Schools and Libraries Program: Application and Invoice Review Procedures
Need Strengthening (Letter Report, 12/15/2000, GAO/GAO-01-105).
The Telecommunications Act of 1996 expanded the concept of universal
telephone service to include telecommunication support services for
eligible schools and libraries. Under this program, called the "e-rate
program," schools and libraries can apply for discounts on
telecommunications services, Internet access, and internal connections.
GAO found that the Universal Service Administrative Company's (USAC)
Schools and Libraries Division (SLD) committed over $3.7 billion to
applicants during the 1998 and 1999 program years. However, a
significant amount of these funds has not yet been paid out, even though
the deadlines for applicants and vendors to use the funds has been
extended more than once. In addition, more funding would be available
for eligible requests if SLD's review procedures were more effective at
identifying and denying ineligible requests. Despite procedures
requiring reviewers to deny funding for ineligible items and to confirm
that conditionally eligible services are being used according to program
rules, GAO identified millions of dollars in funds incorrectly committed
to ineligible products and services. Finally, SLD's practice of
approving most vendors' invoices without reviewing how and where the
committed funds are actually being spent leaves the program vulnerable
to further funding errors and potential abuse.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GAO-01-105
TITLE: Schools and Libraries Program: Application and Invoice
Review Procedures Need Strengthening
DATE: 12/15/2000
SUBJECT: Telecommunication
Eligibility determinations
Internal controls
Performance measures
Libraries
Public schools
Funds management
Information technology
Aid for education
IDENTIFIER: FCC E-Rate Program
Universal Service Fund
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GAO-01-105
A
Report to the Subcommittee on Commerce, Justice, State, the Judiciary, and
Related Agencies, Committee on Appropriations, U. S. Senate
December 2000 SCHOOLS AND LIBRARIES PROGRAM
Application and Invoice Review Procedures Need Strengthening
GAO- 01- 105
Letter 3 Appendixes Appendix I: FCC's Authority to Set and Modify E- Rate's
Annual Funding Level 40 Appendix II: Competitive Bidding Requirements 42
Appendix III: Additional Eligible Students and Facilities 46 Appendix IV:
Funding Commitments and Authorized
Payments, 1998- 99 49 Appendix V: Application Sampling Methodology and
Detailed Results 54 Appendix VI: Administrative Costs of Selected Technology
Support Programs 56 Appendix VII: Comments From the Federal Communications
Commission and Univeral Service Administrative Company 59
Appendix VIII: GAO Contacts and Staff Acknowledgments 68 Tables Table 1:
Amounts of Funds Requested and Committed for
the First 2 Program Years, as of August 31, 2000 16 Table 2: Amounts of
Funds Committed and Authorized for
Payment by SLD for the First 2 Program Years, as of August 31, 2000 17 Table
3: E- Rate Program's Operating Expenses, 1997- 99 29 Table 4: Additional
Facilities and Students Eligible for E- Rate
Funding 46 Table 5: Amounts of Funds Requested and Committed for the
First 2 Program Years, as of August 31, 2000 50 Table 6: Amounts of Funds
Committed and Authorized for
Payment by SLD for the First 2 Program Years, as of August 31, 2000 52
Table 7: Unweighted Results of GAO's Review of Internal Connections Funding
Denied or Committed From 44 Applications From the Second Program Year,
Through November 1999 54 Table 8: GAO's Estimates of Internal Connections
Funding
Denied or Committed From the Second Program Year, Through November 1999 55
Table 9: Fiscal Year 1998 Administrative Costs for Selected
Federal Programs That Target Technology 56 Figures Figure 1: Overview of E-
Rate Application and Funding Cycle 10
Figure 2: Examples of Eligible, Conditionally Eligible, and Ineligible
Products and Services 13
Abbreviations
FCC Federal Communications Commission MSA Metropolitan Statistical Area NECA
National Exchange Carrier Association PCS personal communications service
SLD Schools and Libraries Division USAC Universal Service Administrative
Company WAN Wide Area Network
Lett er
December 15, 2000 The Honorable Judd Gregg Chairman The Honorable Ernest F.
Hollings Ranking Minority Member Subcommittee on Commerce, Justice,
State, the Judiciary and Related Agencies Committee on Appropriations United
States Senate
The Telecommunications Act of 1996 expanded the traditional concept of
universal service- affordable, nationwide telephone service. Among other
things, the act extended universal service support to eligible schools and
libraries and authorized the Federal Communications Commission (FCC) to
implement a program to assist these institutions in acquiring advanced
telecommunications and information services. Under FCC's program (often
referred to as the “e- rate program”), eligible schools and
libraries can apply individually or as part of district wide or even state
wide consortia for discounts from vendors on the cost of eligible
telecommunications services, Internet access, and internal connections (the
equipment needed to deliver these services). The e- rate program committed
over $3.7 billion to schools and libraries that requested e- rate support
during its first 2 years, 1998 and 1999.
We issued several reports in 1998 and 1999 dealing with the program's
startup activities. 1 Among other things, we reviewed key aspects of the
program's administrative structure, the design of its procedures, and its
internal controls for reviewing applications. We made recommendations to FCC
to improve the program's operations, which program officials implemented
before making their first- year funding commitments to applicants in late
1998.
1 See Letter to the Honorable Ted Stevens, B- 278820, Feb. 10, 1998;
Telecommunications: FCC Lacked Authority to Create Corporations to
Administer Universal Service Programs (GAO/ T- RCED/ OGC- 98- 84, Mar. 31,
1998); Telecommunications: Court Challenges to FCC's Universal Service Order
and Federal Support for Telecommunications for Schools and Libraries( GAO/
RCED/ OGC- 98- 172R, May 7, 1998); Schools and Libraries Corporation:
Actions Needed to Strengthen Program Integrity Operations Before Committing
Funds (GAO/ T- RCED- 98- 243, July 16, 1998); and Schools and Libraries
Program: Actions Taken to Improve Operational Procedures Prior to Committing
Funds( GAO/ RCED- 99- 51, Mar. 5, 1999).
