo. Yes.
    Mr. Wilkins [continuing]. And then the money can flow to--
--
    Ms. Eshoo. So when do you think that money will be 
obligated?
    Mr. Wilkins. Congresswoman, I can't give you an estimate, 
all I can say is we are working on it as fast as we can. We 
know----
    Ms. Eshoo. No, but I mean do you think it is going to be in 
a year or 6 months, or just some ballpark.
    Mr. Wilkins. I think that the ballpark, it is within a 
year----
    Ms. Eshoo. Yes.
    Mr. Wilkins [continuing]. But in this case, obviously, it 
is a very high dollar auction, lots of questions----
    Ms. Eshoo. Right.
    Mr. Wilkins [continuing]. All I can say is we will move as 
quickly as we can.
    Ms. Eshoo. OK. There has been a lot of attention given to 
the need for enhanced location accuracy when calling 911 from a 
wireless phone. Many landline phones in large office buildings 
still only provide the building's address. Where is the FCC on 
this? If you had to make a 911 call----
    Mr. Wilkins. Internally?
    Ms. Eshoo [continuing]. Yes. Tell me how it would work.
    Mr. Wilkins. So----
    Ms. Eshoo. Is it going to work or----
    Mr. Wilkins. Yes.
    Ms. Eshoo [continuing]. Is it in the works that it is going 
to work, or----
    Mr. Wilkins. If 911 is called within our facilities, we can 
identify where in the building the call came from. That is an 
issue in and of itself; is it eighth floor, fifth floor, 
wherever. So we have a process where our security team knows 
when the call goes out, it goes through to first responders, 
but then we also----
    Ms. Eshoo. Well, I know what the process is with first 
responders and all that, but----
    Voice. You dial 911.
    Ms. Eshoo. Yes, exactly. You dial 911, but I want to know 
what happens after that. Does the first responders, do they 
have the granular location information----
    Mr. Wilkins. Yes, our----
    Ms. Eshoo [continuing]. Do callers need to dial an extra 9 
before the 911?
    Mr. Wilkins. Yes. Our system, we do dial the extra 9. So we 
are 9911.
    Ms. Eshoo. Are you going to fix that?
    Mr. Wilkins. We service a lot of agencies. There is a----
    Ms. Eshoo. Are you going to get rid of the 9?
    Mr. Wilkins. There are mixed practices out there. And then 
in terms of location, our security team knows where in the 
building the call came from, both tells responders and then 
also delivers our folks there.
    Ms. Eshoo. Yes, well, you are really not behind the 8 ball 
on this. That really needs to be upgraded, and especially that 
it is the FCC. You should be the example, not only for the rest 
of the Federal Government, but for the entire country, so you 
need to work on that.
    My time is up, Mr. Chairman. Thank you.
    Mr. Walden. You are welcome.
    Ms. Eshoo. Thank you, Mr. Wilkins.
    Mr. Walden. Thank you, Mr. Wilkins.
    We will now turn to the vice chair of the subcommittee, Mr. 
Latta.
    Mr. Latta. Thank you, Mr. Chairman. Again, Mr. Wilkins, 
thanks very much for being here, and thanks for your testimony.
    The Inspector General is required to conduct audits of the 
commission's financial statements. Did the IG audit the 
commission's fiscal year 2014 financial statements?
    Mr. Wilkins. Yes.
    Mr. Latta. Did the audit report a material weakness with 
regard to the Universal Service Fund?
    Mr. Wilkins. Yes.
    Mr. Latta. Could you describe what those weaknesses were or 
are?
    Mr. Wilkins. Yes. It was a specific material weakness that 
related to the way USAC, or the Universal Service 
Administrative Company, reconciled its invoice amounts against 
obligated funds. It specifically related to the extent of the 
invoice deadlines in a particular year, and their systems 
didn't automatically report back to their obligation system. 
They actually found the problem. We were aware of it before the 
auditors came in, of course. We told the auditors. So the 
auditors, quite appropriately, said this is a problem to fix, 
but no money was lost, it actually was a management step that 
was identified.
    Mr. Latta. So there was no impact on any monies out there?
    Mr. Wilkins. No. No money was lost.
    Mr. Latta. OK. And did you say has this weakness been 
corrected and identified?
    Mr. Wilkins. Yes.
    Mr. Latta. OK.
    Mr. Wilkins. Yes.
    Mr. Latta. And how far back did that go?
    Mr. Wilkins. That was just from 1 year because they changed 
the invoice system for 1 year.
    Mr. Latta. OK. And also, I guess to follow up on that, is 
this the same issue that we discussed during your last visit 
here, and is it associated with any new financial system?
    Mr. Wilkins. No, that is our FCC genesis system. This issue 
you are raising was at USAC, which is a separate----
    Mr. Latta. OK, and who is the contractor?
    Mr. Wilkins. For our system?
    Mr. Latta. Right.
    Mr. Wilkins. A company called CGI.
    Mr. Latta. CGI, OK, thank you. And again, in fiscal year 
2016, the budget request, it states that the commission is in 
the process of creating a Joint USF Antifraud Taskforce to 
combine resources agency-wide.
    Mr. Wilkins. Yes.
    Mr. Latta. And I appreciate the effort for a more targeted 
approach to identify and prevent fraudulent activities within 
USF, however, the agency has requested $10 million for 
antifraud efforts within USF. How was this amount determined 
for the $10 million?
    Mr. Wilkins. Right. So we think that the need to have that 
joint effort is very important. What we are doing though is 
redeploying resources we have to staff it, whereas a year ago 
we said actually give us more money to hire more people. And I 
think it is an example of a year in there as the senior 
management team looking very hard at the people we have and 
where we can be more efficient, we said let us use the FTEs we 
have to do this work, instead of asking for more.
    Mr. Latta. OK. And could you give a specific breakdown of 
that cost, for that $10 million?
    Mr. Wilkins. Yes, so in 2015 we requested $10.8 million for 
45 FTEs, I believe the breakdown was 17 for the Enforcement 
Bureau, I want to say 20 for the Wireline Competition Bureau, 
another 10 for my office, and the rest for the IG, I believe. I 
might be off by one or two, but that was the rough breakdown. 
We are not going to have that high of a staffing level so, for 
example, instead of those 17 for the Enforcement Bureau, right 
now that USF enforcement component of the Enforcement Bureau, 
it was five people, and those are roles that we have filled as 
people have left. So the group will not be as big, but as we 
have the opportunity to reallocate resources we have, we think 
we will staff that up because we are seeing lots of benefits 
from what we are doing.
    Mr. Latta. OK. Well, and additionally, how much of the 
money is expected to be recovered through taxes of the 
taskforce and other antifraud measures?
    Mr. Wilkins. Well, certainly, and I think the IG would 
agree with this too, $1 of enforcement or oversight in USF 
tends to generate positive, more than $1 of returns from those 
activities. Certainly, our reason for creating that effort is 
because universal service, all those programs have been going 
through lots of change over the last 2 or 3 years, essentially 
around modernizing it for broadband. When you do that, the 
rules change. Simple compliance can be harder for people to 
participate in it because the rules are different. Obviously, 
USF--and sometimes you have criminal or fraud issues, but 
frankly, compliance with the rules is an important issue for 
us. Our rules say if you don't comply with them, you shouldn't 
get the money. And that is the kind of thing that we are really 
focusing on internally is making sure that there is compliance 
as the rules change so that the money goes where it should go.
    Mr. Latta. OK. And the commission has also, as mentioned 
earlier, is requesting over $44 million to move to a new 
headquarters or for restacking. The budget request states that 
by moving or restacking FCC headquarters, this process would 
save the commission up to $119 million over 15 years. Can you 
explain how the commission reached that estimate of $119 
million over the timeline of 15 years?
    Mr. Wilkins. Yes. So our current fully-loaded lease costs 
to remain at headquarters is around $40 million, $41 million. 
The space planning that we are doing already with GSA, 
essentially to bring us, I would say, just in line with current 
federal guidelines, we would be reducing that space by around 
30 percent. And I think GSA--obviously, we are customers of GSA 
in this process. They would also propose probably a lower per 
square foot. So essentially, the idea would be for our lease 
costs to go down by $11 million to $12 million a year over 15 
years. You deduct from that though the, for example, the $51 
million we are requesting now to facilitate that move, and the 
net would be $119 million over the 15 years.
    Mr. Latta. OK. Thank you, Mr. Chairman. And my time has 
expired, and I yield back.
    Mr. Walden. Thank the gentleman.
    Now recognize the ranking member of the full committee, Mr. 
Pallone, for questions.
    Mr. Pallone. Thank you.
    Mr. Wilkins, I--Ms. Eshoo started--was talking about this 
issue, but I wanted to follow up. I am very concerned about 
consumers being hit with fraudulent charges on their monthly 
communication bills through scams like cramming. And the FCC 
has made strides over the past year trying to curb this 
practice, but the question is if the FCC's budget continues to 
flat line the way it has since 2009, will it impact the FCC's 
ability to protect consumers from fraud?
    Mr. Wilkins. Yes. If we continue to be flatlined, it will 
impact our ability to delivery all areas of our mission. I 
think our current budget proposal that we can make do with 
fewer people is based on having much better IT to use those 
people much more efficiently. And in the consumer enforcement 
area you are describing, for example, there is a huge 
opportunity to use data and analytics, using IT to be much 
smarter about finding areas that we then go focus the resources 
we have instead of just, perhaps, waiting for someone to 
complain. So that is the opportunity we see, but it does 
require the investment. I mean if we are flat lined, there is 
no way we can make the investments nearly as promptly as we 
want to. And I would actually add, if we are flat lined for 
'16, in the sense of not being able to fund those move costs, 
that money is going to come from somewhere. I mean our lease, 
after 2017, goes up by $9 million a year, and nothing else 
changes, someone has to pay that. I mean there really is kind 
of a downward spiral around this move that, everything else 
aside, really would affect our ability to fund anything at a 
reasonable level.
    Mr. Pallone. OK. I think you have answered in your response 
the other two questions I had, but let me just look at this a 
second. Again, you talked about the aging computer system that, 
I guess, will eventually slow down your ability to continue 
these reform efforts. I think you have answered that in terms 
of what happens if you don't because that is where the bulk of 
this additional money goes to, correct?
    Mr. Wilkins. Yes. I think right now, our cost profile for 
IT continues to grow because the cost of maintaining things 
that are older and older grows every year. And when I was here 
in September, I testified that over \1/2\ our systems are more 
than 10 years old in terms of software, and the software, well, 
that might as well be 100 years, right? The cost to do a 
software update for something that was installed in 2004 is 
astronomical because almost no one else does it. And so it is 
really that treadmill; if you don't invest to get off the 
treadmill, it just goes faster and faster, and you run faster 
and faster, and you don't get anywhere and you are just 
spending more money to essentially, you know, deliver the same 
or worse.
    Mr. Pallone. And I think you talked about the staff too, 
that the FCC has a historically low number of full-time staff, 
and whether any further reduction in the number of full-time 
staff would impact your ability to carry out your 
responsibilities. I think you kind of answered that too, but if 
you want to add anything.
    Mr. Wilkins. We think with sufficient IT support, the 
staffing level we propose in '16 lets us do everything Congress 
needs us to do.
    Mr. Pallone. OK. All right, thanks a lot.
    Thank you, Mr. Chairman.
    Mr. Walden. Thank you very much. The gentleman yields back.
    And the chair now recognizes the gentleman from Illinois, 
Mr. Shimkus, for 5 minutes.
    Mr. Shimkus. Thank you. Mr. Wilkins, welcome. It is good to 
have you back.
    Ranking Member Eshoo talked about the 9911 issue, but 
Commissioner O'Reilly in a blog post said that it is a simple 
programming change. And the first question--and this is for, 
obviously, the facility which you are operating out of. Is that 
your understanding, and did you give him that information as 
far as the headquarters itself?
    Mr. Wilkins. Yes. So it would be a programming change for 
our voice-over IP phone system. It would cost some money. 
Depends on if we just did it for our main headquarters 
facility, or went to all of our remote locations. Actually 
hearing the committee's interest and concern in that, I would 
be very glad to go back and talk again with my IT team and see 
what else we can do.
    I will say that having looked at it, the one question that 
we had for management is, the people that use our phones are 
our internal people; we don't have members of the public back 
in our offices, and at some level, they are used to dialing 9 
to get out. And so we will----
    Mr. Shimkus. Yes. Yes. I guess I would only say, you may 
have guessed, obviously, a lot of people who are outsiders come 
into the----
    Mr. Wilkins. Yes.
    Mr. Shimkus [continuing]. FCC to have meetings, you may 
have bring your kid to work day----
    Mr. Wilkins. Yes.
    Mr. Shimkus [continuing]. These are really terrible stories 
that----
    Mr. Wilkins. We will be very glad to go back and----
    Mr. Shimkus. And really governments should try to lead as 
much as possible in doing this, and if it is a simple 
programming then we can tell other entities that, hey, it is a 
simple programming issue, and it may cost a little bit but the 
return on investment over time, just for you all leading by 
example, could be very helpful.
    Mr. Wilkins. OK.
    Mr. Shimkus. I would like to then go to a question on, last 
time we had talked about your--talking about the internal 
reporting processes for auction-related expenditures----
    Mr. Wilkins. Yes.