In June 1999, you directed us to review several additional aspects of the
program as it neared the beginning of its third year. 2 Specifically, this
report discusses four issues:
the amount of e- rate funding requested by applicants, the amount of funds
committed to them, and the amount of committed funds they have actually
used; whether e- rate funds have been committed to products and services
that
are ineligible for support under the program's rules; whether the
administrative costs of the program are increasing and how
they compare with those of other federal support programs; and FCC's
progress in establishing performance goals and measures for the
program. In addition, you asked us to provide information on two related
issues. Appendix I describes FCC's authority to increase the program's
annual funding level, currently capped at $2.25 billion. Appendix II
compares the program's competitive bidding procedures to federal procurement
law and includes information on other e- rate competitive bidding issues.
To evaluate these issues, we reviewed relevant laws and regulations, FCC
orders, and program procedures; analyzed program data on the demand for
funding and funding commitments; obtained the program's administrative
expenses from audited financial statements; and compared the program's
competitive bidding procedures to federal government practice. We also
interviewed officials at FCC's Common Carrier Bureau, as well as at the
Universal Service Administrative Company (USAC) and its Schools and
Libraries Division (SLD), which is responsible for the program's day- to-
day operations. In addition, we reviewed a sample of 44 out of 9, 770
applications that requested and received funding commitments for internal
connections from June through November 1999 to see if ineligible products
and services had received funding commitments. The 44 applications contained
over 2, 300 separate requests for internal connections and accounted for
$285 million of the $1.2 billion in second- year funding commitments for
internal connections through November 1999. The results of these 44
applications are not representative of all 9, 770 applications, since our
sampling procedures gave applications for a large amount of funding a
greater chance of being included in our sample. We found that our sample of
44 applications could not be used to provide reliable
2 S. Rep. No. 106- 76 (June 14, 1999).
estimates for all 9, 770 applications because there was great variation in
the amounts of the errors we observed from one application to the next in
our sample. As a result, we do not present the results of this analysis in
the body of our report. When using computer- generated data provided by SLD,
we tested their reliability against the actual applications or complementary
data sets. We performed our review from September 1999 through October 2000
in accordance with generally accepted government auditing standards.
Results in Brief The amount of annual e- rate funding requested by schools
and libraries almost doubled from $2.4 billion in 1998 to an estimated $4.7
billion in 2000.
For the first 2 program years (1998 and 1999), SLD committed a total of $3.7
billion in e- rate funding to applicants. However, at least $1.3 billion (35
percent) of the funds committed in these 2 years had not been paid out as of
the end of August 2000, even though FCC extended its deadlines for
applicants to use their funds. Although funding commitments for the third
program year were not complete at the end of August 2000, about $1. 5
billion had already been committed, and SLD estimated that it would be
committing an additional $600 million.
Weaknesses in SLD's e- rate application review process resulted in
commitments of funds for ineligible products and services. We reviewed 44
second- year applications that received funding commitments for internal
connections- the type of service most likely to include ineligible items.
After screening out $20 million from requests that included ineligible
items, SLD committed $285 million in e- rate funds to these applications for
internal connections. However, we found that SLD reviewers failed to
identify other ineligible items, resulting in at least $6 million in funding
errors. This amount understates the extent of the problem because it does
not include cases in which we found funds mistakenly committed for
ineligible items whose costs could not be determined from the application
materials. Also, it does not include the costs of other items whose
eligibility was questionable but could not be resolved using the application
materials and current review criteria. We traced these funding commitment
mistakes and problems to procedural errors, unclear review criteria, and a
lack of sufficient information in some applications for reviewers to
determine the eligibility of questionable items. In addition, we found that
SLD's process for reviewing invoice forms prior to disbursing committed
funds provides another opportunity to identify ineligible items. However,
the invoice review process requires applicants to submit much less
information than found on their applications and involves less comprehensive
reviews. An
independent auditor hired by SLD has uncovered preliminary evidence that
some program funds were spent on ineligible services after clearing SLD's
application and invoice reviews. We are making recommendations to further
improve SLD's ability to identify and deny funding for ineligible products
and services. After reviewing a draft of this report, FCC and USAC said they
had begun to implement the recommendations and had already completed action
on some of them.
Although the e- rate program's administrative costs grew slightly from 1998
to 2000, they still remain small in relation to the program's overall
funding. Program officials recently took actions designed to reduce
contractors' costs- the program's biggest expense. We compared the e- rate
program's administrative expenses with those of 34 other federal technology
support programs by calculating the administrative expenses for each program
as a percentage of the total funding provided. The e- rate program's
percentage of 2.4 fell in the middle of the range of the other programs'
percentages.
Until recently, the e- rate program lacked meaningful performance goals and
measures as defined by the Government Performance and Results Act of 1993.
FCC's initial goals focused on increasing the percentage of school buildings
connected to the Internet, but these connectivity goals were much lower than
the percentage of schools already connected. In September 2000, FCC
finalized new goals and measures that focus on Internet connections to
classrooms. Unlike the old goals, these properly reflect the percentage of
classrooms already connected. The new goals include having 100 percent of
public school instructional classrooms connected to the Internet by 2002 and
95 percent of private school instructional classrooms connected by 2003. The
plan also seeks to improve participation in the e- rate program by urban
low- income school districts and rural school districts located outside of
towns, as well as rural libraries and libraries serving small populations.
According to FCC data, the participation rates for these groups currently
fall below the average rates of participation for all groups of applicants.
Background Universal service traditionally has meant providing residential
customers with nationwide access to basic telephone service at reasonable
rates. The
Telecommunications Act of 1996, however, broadened the scope of universal
service, in part by extending universal service support to include eligible
schools and libraries. The new program (often referred to as the
“erate” program) is designed to improve schools' and libraries'
access to advanced telecommunications and information services.