    Mr. Shimkus [continuing]. And reviewing the use of auction 
funds and IT. Have you completed this review?
    Mr. Wilkins. Yes. And so I think--my QFRs or one of our 
document requests to this committee last year, we specifically 
broke out--wherever we can, we do direct accounting. So a 
person who works on auctions, they literally do their timecode 
and say I worked on auctions. And wherever we can, we do that. 
An IT contract that is for the new auctions platform, obviously 
goes to auctions.
    Around $55 million of our current auction spending is 
directly accounted for.
    Mr. Shimkus. Can you provide that stuff to us?
    Mr. Wilkins. Yes. Yes, we will----
    Mr. Shimkus. And the other follow-up--and you are providing 
an audit of these responses and reviews, on the accuracy? Are 
you----
    Mr. Wilkins. We are certainly doing ongoing review to make 
sure those costs are accurately reflected.
    Mr. Shimkus. And can you provide us some of the ongoing 
review and----
    Mr. Wilkins. Sure. We will be glad to provide all the 
information.
    Mr. Shimkus. And, I am sorry I am going fast. I want to get 
to the last one. You are also requesting $3 million for the 
ongoing maintenance, improvement costs for the broadband map. 
As many of us know on the subcommittee, who have been here for 
a while, NTIA funded the map through Recovery Act funds or 
stimulus funds. That is correct. Those funds were exhausted, so 
last year FCC became responsible for its cost. So we are trying 
to figure out how that happened. How did we go from NTIA, an 
agency of the Department of Commerce, now where the FCC kind of 
took control of this, and then we are trying--the other 
question is who made that decision?
    Mr. Wilkins. So as you said, NTIA got the funding in the 
Recovery Act, because the FCC has expertise in it, lot of our 
processes obviously involve collecting broadband data, NTIA set 
up an interagency contract to fund us to actually do the IT 
systems, and that was the practice until their funding went 
away. So the idea of transferring it to us, I wouldn't say it 
was like a preordained it transferred to the FCC, it is more of 
de facto we run it, they can't fund it anymore. We have found 
it to be a valuable policy tool and we would like to keep 
funding it, but, as you said, it was not funded last year, and 
right now it is on hold. I mean we are actually not investing 
money to keep upgrading it or operating it in any kind of real 
way.
    Mr. Shimkus. But it didn't rise to the level of a, you 
know, the commission actually making a decision or the chairman 
saying we are going to do this, was this done just internally 
kind of by default?
    Mr. Wilkins. Right. It was----
    Mr. Shimkus. You got handed the ball and you are----
    Mr. Wilkins. Yes, well, it was the kind of thing where 
agencies can collaborate on--NTIA had some money, we had some 
expertise, we did the arrangement, set it up that way, and it 
worked pretty well while they had the funding. And now we have 
to figure out if we want to maintain it, where the funding 
comes from.
    Mr. Shimkus. OK. Chairman, my time is over. Thank you very 
much. Thank you, Mr. Wilkins.
    Mr. Latta [presiding]. The gentleman yields back.
    The chair now recognizes the gentlelady from New York, Ms. 
Clarke, for 5 minutes.
    Ms. Clarke. Thank you, Mr. Chairman. And I thank our 
ranking member. I thank Mr. Wilkins for coming today to share 
information with us.
    I am a new member to this committee, and wanted to just ask 
a couple of questions; one is somewhat parochial. I was visited 
by my local regional broadcasters just recently, and they 
raised a concern about regional office staffing, particularly 
in the New York region, some concerns about radio piracy, and I 
was wondering whether you have considered looking at these 
regional offices and the staffing levels, and the concerns that 
these regions have, whether you would be addressing that in 
this budget, and whether there is a line item specific to those 
regional offices?
    Mr. Wilkins. Thank you for that question. So one of the 
activities we are now undertaking with our most recent budget 
being less than we asked for, is a systematic review of all of 
our people, all of our offices, to find out how we can most 
efficiently deploy with the resources we have. So we are 
actively looking at that. It is not a line item in our budget 
necessarily----
    Ms. Clarke. Yes.
    Mr. Wilkins [continuing]. But we are definitely looking 
into staffing levels in offices like New York, and trying to 
make sure we are making the best use of the people and the 
money that we have.
    Ms. Clarke. Just wondering, do you look at perhaps 
activities nationally, and then look at allocation of staff 
based on, you may have a larger problem, say, in a place like 
New York----
    Mr. Wilkins. Sure.
    Ms. Clarke [continuing]. Than you may have in other parts 
of the country, whether it is appropriate to shift staff 
according to need?
    Mr. Wilkins. Yes, I would agree. So the only way that we 
can, especially in that field part of the FCC, the only way we 
can manage is to find out where is the highest density of need, 
and how can we deploy the people and the resources we have 
against that. So that is absolutely the principle that we are 
using as we are doing this review right now.
    Ms. Clarke. Very well. Immediately upon taking office, 
Chairman Wheeler identified FCC process reform as a priority. 
An intra-agency staff working group produced the report on the 
FCC process reform. What progress has been made to implement 
the recommendations in that report, and could you please 
explain what other steps the commission has taken to improve 
the FCC's process?
    Mr. Wilkins. Thank you for that question. That is a very 
important priority for the chairman. My office is responsible 
for, I would describe as the internal process reform steps. 
There is a separate set of issues around how the commissioners 
operate that my office doesn't really play a role in. I will 
give you a couple of examples. There are a lot of things on the 
internal process reform report around improving transparency 
and using metrics to better manage our internal resources. One 
thing that we just completed, with my office as the main 
implementer, was a new system for consumers to register 
complaints with the commission. We have a new online system, it 
is a Web site. You have a problem related to your phone bills 
or any other FCC issue, it is actually much easier for you as 
an individual to go and make that complaint. The process reform 
angle is we now have a much easier way to track those things, 
to figure out is the backlog or the volume going up or down in 
given areas, be more transparent about it and manage our 
resources better. So that is one example. And I would just 
emphasize that the IT investments that we want to make here, 
that we have talked about so far in the hearing, are 
overwhelmingly about having that model be used in many other 
areas for process reform improvement, and that is why the 
chairman is on my back to make sure we get the IT right.
    Ms. Clarke. Very well. And as you know, FCC licenses pay 
the cost associated with the FCC's operations. It is, 
therefore, critical for the FCC to ensure that its regulatory 
fees are assessed in a fair and equitable fashion. Can you 
explain the FCC's efforts to ensure fairness in the regulatory 
fee structure?
    Mr. Wilkins. Yes, and let me answer that with two examples. 
My office actually does the fee proceedings. We just completed 
one last year where we tried to make at least a few areas 
better. So for example, we set a new de minimis standard where 
a very small business, under the old formula, may have had to 
pay us a few hundred dollars and, frankly, spend more money on 
lawyers and filing costs than the money, we just exempted them. 