The Telecommunications Act of 1996 did not prescribe to FCC a structure for
administering the program. In 1997, FCC directed the establishment of the
Schools and Libraries Corporation as a not- for- profit organization working
within the framework of FCC orders and rules to carry out the program's day-
to- day operations, such as processing and reviewing e- rate applications.
In November 1998, FCC changed the program's administrative structure in
response to legal concerns about FCC's authority to create a corporation and
the Congress's directive that a single entity should administer the e- rate
program and a related program that provides telecommunications support to
rural health care providers. 3 FCC appointed an existing body, the Universal
Service Administrative Company (USAC), as the permanent administrator of the
program and directed the Schools and Libraries Corporation to merge with
USAC by January 1, 1999. 4 Under this merger, the Corporation's staff became
part of a new USAC unit called the Schools and Libraries Division (SLD),
carrying out essentially the same functions as before. In this report, we
will refer to SLD when discussing operational issues associated with the
program. FCC retains responsibility for overseeing the program's operations
and ensuring compliance with its orders. Among other things, FCC reviews
USAC's budget, makes e- rate policy decisions as needed, and handles appeals
about funding decisions that are not resolved by SLD in favor of the
applicant.
3 See Senate Bill 1768 and the Conference Report on H. R. 3579 (H. Rept. No.
105- 504). Section 2004( b) of the Senate bill provided, in part, that the
Commission should propose a structure for the administration of its
universal service programs that would consist of one entity.
4 USAC was originally established as a subsidiary of the National Exchange
Carrier Association (NECA) to administer the high- cost and low- income
universal service support mechanisms. USAC currently performs billing,
collection, and disbursement functions for all the universal support
mechanisms. See Changes to the Board of Directors of the National Exchange
Carrier Association, Inc., Federal- State Board on Universal Service, Third
Report and Order and Fourth Order on Reconsideration, and Eighth Order on
Reconsideration, CC Docket Nos. 96- 45, 97- 21, FCC 98- 306 (rel. Nov. 20,
1998).
Eligibility Defined by Generally, educational institutions that meet the
definition of “schools” in
Federal and State Law the Elementary and Secondary Education Act of 1965 5
are eligible to
participate, as are libraries that are eligible to receive assistance from a
state's library administrative agency under the Library Services and
Technology Act. 6 Prekindergarten education programs, adult secondary
education programs, and juvenile justice facilities (e. g., classes leading
to the General Educational Development High School Equivalency Test or other
education that does not go beyond grade 12) may also be eligible for program
funding depending on how state law defines elementary and secondary schools
in the state where the program or facility is located. Appendix III
identifies the states where this broader eligibility applies.
Eligible schools and libraries may apply annually for e- rate support. Over
30, 000 applications were submitted during each of the program's first 3
program years (1998- 2000) from schools and libraries in each of the 50
states, the District of Columbia, and Puerto Rico. 7 Individual applications
can cover single schools, whole school districts, consortia, or even schools
in entire cities and states. Applicants can also submit multiple
applications each year for different services. The amount of support sought
in an individual application can range from hundreds of dollars to tens of
millions of dollars, depending on the number of schools or libraries covered
by the application and the extent of the services for which funding is
sought.
5 20 U. S. C. 8801( 14) and (25). 6 20 U. S. C. 9122. Examples of entities
not eligible for support are home school programs, private vocational
programs, and institutions of higher education. In addition, private schools
with endowments of more than $50 million are not eligible to participate.
Libraries whose budgets are part of a school's budget are not eligible to
receive universal service support.
7 Schools and libraries located in American Samoa, Guam, the Northern
Mariana Islands, and the U. S. Virgin Islands have also requested funds in
one or all of the program years.
Funding Is Provided Schools and libraries do not receive funding directly
from the program.
Through Discounts on Instead, the program requires applicants to seek
competitive bids from
Contracted Services technology vendors for telecommunications services,
Internet access, and
internal connections that are eligible for e- rate support. The program
reimburses the applicants' vendors for discounts the vendors provide on the
costs of services, as approved by SLD during the application process.
Alternatively, if the applicant has already paid in full for the service, it
may seek reimbursement from SLD. Approved reimbursements are paid to the
service provider, which passes them on to the applicant. The discount levels
range from 20 to 90 percent, with schools and libraries located in rural and
low- income areas receiving the highest discounts. 8 See figure 1 for an
overview of the e- rate application and funding cycle.
8 The program measures how economically disadvantaged the schools and
libraries are by the number of students eligible to participate in the
national school lunch program. Urban and rural designations are based on the
Metropolitan Statistical Area (MSA) listing.
Figure 1: Overview of E- Rate Application and Funding Cycle
(1) Applicants submit (2) After 4 weeks,
(3) Applicants submit descriptions of services
applicants may choose requests for e- rate funds
they are seeking. SLD posts their vendors and sign
to cover the discounted descriptions on its Web site.
contracts for services. share of eligible services. (6) Applicants inform
(5) SLD commits funds (4) SLD reviews
SLD when vendors for eligible requests and
applications for the begin providing services. notifies applicants and
eligibility of requested vendors via letter.
services and entities. (7) Vendors send invoices
(8) SLD authorizes payment for discounted share of costs
of valid invoices and requests to SLD. Applicants that have for
reimbursement from
paid vendors directly request universal service fund. reimbursement.
The discounts are funded by the universal service fund, which is one of the
financial support mechanisms used to compensate telephone companies and
other communications entities for providing access to telecommunications
services at reasonable and affordable prices to highcost areas, low- income
households, and rural health care providers in addition to schools and
libraries. The Telecommunications Act specifies that every
telecommunications carrier providing interstate telecommunications services
must contribute to this fund, unless exempted by FCC. 9 A portion of this
fund is used to compensate vendors for the discounts they provide to e- rate
program participants. Unless the Commission takes action, $2.25 billion is
available for e- rate discounts each year.
Not All Telecommunications The e- rate program does not provide support for
all the
Products and Services Are telecommunications services that schools and
libraries may need or desire.
Eligible for Support The Telecommunications Act directed FCC to convene a
Federal- State
Joint Board on universal service. Based on the board's recommendations,
FCC's May 1997 Universal Service Order, along with several subsequent
orders, defines three classes of service that are eligible for e- rate
support:
telecommunications services, such as local, long- distance, and
international telephone service; as well as high- speed data links (such as
T- 1 lines); Internet access services, such as dial- up Internet access, and
e- mail
services; and internal connections, such as telecommunications wiring,
routers,
switches, and network servers that are necessary to transport information to
individual classrooms.
Charges for telecommunications and Internet access services can include both
recurring costs, such as monthly service, and one- time installation costs.
Internal connections are generally one- time costs to purchase and install
eligible equipment and software. Some items within these categories are
eligible only if certain conditions are met. For example, personal
communications service (PCS) and cellular telephone service are
conditionally eligible if used at a place of instruction for educational
purposes. Other items are always ineligible for e- rate support, even though
9 The Commission also required certain other providers of telecommunications
services, such as payphone service providers, to contribute to the universal
service fund.
they may be necessary or desirable for providing students or library patrons
with access to advanced telecommunications services, such as the Internet.
Ineligible items include personal computers, modems in personal computers,
virus protection software, and content- filtering software designed to block
access to objectionable Web sites. Figure 2 illustrates some of the common
eligible and ineligible products and services. FCC's Schools and Libraries
Eligibility List provides additional information on the items that can be
funded under each of these categories.
Figure 2: Examples of Eligible, Conditionally Eligible, and Ineligible
Products and Services
Eligible for Funding Conditionally Eligible Ineligible for Funding
for Funding Telephone/ data services Software
Modems installed in personal computers
Maintenance Televisions
Computers used as web/ mail servers
Video services Computers used as
individual workstations Central phone systems
Wiring Telephones
Schools and libraries are allowed to contract with the same vendor for both
eligible and ineligible services. However, in preparing their e- rate
applications, applicants are required to exclude the cost of all ineligible
items from their funding requests.
Although E- Rate The annual amount of e- rate funds requested by applicants
has grown
Funding Requests Have sharply, from $2.4 billion for the first program year
(1998) to an estimated
$4. 7 billion for the third program year (2000). This latter amount greatly
Increased, a Significant
surpasses the annual e- rate funding cap of $2. 25 billion, which FCC Amount
of Committed
established at the outset of the program. For the first 2 program years
(1998 Funds Has Not Been
and 1999), SLD committed a combined total of $3. 7 billion in e- rate
support in response to applicants' requests. However, as of August 31, 2000,
at least
Used $1. 3 billion of this $3.7 billion in committed funds was still unused.
Because
FCC extended its deadlines, some applicants receiving funds for the second
program year will have until September 30, 2001, to receive onetime
services. As of August 31, 2000, SLD had committed $1.5 billion for the
third program year and expected to commit another $600 million.
Amount of Requested Section 254 of the Communications Act of 1934, as
amended, provided FCC
Funding Has Increased with the authority to set the funding level for the e-
rate program. Acting on
Sharply the recommendations of the Federal- State Joint Board, which
estimated
the demand for e- rate support, FCC established a $2.25 billion annual
funding cap for the program. Each year, FCC determines the funding level for
the program, based on projected demand, subject to the cap. Appendix I
provides additional details on FCC's authority to set and modify this cap.
Table 1 shows the amounts of e- rate funds requested by applicants and
committed to them by SLD for the first 2 program years. (Funding commitments
for the third program year were not complete at the time our review ended.)
For the first program year, FCC set the funding level at $1. 925 billion. 10
This was enough to fund all the applicants' requests for eligible
telecommunications services and Internet access support, but not enough to
cover all requests for eligible internal connections support. The program's
funding priorities call for telecommunications services and Internet access
requests to be funded first, with any remaining funding going to internal
connections for the most disadvantaged applicants. As a result, only those
applicants with discount rates of 70 percent or higher received e- rate
funding for their internal connections. 11 For the second program year, FCC
raised the funding level to the full $2.25 billion allowed under the cap.
SLD received about $2. 7 billion in requests but found, after reviewing them
against various eligibility criteria, that all eligible requests could be
funded for only $1. 99 billion. According to SLD officials, FCC directed
them to reopen the second- year application period so that they could use
the remainder of the funds. 12 These additional applications, requesting an
estimated $370 million, had not been processed at the time our review ended
and are not included in table 1.
10 FCC also extended the first program year from 12 to 18 months. 11 As
table 1 shows, the total amount of first year funds committed was $1. 731
billion. This amount does not equal the total amount of authorized funding
available that year ($ 1. 925 billion). SLD held some funds in reserve to
cover appeals by applicants that were denied funding. Program funds are also
used to cover the program's administrative costs.
12 SLD is reviewing applications received between Apr. 7, 1999, and Mar. 31,
2000, for the remaining second- year program funding.
Table 1: Amounts of Funds Requested and Committed for the First 2 Program
Years, as of August 31, 2000 First program year (1998) Second program year
(1999) a Amount requested by
Amount committed by Amount requested by
Amount committed by Service type applicants SLD applicants SLD
Telecommunications $725,533,870 $679, 158, 138 $770,554,717 $579, 455, 836
Internet access 138,977,710 135,647,152 185, 823,153 148, 408, 155 Internal
connections 1,536,573,944 917,092,722 1, 754, 481,404 1,242, 965, 575
Total $2,401,085,524 $1, 731, 898, 012 $2, 710, 859,274 $1,988, 829, 566
a Does not include requested and committed amounts for additional
applications accepted after April 7, 1999. Source: SLD's database.