So trying to make it just less of a burden.
    This also is the USF proposal in our current budget. It is 
specifically designed so that the parts of the industry that 
are involved in USF are the ones who would support those 
activities of the commission, and the ones who aren't involved 
in USF would not. Under our current model, I mean a broadcaster 
is a good example, broadcasters don't have anything to do with 
USF. Part of the regulatory fee a broadcaster pays does, in our 
current model, go to basically pay for our USF activities. And 
given that our costs will go up because of the move for a year 
or two, we just thought this was the exact right time to 
propose that alignment so that the people that pay fees, that 
sort of pay for things that relate to their business or their 
activity.
    Ms. Clarke. Thank you very much.
    Mr. Chairman, I yield back.
    Mr. Latta. The gentlelady yields back.
    And the chair now recognizes the gentleman from New Jersey, 
Mr. Lance, for 5 minutes.
    Mr. Lance. Thank you, Mr. Chairman. And good morning to 
you, Mr. Wilkins.
    The FCC makes a one-time request of $51 million for 
restacking, and is this similar--for move or restacking. Are a 
move or restacking equivalent, and which of the two would be 
less costly?
    Mr. Wilkins. Right. Certainly. So we always use move or 
restacking because, certainly, our current landlord is eligible 
to bid to retain our lease, and so the restacking would be we 
would stay at the current facility but in smaller space. So we 
would collapse and literally restack where the offices were 
laid out. And so I think it is important from the GSA 
perspective that we maintain as much competition for our lease 
as possible, so we always maintain that.
    The $51 million budget request certainly applies to either 
one of those, because really what that pays for, it pays for 
internal construction, walls, and these are not exciting things 
but they are necessary things. So the furniture, and even if we 
restacked our current location, you would change the footprint 
because you are going to smaller offices, et cetera. And we are 
committed to those--I mean we are committed and, frankly, GSA 
is going to make sure we are committed to those lower lease 
costs in the long term as we talked about.
    Mr. Lance. Are these competitively bid, or to the lowest 
responsible bidder, or----
    Mr. Wilkins. Right. So Congress has to first approve a 
prospectus. That hopefully will be coming from OMB relatively 
soon. And then an RFP goes out to commercial lessors for the 
period of several months, and people look at our requirements, 
how much space, other things, and there is a competitive 
bidding process that GSA runs and, you know, we try to get the 
best deal for the taxpayer.
    Mr. Lance. Well, thank you. At your convenience, we would 
appreciate if you would provide us with a list of the awardees. 
And----
    Mr. Wilkins. Certainly.
    Mr. Lance. We appreciate that, thank you. The budget 
request includes $2.4 million to engage an administrator to 
manage the Broadcast Relocation Fund.
    Mr. Wilkins. Yes.
    Mr. Lance. Is this going to be awarded through a 
competitive bidding process----
    Mr. Wilkins. Yes.
    Mr. Lance [continuing]. As well?
    Mr. Wilkins. Yes.
    Mr. Lance. Thank you. That ends my question. Anybody on our 
side wants the balance of my time?
    Mr. Latta. I believe the gentleman yields back.
    Mr. Lance. I will yield back.
    Mr. Latta. Thank you very much.
    And the chair now recognizes the gentleman from New York 
for 5 minutes, Mr. Collins.
    Mr. Collins. See if this is working. It wasn't last week. 
Thank you, Mr. Wilkins.
    I will begin one real quick question on the rural broadband 
map.
    Mr. Wilkins. Yes.
    Mr. Collins. I represent some very rural counties, and you 
currently use, if I understand, like the 9-digit zip code. In 
these counties, your 9-digit zip code is showing as much as 97 
percent coverage. The counties knew that was wrong. They did 
their own in-depth study. It is under 50 percent. So I am 
assuming you are aware of the shortcomings in that, and is that 
what you are trying to address so we can actually get a number?
    Mr. Wilkins. Right. Yes, right, the use of the broadband 
map is a tool exactly to facilitate that kind of input and two-
way dialogue, because you are right, in universal service, for 
example, we are deploying millions of dollars and it really is 
supposed to be where it is most needed.
    Mr. Collins. Where it is needed, which is our counties, and 
they are not getting it because of the 9-digit zip code----
    Mr. Wilkins. Exactly.
    Mr. Collins [continuing]. Methodology.
    Mr. Wilkins. Exactly. And so the broadband map has been 
used, and our hope is to use it as a tool just to make that 
easy, because it is one thing to have some complicated data set 
to look at, it is another thing to see a map of your county 
which you know----
    Mr. Collins. Is wrong.
    Mr. Wilkins [continuing]. See what the FCC thinks is right 
or wrong, and if it is wrong, to be able to tell us.
    Mr. Collins. I think all of us in this day and age would 
appreciate the more accurate you can get it, the funds can go 
where they actually are needed, which is many of the rural 
counties.
    So couple of questions on the budget. That is what I have 
spent my life doing, both as a county executive in the largest 
upstate county of New York, where I implemented Lean Six Sigma 
for the first time in a large municipal government. We had over 
5,000 employees. I cut 22 percent of the workforce, improved 
efficiency, improved delivery of service, and those cuts saved 
$100 million a year. So in budgeting, there are two ways of 
looking at it. Let us flat line and add to, and then there is 
zero-based. And just first question, are you familiar with Lean 
Six Sigma, have you looked at it, because as a generality, you 
can reduce your workforce 22 percent.
    Mr. Wilkins. Yes.
    Mr. Collins. I did it and actually improved service.
    Mr. Wilkins. Yes. I am familiar with Six Sigma. I can tell 
you that in my budget discussion with Chairman Wheeler, you 
know, he and I are both relatively new to the government, from 
the private sector, and I am familiar with zero-based 
budgeting. Certainly, Chairman Wheeler's instructions to me are 
to find ways to be as efficient as possible. You know, in the 
federal context, you know, restructuring your workforce takes 
more time and energy because there are a number of constraints, 
and actually what we are----
    Mr. Collins. Well, and I had a unionized workforce.
    Mr. Wilkins. Well, and what we are doing now though is 
consistent with those obligations that we have to follow, how 
can we most effectively restructure.
    Mr. Collins. So would it make any sense, and I have done 
this so--to pick a department, to pick a unit that has--I mean 
you might even think some areas where efficiencies would be--
and try to--I am assuming you have never really tried it. You 
have never brought in master black belts, you have never 
process mapped, is that----
    Mr. Wilkins. So we are doing some of that work now. I mean 
we are--in some of our areas we are doing----
    Mr. Collins. But using the skill set of Lean Six Sigma, or 
is it just----
    Mr. Wilkins. Well, not Six Sigma specifically, but using 
tracking information we have and doing more of a zero-based 
exercise of----
    Mr. Collins. If----
    Mr. Wilkins [continuing]. What does it really take to do 
the work that is being----
    Mr. Collins. I would love to see if you could provide me 
just some examples. That is my background.