The funding commitment process for the third year was still under way when
we ended our audit. SLD estimated, however, that the total amount of third-
year funding requested by applicants is about $4.7 billion, almost double
the request level for the program's first year. Since this amount is well
above the funding level of $2. 25 billion that FCC set for this year, many
requests will not be met. As noted above, the program's funding priorities
call for telecommunications services and Internet access requests to be
funded first, with any remaining funding going to internal connections. SLD
officials estimated that they would be able to fund eligible internal
connection service requests only for applicants that have a discount rate of
82 percent or higher. As of August 31, 2000, SLD had committed $1.5 billion
for the third year and estimated that it would be committing an additional
$600 million once all the third- year applications were processed.
A Significant Amount of Although SLD commits program funds to applicants on
the basis of their
Funds Committed to application requests, it does not authorize payouts of
committed funds
Applicants Has Not Been until it receives valid invoices showing that the
applicants have obtained
Used the requested products and services. In accordance with its internal
control
procedures, SLD will not approve payments of committed funds until (1)
applicants certify that they have begun to receive e- rate- supported
services from their vendors and (2) vendors file invoice forms requesting
reimbursement for the e- rate- supported services that they have provided to
the applicants. In many cases, applicants and their vendors have not yet
submitted this material. As of August 31, 2000, at least 35 percent ($ 1. 3
billion) of the $3.7 billion in program funds committed to applicants during
the first and second program years had not yet been paid out. Table 2
summarizes the amounts of first- and second- year funding that were
committed to applicants and the amounts that SLD authorized to be paid out
as of August 31, 2000. Appendix IV contains the same data broken out by each
state, the District of Columbia, and the Commonwealth of Puerto Rico.
Table 2: Amounts of Funds Committed and Authorized for Payment by SLD for
the First 2 Program Years, as of August 31, 2000 First program year (1998)
Second program year (1999)
Program funds Program funds Program funds
authorized for Program funds
authorized for Service type committed
payment committed payment
Telecommunications $679, 158, 138 $507,321,407 $579, 455, 836 $233, 465, 766
Internet access 135, 647, 152 95, 165,521 148, 408, 155 68, 118, 565
Internal connections 917, 092, 722 792,059,949 1, 242, 965, 575 707, 530,
523
Total $1, 731, 898, 012 $1, 394, 546,877 $1, 988, 829, 566 $1,009, 114, 854
Source: SLD's database.
FCC required that applicants use all funds committed to them in the first
program year no later than June 30, 1999. In March 1999, FCC granted a
partial extension of this deadline, allowing the payment of funds committed
for one- time services provided through September 30, 1999. FCC permitted
this extension because a number of schools and libraries received late
notice of funding commitment decisions, making it difficult for them to
initiate the installation of internal connection services. 13 In December
1999, FCC waived the new deadline for those applicants that had received
late funding commitments following appeal decisions, requested a change in
vendors, or for some reason had their payments delayed. The waiver generally
gives an applicant an additional 180 days from the time of receiving the
late commitment letter or changing the vendor to use its funds committed for
one- time services. 14 Despite these extensions, about $337 million of the
total funds committed during the first program year had not been authorized
for payment as of August 31, 2000.
13 In addition, FCC noted the extension would allow schools to use internal
connection funding over the summer months when schools were in recess. 14
Because of these extensions and pending appeals, SLD estimates that it is
possible that as much as $44 million committed in the first year could still
be paid out.
For the second program year, FCC originally established a deadline of June
30, 2000, for receiving services supported by committed funds. FCC
subsequently extended this deadline for one- time services to September 30,
2000, largely because SLD again notified applicants of their funding
commitments later than anticipated. As of August 31, 2000 (30 days before
the deadline), about $980 million of these committed funds, or nearly 50
percent, had not been authorized for payment. On October 31, 2000, FCC again
extended this deadline. Applicants meeting certain criteria now have until
September 30, 2001, to use second- year funds committed for one- time
services.
It is currently unclear what percentage of committed funds will ultimately
be used. Given the deadline extensions and waivers, SLD officials expect
that additional applicants and vendors will eventually file the required
forms and receive some of the committed funding, while others may never
claim all of the funds committed to them because they did not obtain all of
the items included in their request. FCC has already used $447 million of
first- year program funds to reduce the amount that telecommunications
carriers paid into the universal service fund in the second and third
program years. Both FCC and SLD officials stated that a comprehensive
analysis has not been conducted to determine why some committed funds have
not been claimed or whether changes in program procedures could reduce the
amount of unused funds.
Weaknesses Found in Weaknesses in SLD's application review process caused
some funds to be
Application and committed for ineligible products and services. We reviewed
44 secondyear
applications that received funding commitments for internal Invoice Review
connections- the type of service most likely to include ineligible items.
Procedures
After screening out $20 million from requests that included ineligible
items, SLD committed $285 million in e- rate funds to these applications.
However, we found that SLD reviewers had failed to identify other ineligible
items that resulted in at least $6 million in funding errors. This amount
understates the extent of the problem because it does not include cases we
found in which funds were mistakenly committed for ineligible items whose
costs could not be determined from the application materials. Furthermore,
it does not include the costs of other items whose eligibility was
questionable but could not be resolved using the application materials and
current review criteria. We traced these funding commitment mistakes and
problems to procedural errors, unclear review criteria, and a lack of
sufficient information in some applications that prevented reviewers from
determining the eligibility of questionable items. In addition, we found
that
SLD's process for reviewing invoice forms prior to disbursing committed
funds provides another opportunity to identify ineligible items. However,
the invoice review process requires applicants to submit much less
information than is found on their applications and involves less
comprehensive reviews. An independent auditor hired by SLD has uncovered
preliminary evidence that some program funds were spent on ineligible
services after the requests for these funds cleared SLD's application and
invoice reviews. SLD officials have begun efforts to address some of these
weaknesses.
Application Review One of SLD's key management objectives is to ensure that
e- rate funds are
Includes Procedures to provided only to eligible entities for eligible
products and services. Not
Prevent Funding of only is it inequitable for some applicants to receive
funding for ineligible
Ineligible Items products while others do not, but such errors deplete the
funds available to
other applicants. This latter point is particularly important because, as we
noted earlier, there was not enough funding available during the first and
third program years (1998 and 2000) to meet all the applicants' requests.
SLD's primary internal control for ensuring that program funds are not
directed to ineligible products and services is the application review
process. This process calls for more than one reviewer to examine virtually
all applications, identify all ineligible items that an applicant may have
included, and exclude these items from the funding commitment made to the
applicant. One key aspect of this process calls for reviewers to compare the
services described in each application to a database listing more than 750
telecommunications services, Internet access services, and internal
connection items. 15 For each item, the database identifies the type of
service, provides a definition, and specifies whether it is eligible,
ineligible, or eligible only if certain conditions are met. Any funding
request that includes an ineligible entity or an ineligible product or
service must be reduced by the cost of the ineligible item. If the cost of
ineligible items totals more than 30 percent of the funding request, then
the whole request is denied. 16
15 This aspect of the review process was implemented as a result of our
testimony Schools and Libraries Corporation: Actions Needed to Strengthen
Program Integrity Operations Before Committing Funds( GAO/ T- RCED- 98- 243,
July 16, 1998), which found that the same review criteria were not being
applied to all applications. 16 This procedure was put in place to prompt
applicants to prepare their applications carefully and make a conscientious
effort to exclude ineligible items.
While the process used to review the eligibility of services is the same for
all applications, the amount of effort needed to review an application
varies. Some applications are quite large, covering many schools and
containing hundreds of separate requests for products and services, each of
which needs to be reviewed, whereas other applications include only a few
products or services. Applications also vary in the amount of information
provided. Some applications we reviewed included detailed descriptions of
every product or service for which support was requested. In other cases,
reviewers had to ask applicants for more information to understand what
services they had included.
The importance of the application review process is underscored by the fact
that applicants can request substantial funding for ineligible items. For
example, for the 1999 program year, SLD officials said that they had
identified and denied nearly $400 million in internal connection funding
requests for ineligible items or requests that did not meet other
eligibility rules. 17 Once SLD reviews the applications and adjusts the
requested amounts to remove the cost of ineligible items, it makes its
funding determinations. Each applicant receives a letter detailing the
amount of funding committed for each funding request and noting any funding
that was denied.
Some Ineligible Internal To test the effectiveness of SLD's application
review process, we examined
Connection Items Were a sample of applications that received funding
commitments for internal
Included in Second- Year connections during the second program year (1999),
the one most recently
Funding Commitments completed at the time of our review. Our objective was
to determine how
effective the process was in funding only eligible items. We focused on
internal connections because many ineligible products and services fall into
this category. All of the applications in our sample had gone through SLD's
review process and had received funding commitments. Our sample universe was
the 9,770 applications that had received funding for internal connections
for the 1999 program year. We selected applications for review with a
probability proportionate to their size, as measured by the number of
dollars committed for internal connections. Our sample included 44
applications that accounted for more than $285 million of the $1.2 billion
in
17 SLD officials stated that, during the 1999 program year, they denied a
total of $700 million in funding requests for ineligible items or requests
that did not meet other eligibility rules. These denials included requests
for telecommunications, Internet, and internal connection services.
second- year funds committed for internal connections through November 1999.
These applications contained over 2, 300 separate funding requests for
internal connections, many of which contained dozens of internal connection
items. Because of the great variation in the amounts of the errors we
observed from one application to the next in our sample, we were unable to
reliably estimate the total amount of funding for ineligible or potentially
ineligible services committed by SLD in the second program year. Additional
information on our sampling methodology appears in appendix V.
We found that SLD reviewers correctly identified and screened out $20
million from requests that included ineligible items before committing $285
million in internal connections funding to the 44 applications. This $20
million includes both ineligible items and requests in which more than 30
percent of the cost was for ineligible items (a condition that results in a
denial of funding for the entire request). The following examples illustrate
some of the ineligible items that SLD caught during the application review
process:
$6. 8 million was correctly denied to an applicant requesting ineligible
multimedia equipment. $4. 2 million was correctly denied to an applicant
requesting ineligible
satellite and computer services, Wide Area Network (WAN) equipment,
software, and maintenance. $3. 7 million was correctly denied to an
applicant requesting equipment
identified as part of an ineligible WAN. About $336,000 was correctly denied
to an applicant requesting wiring at
ineligible locations, including a stadium and housing, as well as ineligible
software, modems, and telephones.
Overall, we believe that about $193 million of the $285 million in
commitments was correctly reviewed and processed. We found, however, that
SLD reviewers missed other ineligible items in these 44 applications and
incorrectly included them in funding commitments made to applicants.