    Mr. Wilkins. Sure. Be glad do.
    Mr. Collins. And perhaps even encourage you to consider, 
even on a satellite basis or some small basis, try it and then 
it can catch on, and the savings can just be dramatic.
    Mr. Wilkins. We agree.
    Mr. Collins. It is not normally the way government works.
    Mr. Wilkins. Agreed.
    Mr. Collins. So another comment, and I am not going to try 
and trick you here, but you implied that because 8 cents in 
your budget brought in $1. You said that. Number one, I would 
say you are kind of taking undue credit for the wildly 
successful spectrum audit that far exceeded your estimates. And 
so kind of a rhetorical question, if we increased your budget 
$10 million, could you guarantee us $120 million coming back in 
on top of your current budget? Or if I gave you $100 million, 
could you guarantee us $1.2 billion coming back?
    Mr. Wilkins. No, I wouldn't want to say that. I would 
emphasize----
    Mr. Collins. I didn't think so.
    Mr. Wilkins [continuing]. Thought that when spectrum 
auctions were created in the mid-'90s, I don't think anyone 
expected it would lead to the----
    Mr. Collins. Well, my point is, I understand how you did 
the numbers----
    Mr. Wilkins. Yes.
    Mr. Collins [continuing]. But in fairness to us, I think 
you are trying to take credit for some things that were outside 
of your scope, and I know that is a good thing to do but----
    Mr. Wilkins. Well, our auction staff does do that work. I 
mean that money comes from somewhere. It is because there is an 
auction staff that runs those auctions.
    Mr. Collins. So if we increased your budget by $10 million, 
could you give us another $120 million----
    Mr. Wilkins. Well----
    Mr. Collins [continuing]. Coming back?
    Mr. Wilkins. I think that the recent increases for our 
auction----
    Mr. Collins. No, no, no, on top of your current budget----
    Mr. Wilkins. Well, I think for auctions, the $11 million 
that we are requesting for our auctions fund probably will 
generate more than $100 million from the----
    Mr. Collins. No, but if I gave you 10 on top of that, could 
you give us another--so if we give you 20, can you give us 240?
    Mr. Wilkins. No, no, clearly, clearly, there is a limiting 
principle----
    Mr. Collins. OK. Well, I only bring that up because you 
were a little self-serving on that one.
    Mr. Wilkins. OK.
    Mr. Collins. OK.
    Mr. Wilkins. That is fair.
    Mr. Collins. Thank you, Mr. Chairman. Yield back.
    Mr. Latta. Thank you very much. The gentleman yields back.
    And at this time, the chair recognizes the gentleman from 
North Dakota, Mr. Cramer, for 5 minutes.
    Mr. Cramer. Thank you, Mr. Chairman. Thank you, Mr. 
Wilkins, for being here. Thank you for your--you are very 
knowledgeable and it is great to have a witness that is both 
knowledgeable and forthcoming.
    I want to just follow up a little bit on where I think Mr. 
Lance was going, and maybe expand it a little, and Ms. Eshoo as 
well. I appreciated your answer to her with regard to, you 
know, contractors or, you know, former employees coming back as 
contractors, and that was a good answer. But I am missing 
detail I think when I look at the budget request, and I would 
just say it could be very helpful for us, and give us sense of 
confidence if we could get more details about not just the 
$44.1 million, for the moving and stacking, which I think is a 
large amount, and I wish I had a local moving company to bid on 
it, but the $32 million in addition to that is pretty vague, to 
say the least, and I would just really want to encourage you, 
first of all, if you can explain that a little bit, but then 
provide us some detail, again, you know, before the chairman 
and the commissioners visit here.
    Mr. Wilkins. OK. Absolutely.
    Mr. Cramer. That would be very helpful.
    Mr. Wilkins. Would you like me to--I can----
    Mr. Cramer. Please.
    Mr. Wilkins [continuing]. Say a little more?
    Mr. Cramer. Yes, please.
    Mr. Wilkins. So on the move costs, it is $51 million that 
is just in our budget request.
    Mr. Cramer. Right.
    Mr. Wilkins. It is split as our usual practice between 
auctions and non-auctions.
    Mr. Cramer. Right.
    Mr. Wilkins. $51 million. That would be the first of two 
fiscal years where some of that spending is required. The total 
estimate we are getting from GSA is closer to about $80 
million, so $50 million would be the larger chunk.
    Just to give you some context, for the amount of square 
feet that we are talking about for our new lease, that would be 
about $175 per square foot, fully loaded, for everything from 
walls and furniture to the cost to move the stuff. That 
compares to, let us see, GSA gave us three examples, NIH and 
NLRB both recently did moves that were $206 a square foot, so 
we are a little lower than that. Recently, the FTC, which is 
sort of a similar agency to us in terms of----
    Mr. Cramer. Sure.
    Mr. Wilkins [continuing]. People, moved about half as many 
people, it wasn't their full staff, it was a part of their 
staff, about 900 people, total was $75 million over several 
fiscal years. They had some different issues going on, but 
again, we are talking about a similar amount of money for twice 
as many people. So I am not an expert in move costs, but from 
what GSA has told us, the numbers are pretty much in the range 
that they would typically do with a federal agency. The rest of 
the cost, so exactly as the chairman said, total is $84 
million, take 51 away from that for the move, that leaves you 
with 33. We have got $4 million for the PSAP system and the 
broadband map, $8 million in inflation and $1 million for the 
IG. We could talk about any one of those, but those are kind 
of----
    Mr. Cramer. Sure.
    Mr. Wilkins. Those are what they are. We are left with $21 
million of--we are left with $15 million if you take the PSAP 
and broadband map out. So those are, as Congresswoman Eshoo 
said, that is to buy the off-the-shelf IT infrastructure, 
instead of having--I mean we literally have 200 giant servers 
like you would see in a movie from 20 years ago, sitting in 
very expensive real estate over here on 12th Street.
    Mr. Cramer. Yes.
    Mr. Wilkins. I mean that is not how you do IT, certainly in 
the private sector, and you shouldn't in the public sector now 
either. So we have a--literally, a truck is going to show up to 
the FCC in a couple of weeks and take those suckers out to West 
Virginia. And that is the first step to going to a true cloud 
environment which, for storage and your basic servers, is just 
the way to do it. So that is what those costs are, and we will 
be glad to give staff follow-up on all of the specifics of 
those contracts.
    Mr. Cramer. I would be helpful, just because, obviously, 
details are--and information keeps the imagination from getting 
too far astray, if you know what I mean.
    I don't have anything else, but thank you. I yield back.
    Mr. Latta. Thank you very much. The gentleman yields back.
    The chair now recognizes the gentleman from Ohio, Mr. 
Johnson, for 5 minutes.
    Mr. Johnson. Thank you very much, Mr. Chairman. And, Mr. 
Wilkins, thank you for being here today.
    You have requested $25 million out of the USF fund to 
reimburse the agency for costs of oversight administration of 
the fund, with $10 million of this amount going to the creation 
of the Joint USF Antifraud Taskforce. Do you expect the fund 
for USF oversight administration to be a one-time disbursement, 
or do you expect this to be an ongoing effort?
    Mr. Wilkins. Right. So we certainly would, if that was 
granted in '17, then we would have to, in fact, resubmit it and 
it would be reapproved by Congress, if it was approved. I get--
--
    Mr. Johnson. So it is ongoing, am I understanding that----
    Mr. Wilkins. Well, I really think it is obviously Congress' 
decision, and it is just about this issue of fee-ness to the 
fee payers.
    Mr. Johnson. Yes.
    Mr. Wilkins. And to be clear, the money is the money. 
Right? In other words, those are people that we largely have 
today. We may be reallocating some of our current workforce to 
that on the margin, but those are costs that are right now 
being paid by our fee payers. Out Section 9 fees, they pay it.
    Mr. Johnson. What----
    Mr. Wilkins. That is not going to change a lot.
    Mr. Johnson. What is that money going to be used for? The 
budget request says salaries and IT. Is it going to pay 
salaries----
    Mr. Wilkins. No.
    Mr. Johnson [continuing]. IT or both?
    Mr. Wilkins. No, IT, that is a mistake if that is what it 
says. It is just for the salary and expenses for the people who 
do USF work at the commission.
    Mr. Johnson. Prior to this request, how did the agency fund 
these costs?
    Mr. Wilkins. Out of our regular Section 9 regulatory fees.
    Mr. Johnson. OK. The FCC acknowledges that it has collected 
just over $90 million in excess regulatory fees, so will the 
commission or the Administration, as was called for in GAO's 
2012 report to Congress, titled Federal Communications 
Commission regulatory fee process needs to be updated, will 
they provide Congress with a proposal to true-up these fees so 
as to avoid continued growth of the uncollected funds?
    Mr. Wilkins. Well----
    Mr. Johnson. Over-collected funds, I am sorry.
    Mr. Wilkins. Sure. I mean it certainly does strike us as a 
burden on our fee pays, and I would love to have the money, but 
that is sort of the--it is outside the FCC's control. That is 
certainly something for the Administration to work with 
Congress on what to do with those funds.
    Mr. Johnson. All right. As you also know, Mr. Wilkins, the 
FCC is well aware of the legal challenges ahead once the Order 
is released. There may be reconsideration requests filed at the 
commission, Motions for a Stay of the Order, and appeals of the 
Order that could go all the way to the Supreme Court. Has the 
FCC budgeted and estimated the potential resources needed and 
costs of the litigation for this year's budget request?
    Mr. Wilkins. Yes. So I can--so with regard to open Internet 
issues, my office--I am the budget--I am the green eyeshade 
guy, not the policy guy. I can tell you unequivocally we do not 
have a current plan to add more resources to say Wireline 
Competition Bureau or the General Counsel's Office. I mean this 
is certainly an important issue that will take staff work, but 
in terms of my staffing discussions with those office and 
bureau heads, it is not different than, I would say, the usual 
large important issues that those staff support. So there is no 
increase in this budget, for example, to support that activity.
    Mr. Johnson. OK. Litigating the Title II Order will not be 
costless though. Do you agree that is fair to say?
    Mr. Wilkins. Certainly. Yes. Yes.
    Mr. Johnson. Has the commission projected how much the cost 
will be for 2016, '17, '18 and '19? You may have just answered 
that. You haven't projected that out?
    Mr. Wilkins. No. Our current budget assumes that the 
litigation support that we have in the General Counsel's 
Office, for example, will be able to handle that. Now, if the 
office chiefs change their minds on that, they would bring it 
to me, but right now that is our plan.
    Mr. Johnson. OK. One final question, and if you would 
please for the sake of time, just a simple yes or no. Wouldn't 
the commission have saved a significant amount of money if it 
had let Congress legislate on net neutrality instead of moving 
forward with an ill-fated Title II Order that it knows is going 
to be litigated for years?
    Mr. Wilkins. No.
    Mr. Johnson. No. Why? Why do you say no? Cost of 
litigation? Because you just said that it was going to be----
    Mr. Wilkins. Well----
    Mr. Johnson. The cost of litigation was not going to be 
negligible, so----
    Mr. Wilkins. Well, our bureaus and offices that deal with 
those sorts of issues, essentially, these are expert, 
experienced attorneys, or economists, or policy people, and 
this is their job. Any given year, we will have major 
litigation, we will have major issues, those offices are built 
to do that. And certainly----
    Mr. Johnson. But that litigation is not free. That 
litigation is not free. The taxpayers are paying for that 
litigation, so the question is wouldn't it have been more 
prudent to let Congress work with the FCC to get a legislative 
fix to net neutrality, rather than spending taxpayer dollars to 
litigation something that they know is going to be litigated?
    Mr. Wilkins. Well, Congressman, from my office's 
perspective, I can assure you there is no incremental budget 
requests that are being driven to support that. We have people 
who do that. Certainly, the prioritization question----
    Mr. Johnson. But they don't do it for free, that is the 
point I am making. They don't do it for free.
    Mr. Wilkins. No.
    Mr. Johnson. If they weren't doing that, they would be 
doing other things that are meaningful and useful for the 
taxpayers, not litigating something that they could have 
precluded by working with Congress. Do you see what I am 
saying?
    Mr. Wilkins. Certainly, the cost of the people to do that--
--
    Mr. Johnson. OK.
    Mr. Wilkins [continuing]. Will be----
    Mr. Johnson. I yield back, Mr. Chairman.
    Mr. Latta. The gentleman yields back.
    And the chair recognizes the gentleman from Kansas, Mr. 
Pompeo, for 5 minutes.
    Mr. Pompeo. Thank you, Mr. Chairman.
    Mr. Wilkins, you said in your testimony, ``You are 
currently examining additional workforce restructuring at all 
FCC facilities.'' Can you tell me if that includes studying 
closing field offices?
    Mr. Wilkins. We are doing a thorough review of actually 
every part of the commission, and certainly, the field is part 
of that review, yes.
    Mr. Pompeo. And are you doing that internally or do you 
have third parties that have assisted you in conducting that 
review?
    Mr. Wilkins. No, it is as Mr. Collins from New York said, 
we have brought in some management experts to support our 
internal staff in doing that review.