Specifically, we found that SLD improperly committed at least $6 million for
ineligible items or for requests in which more than 30 percent of the
funding was for ineligible items and should have been denied entirely. Some
of the ineligible items missed by reviewers involved relatively small
amounts. For example, $6,000 was incorrectly committed to one applicant for
ineligible WAN equipment. Other missed items involved larger amounts of
funding, as the following cases show:
About $1.8 million was incorrectly committed to an applicant for ineligible
videoconference capabilities. About $2 million was incorrectly committed to
an applicant for
ineligible maintenance services that were intended to be delivered outside
the program year. About $306,000 was incorrectly committed to an applicant
for ineligible
interface cards, video cameras, and maintenance. About $50,000 was
incorrectly committed to an applicant for services to
ineligible locations and for ineligible telephone maintenance. In addition,
we found that SLD committed funds to requests when (1) an applicant included
an ineligible item whose cost was not identified or (2) the eligibility of
the requested services could not be determined because descriptive
information in the application material was not sufficiently clear. These
problems occurred in requests that totaled $86 million, but we did not have
enough information to determine what proportion of this amount might involve
ineligible items. Specific examples include the following:
One application submitted by a city school district included more than 600
requests. The attachment to the application listed a number of eligible
services and items, including servers, switches, and hubs, as well as an
ineligible software product. Since the application did not specify the
amount of funding related to the ineligible software, or even which of the
600 requests included the ineligible item, neither we nor SLD could
determine how much of the $21 million requested in this application and
committed to the applicant was committed in error. Another applicant (a
school system) requested about $1.2 million for
approximately 93 file servers. The application, however, suggests that an
ineligible service center could be one of the locations scheduled to receive
a server. Neither we nor SLD could determine whether and to what extent the
applicant was going to use program funding for this ineligible location.
Still another applicant asked for $2. 7 million to support the installation
of voice, data, and video cabling. SLD approved this request because the
list of eligible services it maintains indicates that each of the requested
services is eligible. However, the list also includes a description noting
that video services are eligible only under certain circumstances. Neither
we nor SLD could determine if the applicant intended to use the television
cabling to provide ineligible video services (which would make the cabling
itself ineligible). SLD stated that reviewers should
have sought additional information from the applicant to resolve this
matter.
Inadequate Information and As shown by the proceeding examples, weaknesses
exist in the application
Unclear Guidance Weaken review process. Some mistakes appear to be the
result of human error,
the Review Process since the information needed to make a correct
determination was
available in the application materials. For example, one application clearly
indicated that the applicant intended to use $1. 7 million in program funds
to upgrade its telephone systems to include videoconferencing capabilities-
an ineligible service. However, other errors appear to be the result of
problems in the application and review process. First, applicants did not
always describe the services for which they requested funding in enough
detail to enable the reviewers to determine whether any of the requested
services were ineligible. For their part, SLD reviewers did not always
contact applicants for additional information needed to make informed
decisions about the eligibility of requested services. Second, the program's
policies and guidance do not always effectively define which services are
eligible for funding support.
Inadequate Information in E- rate applications do not always include
detailed information on the
Applications services for which funding is requested. This is the result of
FCC's policy to
allow the applicants flexibility in how they document their funding
requests. The e- rate application requires one line of basic information for
each funding request, including such information as the vendor, the general
type of service requested, the total monthly and annual costs, and the
discount rate requested. In addition, applicants are required to provide an
attachment for each request that includes “a concise but specific
itemization of services provided.” In the applications we reviewed,
some applicants listed every item for which they were requesting support,
while others included only a general description of the requested services,
making it difficult to readily determine if these requests included
ineligible items.
Procedures direct SLD reviewers to contact applicants for additional
information if the application is unclear. Moreover, for conditionally
eligible services, reviewers are required to determine whether the requested
service will be used according to the program's rules. If the reviewers
cannot make that determination from the information provided in the
application, they are required to ask the applicant for clarification.
However, we found that this procedure was not being consistently followed
for the applications that we reviewed. We identified several instances when
reviewers approved requests for conditionally eligible services without
having documentation showing how the services would be used. For example,
two applicants requested program funds for network equipment maintenance,
which is eligible for program support if the equipment being maintained is
eligible. However, the applicant did not identify the equipment to be
maintained, and SLD approved the request without seeking additional
information.
Similarly, service to administrative buildings is conditionally eligible.
Such a building is eligible only if needed to provide service to
instructional buildings. However, we found instances when SLD approved
requests for services to buildings despite evidence that they could be
ineligible administrative sites. For example, an applicant included in its
list of sites to be funded one site that had no students. SLD fully funded
this request, even though the application did not specify whether the site
with no students was an instructional or an administrative building. SLD
stated that while additional information should have been requested,
reviewers did not ask for additional information on this conditionally
eligible item because they assumed the request was eligible.
Lack of Clarity as to the FCC's rules do not always clearly define which
services and entities are
Eligibility of Some Items ineligible for program funding. For example, FCC's
rules state that WANs
are not eligible for funding but do not provide clear guidance on what
should be considered a WAN. 18 As a result, SLD reviewed 1999 applications
under a policy that rejected any item specifically identified as part of a
WAN, such as components with the acronym “WAN” in their
description. However, similar items that did not include the acronym
“WAN” in their description were approved. For example, SLD
denied one applicant's request for radios used to cross a public right- of-
way. However, SLD approved a request by another applicant because the
acronym “WAN” was not used in the application's description of
wireless transmitters capable of transmitting data up to 600 feet from the
school. When we pointed out this inconsistency, SLD (with FCC's concurrence)
changed its procedures for dealing with WANs. Under the new procedures, all
types of networking equipment located within school and library facilities
are considered eligible, regardless of how they are labeled. Only the actual
wires that carry data across public rights- of- way are considered
ineligible WAN components.
18 See 47 C. F. R. 54. 500 and 54. 518.
FCC has also identified teacher training as an ineligible service but does
not specifically define the type of training that is ineligible or discuss
the training of other personnel. As a result, SLD approved several requests
for what it assumed was initial training provided by vendors on the use of
eligible items. For example, one applicant submitted a request stating that
over $4,500 in program funds would be spent for “on- premises
training” and “on- site translation.” SLD approved the
request, considering it a reasonable cost of installing eligible equipment.
FCC staff stated that this policy is consistent with the intent of the
original order, which identified training as an ineligible item and FCC
subsequently specified as teacher training. FCC staff concluded that basic
instruction in using eligible equipment is eligible, provided it is
“reasonable.” However, they have not defined any criteria to
determine when these training costs should be considered reasonable or
provided guidance to SLD on how training costs should be reviewed.