    Mr. Pompeo. Have they provided you with reports?
    Mr. Wilkins. We have been----
    Mr. Pompeo. Drafts, memos, PowerPoint slides?
    Mr. Wilkins. We do not have a final report yet. We have a 
final report quite soon actually that we would be glad to----
    Mr. Pompeo. Do you have a draft report, do you have interim 
reports, do you have anything that you can share with us?
    Mr. Wilkins. They have been sharing their analyses with us 
as we have been going along, and their final report is due, 
actually, next week.
    Mr. Pompeo. Is there recommendation to close field offices?
    Mr. Wilkins. They have made us good recommendations for how 
we can look at the people we have, the real estate costs we 
have, and deliver the mission better.
    Mr. Pompeo. Right. I asked a direct question, you gave a 
generic response. Is there recommendation to close field 
offices for the FCC and relocate people to your headquarters?
    Mr. Wilkins. In the interim analysis they have done, they 
have shown some cost-based ideas that could be consistent with 
that, but there is not a final recommendation yet.
    Mr. Pompeo. And are these savings reflected in the budget 
that you have provided us?
    Mr. Wilkins. No.
    Mr. Pompeo. You said they could show some savings. You have 
seen the interim report, did you assume, yes, we are going to 
go down that path and----
    Mr. Wilkins. Well----
    Mr. Pompeo [continuing]. The budget includes it?
    Mr. Wilkins. The answer is as our '16 budget request does 
presume, or does project, that our staffing levels drop, we are 
going to look at every possible area we can to most efficiently 
effect that. The default is people retire or leave the 
commission and we just don't replace them. And we are certainly 
looking at other areas where we can do other sorts of workforce 
changes, and absolutely not just in the Enforcement Bureau 
field and all across the commission, and that was the 
chairman's instruction to me when our budget came in where it 
did.
    Mr. Pompeo. Sure, but my question is what did you do? You 
had interim reports, what did you assume for purposes of your 
budget? Did you assume there would be changes in the lease 
payments in the field offices, locality pay connected to that, 
there are lots of changes, changes in--you might have had 
engineers there and you would have lawyers here----
    Mr. Wilkins. Yes.
    Mr. Pompeo [continuing]. Tell me what you assumed when you 
put the----
    Mr. Wilkins. So our budget request, right, is for 
activities that will be taking more than the better part of a 
year in advance of when the budget is done.
    Mr. Pompeo. Yes.
    Mr. Wilkins. So when you are talking about that kind of a 
future view, all you can do is say we will spend less money on 
categories such as FTEs. Then, as Congress considers that, we 
have to view our management plan and say, OK, how are we best 
going to make that happen. Will it be through changes at 
certain bureaus, will it be through other savings? This type of 
analysis is certainly part of that process, but it was not a 
preordained, that is how we are going to pay for X. We just 
have to do the management work to find out where we save the 
money.
    Mr. Pompeo. Right. It is just a bit disingenuous because it 
is not always the case that you just let folks go. Sometimes 
you let an engineer go and you bring a lawyer on, right? And so 
it is worth thinking about how you do that. It is not just a 
case that you used attrition, you have now made policy and 
programming differences that I think are important for us to 
understand. And I guess what I would ask you in closing is, 
when you get this report, it sounds like it will be in the next 
couple of days----
    Mr. Wilkins. Yes.
    Mr. Pompeo [continuing]. When you get a copy of this 
report, will you make sure we get a copy as well?
    Mr. Wilkins. As we decide on what to do with those 
recommendations and other work we are doing, we absolutely will 
share it with----
    Mr. Pompeo. Right, but even before you decide, when you get 
the report, you have clearly hired a contractor to do a report, 
and you already have documents from this contractor, right?
    Mr. Wilkins. Yes.
    Mr. Pompeo. They have provided you interim reports, that we 
get the interim reports.
    Mr. Wilkins. We certainly will give you the final report. 
We want to make sure----
    Mr. Pompeo. Can we get the interim reports?
    Mr. Wilkins [continuing]. The interim reports are----
    Mr. Pompeo. That is a yes-or-no question. Can we just get 
the interim reports?
    Mr. Wilkins. Well----
    Mr. Pompeo. That is----
    Mr. Wilkins [continuing]. I think we wouldn't want to 
provide things that ultimately weren't what we relied on.
    Mr. Pompeo. Sure you would. Sure, it is OK for us to see 
them. There is no harm in us seeing them. You may make a 
different decision.
    Mr. Wilkins. We----
    Mr. Pompeo. Taxpayers paid for these. What is the harm in 
sharing them with the Legislative Branch?
    Mr. Wilkins. Certainly, whatever, of course, things that 
you request we will provide.
    Mr. Pompeo. Great, thank you.
    I yield back.
    Mr. Latta. The gentleman yields back.
    And the chair recognizes the gentleman from Kentucky, Mr. 
Guthrie, for 5 minutes.
    Mr. Guthrie. Thank you.
    You said replace an engineer with a lawyer. Aren't you both 
an engineer and a lawyer? So Mr. Pompeo has a good perspective.
    Mr. Pompeo. We yield.
    Mr. Guthrie. Not a practicing--I will yield to you, not a 
practicing lawyer.
    I have a question on spectrum. I have gotten involved with 
Ms. Matsui on the government spectrum. Hopefully free up more 
spectrum from auctions, so I was just going to tie into that, 
just some budget questions on that. And specifically the 
process of retaining auction revenues and how it works in 
practice----
    Mr. Wilkins. Yes.
    Mr. Guthrie [continuing]. And I am interested in what 
happens when the FCC is authorized to retain a certain amount 
to offset the cost of the auction administration in a certain 
year, but auctions in that particular year raise less than the 
threshold. I believe that this happened in 2008-'12, where in 
no year did the FCC reach the $85 million threshold. So my 
question then, when the auction failed to raise more money than 
the FCC is permitted to retain, how is the difference made up 
to cover the expense of the auctions?
    Mr. Wilkins. Right. So I don't have the specifics on the 
year you mentioned. We will be glad to provide----
    Mr. Guthrie. OK.
    Mr. Wilkins [continuing]. Anything additional. The general 
process is, obviously----
    Mr. Guthrie. Yes, the general process I am interested in.
    Mr. Wilkins. Yes. Obviously, Congress sets our cap of 
revenues we are allowed to use, and then there is sort of a 
separate process we have to do with OMB----
    Mr. Guthrie. Yes.
    Mr. Wilkins [continuing]. Around retaining some certain 
amount of auction revenue so that they can then give us those 
funds as Congress sets the cap. So just for example, so right 
now, I believe we have a little bit less than 3 years worth of 
current auctions program in our auctions account at the 
Treasury. So we are sort of funded through at least the next 2 
fiscal years and into the next, and then certainly this 
question of what is retained for future FCC use from the AWS-3 
auction will be part of that discussion with OMB too.
    Mr. Guthrie. So can it be carried over from previous years 
and previous auctions, and if so, can you carry over to the 
future auctions and are there restrictions?
    Mr. Wilkins. Well, OMB will keep the funds in an account, 
so the funds--so the money is there.
    Mr. Guthrie. Yes.
    Mr. Wilkins. We certainly only can use what Congress sets 
our cap for, or if we have approval to reprogram funds or if 
funds can be on a know your basis moved from one to the----
    Mr. Guthrie. So they can go from one year to the next, as 
long as they are within the cap.
    Mr. Wilkins. Yes. Our ability to spend the money is just 
set by the Congressional appropriation process.
    Mr. Guthrie. OK. But----
    Mr. Wilkins. The question is the money there is OMB.
    Mr. Guthrie. So when it goes above the cap, well, it 
depends on the appropriations process you said.
    Mr. Wilkins. Yes, we----
    Mr. Guthrie. It would revert to the deficit reduction at 
that point.
    Mr. Wilkins. Right. Yes, we can't go above our cap unless 
we got appropriator approval to do that through a reprogramming 
or something.
    Mr. Guthrie. And on a related note, given that there are no 
significant trenches of spectrum in the auction queue beyond 
the broadcast incentive auction scheduled for next year, and 
hopefully we can do some government auction eventually, and 
considering the request for an increase in the cap on retention 
and spending of auction proceeds, because I believe in this 
budget request there is an increase in the cap on--in the cap 
on retention and spending of the auction fees.
    Mr. Wilkins. Yes, to 117, yes.
    Mr. Guthrie. So should we expect the FCC to identify 
additional bands that could be brought to auction during the 
time after the incentive auction, which would require funding 
to support these activities?
    Mr. Wilkins. Well, certainly our experts in our auctions 
program work with all the different government entities 
involved in spectrum planning and certainly we want to be in 
the business of making spectrum available for use, so we will 
participate in that. And of course, the question of what level 
of auctions is set aside so it funds our program, from a 
management standpoint we try to make sure OMB thinks at least a 
few years ahead so we don't run out of money----
    Mr. Guthrie. Yes.
    Mr. Wilkins [continuing]. And of course, OMB wants to make 
sure the money is used more broadly too, so that is just part 
of the ongoing dialogue.
    Mr. Guthrie. Perfect. Well, I appreciate your answers in 
this and your forthrightness.
    And, Mr. Chairman, I yield back.
    Mr. Walden. Gentleman yields back the balance of his time. 
Appreciate his participation in the hearing.
    I am going to yield a minute to Ms. Eshoo who wanted to do 
some follow-up comments.
    Ms. Eshoo. Thank you, Mr. Chairman. I appreciate it.
    The gentleman from Ohio, Mr. Johnson, we weren't back in 
the room yet, he raised a very interesting point about asking 
Mr. Wilkins would the FCC not have saved money, essentially, 
if, in fact, there were a legislative approach to the issue of 
net neutrality. And I think it is important to state for the 
record that, wherever people are on this, that is where they 
are----
    Mr. Wilkins. Sure.
    Ms. Eshoo [continuing]. But I think that it is important to 
state for the record that broadcasters sued after decisions 
were taken by the Congress. USF, I mean there is a line as long 
as Independence Avenue of people that sued relative to what the 
Congress did and the lawsuits that were filed. Certainly, the 
incentive auction brought forward lawsuits. There was previous 
action by the Congress on net neutrality, but I don't think it 
stands in the same area as the 3 that I just mentioned. So 
there is not a tidy answer to this. There just isn't. It is not 
one size fits all. Congress takes actions on a daily basis, and 
people sue. So it is not just one way or the other. And I just 
wanted to get that down for the record. And I appreciate your 
giving me the time.
    And, Mr. Wilkins, I think you have just been a terrific 
witness because you are an effective person at the FCC in terms 
of the work that you do. Thank you.
    And thank you, Mr. Chairman.
    Mr. Walden. Thank the gentlelady for her comments.
    And, Mr. Wilkins, as you know, our committee is very 
interested in doing its due diligence here, just as you are at 
the commission. You know we have a lot of questions that we 
have given you to work on, and again, in my opening questions 
there are some we would really appreciate getting the answers 
to before the five commissioners are here in a little over 10 
days. So we appreciate that. And we will continue to go back 
and forth with you on the data requests that the committee has 
had. And again, thank you for the work you do down there, and 
thank you for participating in our hearing.
    And with that, we stand adjourned.
    [Whereupon, at 11:53 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    Today we are starting down the road to reauthorize the 
Federal Communications Commission--a task not undertaken since 
the first Bush administration. We are starting this process 
with a relatively simple, but important step--an examination of 
the FCC's Fiscal Year 2016 Budget Request. We have had numerous 
concerns about the commission's processes and recent actions--
leading to aggressive oversight of the FCC. Today's examination 
of the agency's budget request will help bring openness and 
transparency to the nuts and bolts of how the agency executes 
its mission and where the commission appears to be headed.
    The communications ecosystem that the agency oversees today 
is one that could not have been fully envisioned in 1990. As we 
look at reauthorization, we must ensure that the FCC is 
responsive to the marketplace and encourages innovation rather 
than stand in the way. Demonstrating the need for 
modernization, the commission majority last week abandoned 
years of bipartisan light-touch regulation of the Internet in 
favor of heavy-handed, intrusive government regulation.
    On its face, the budget request suggests much more of the 
same from the FCC, with one caveat. If approved, the agency's 
funding will exceed the half billion dollar mark for the first 
time. And it proposes to reach these heights by expanding its 
funding sources beyond regulatory fee collections and spectrum 
auction proceeds to include money taken directly from the 
Universal Service Fund. This is troubling. The USF is funded 
directly by consumers of telecommunications services. On its 
face, it appears that the agency's solution to the pressing 
need for fiscal discipline is simply to take money out of 
consumers' pockets. And while Congress has approved a transfer 
of funds from the USF in the past, it approved that funding for 
the FCC's Office of Inspector General and expressly for audits 
and investigations to protect the fund against waste, fraud, 
and abuse. In contrast, it appears the FCC intends this funding 
to pay for the costs of performing part of its core mission--
implementing and administering the Universal Service Fund.
    There are, as we have come to expect, other proposed 
increases in the commission's request--more money for IT 
modernization and $51 million for the agency's new offices. 
Collectively they represent a request for an $84 million 
increase in funding for the agency. As I have noted before, it 
is a critical part of this committee's work to foster a 
smaller, more nimble government for the innovation age. I look 
forward to the examination of these proposed increases and 
understanding of how the FCC's request furthers this goal.

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