Similarly, we identified several requests to fund project design costs and
contingency fees. Guidance provided by FCC describes “room design
consulting and system integration” as ineligible services. However,
FCC staff responsible for e- rate oversight told us that design costs and
contingency fees are eligible for program funds if they are related to
eligible services and are “reasonable.” Again, FCC has not
defined what is reasonable. In one case involving these services, SLD
approved a $3 million request from one applicant that included over $621,
000 in design costs and almost $200, 000 in contingency fees. Because this
request also included some ineligible services, program officials have yet
to determine how much of the requested design and contingency fees should
have been denied. Although they stated that the applicant's contingency fee
was not unreasonable because it represented only 6 percent of the contract's
total cost, they did not define the precise threshold that SLD could use to
determine whether similar requests are reasonable.
In addition, FCC staff stated in June 1998 that no universal service support
will be provided for the costs of tearing down walls to install wiring,
repairing carpets, or repainting. The applications we reviewed, however,
included funding SLD had approved for an indeterminate amount of repainting
and construction of walls and doors. For example, SLD approved a request by
one applicant for over $18 million in program funds for a vendor to install
new central telephone systems in 133 schools. At the request of an SLD
reviewer, the applicant later provided a comprehensive list of the equipment
and cabling to be included in 1 of the 133 schools. Although this list
included the costs of constructing a wall and door, SLD stated that these
costs might be allowable if they resulted from and were
required for the installation of the equipment. As of September 2000, FCC
staff had not determined if these items were eligible to receive funding,
although they said that nominal repair and painting may sometimes be linked
to installation. FCC staff had not provided this additional guidance to SLD.
We also found that SLD sometimes failed to inform applicants that they had
requested funds for ineligible services, even though its internal procedures
require such notification. For example, one applicant requested more than
$7. 7 million for a districtwide cabling project, including approximately
$183,000 in equipment and maintenance that were not eligible for e- rate
support. While SLD denied the funds requested for the ineligible items, its
letter to the applicant did not explain the basis for the reduction or
caution the applicant not to spend any e- rate funds on the ineligible
equipment and maintenance. Without such explicit notification, an applicant
could mistakenly apply funds to ineligible items.
Most Invoices Paid Without SLD's invoice review procedures provide another
opportunity to prevent
Detailed Review funding from going to ineligible products and services. Both
the applicant
and its vendor must file additional forms before committed e- rate funds are
paid. However, these forms contain less information and are reviewed in a
less comprehensive manner than e- rate applications.
One way in which the invoice review process differs from the application
review process is that neither the applicant nor the vendor is required to
provide a descriptive listing of the products and services for which the
invoice seeks payment. The form submitted by the applicant simply states
that it has begun receiving services under an approved request. The invoice
form submitted by vendors also includes few details. It essentially requires
the vendor to identify itself, the application and request number for which
it is seeking reimbursement, and the total amount of reimbursement
requested. Both the applicant and the vendor must certify on their forms
that the information they are providing is accurate. 19
19 When an applicant has paid a vendor the entire cost of an approved
service, the applicant may apply for reimbursement through its service
provider to SLD of the approved, discounted cost. As when vendors submit
invoices, the forms do not require detailed information on the services
provided.
In contrast to the application review process, when every application is
checked for ineligible services, the invoice review process scrutinizes only
a limited number of invoices to determine what services are being funded.
SLD's invoice reviews begin with an automated validation process that
determines if all the required information is included on an invoice form.
20 Once this validation is complete, the invoice is approved for payment,
denied for payment, put on hold, or assigned to a reviewer for a special
review. Invoices are generally chosen for a special review because they are
considered to be “high risk.” For example, invoices from an
applicant or vendor that has previously violated program rules generally
receive special reviews. In some cases, SLD requires the applicant or vendor
to submit detailed billing statements as part of a special review.
Prior to January 2000, reviewers were not required to verify that only
eligible products and services were included in any billing information
submitted by applicants or vendors during the invoice review process.
Because of ongoing concerns about vulnerabilities in this review process,
SLD clarified its procedures in early 2000 to require reviewers to examine
all submitted billing information for evidence of ineligible services.
However, these new procedures are still more limited than those applied to
applications because SLD does not require additional billing information for
all special reviews. Even for cases that require additional information, SLD
did not specify what level of detail should be provided. Since they began,
SLD's special reviews have identified a limited number of invoices that
requested payment for ineligible services, resulting in a denial of payment.
For example, one applicant's vendor requested payment of about $535,000 in
program funding for an ineligible service. As a result, SLD withheld some of
the funds related to the invoice. In addition, SLD plans to modify the
applicant's funding commitment to deny the amount associated with the
ineligible service.
SLD officials also told us in September 2000 that they were taking further
steps to improve their invoice review process. Another detailed review will
be added to identify invoices associated with funding commitments that were
modified by SLD from the original requests because they included ineligible
items. According to SLD officials, procedures for this additional detailed
invoice review are being developed. Also, on October 12, 2000, SLD released
a request for proposals for the evaluation and improvement
20 These checks include determining if the invoice is missing information
about the contact, vendor, or service delivery dates.
of its invoice authorization and payment procedures. As part of its ongoing
quality control efforts, SLD has a contract with an outside auditor (Arthur
Andersen LLP) to conduct site visits to a number of applicants that received
funding during the first program year after clearing SLD's application and
invoice reviews. 21 At the time we completed our review, SLD had received
information from the auditor that some funds approved for payment had not
been used in accordance with the program's rules. In October 2000, SLD
officials told us that over half of the auditor's reviews had been completed
or virtually completed with no major reportable findings. However, the
remaining reviews have disclosed some violations, including cases in which
program funds were used to pay for ineligible services and services
delivered outside the program year. At one location, there are preliminary
indications that program funds could have been intentionally misused. USAC
forwarded this information to FCC, and as a result, this case is under
investigation by FCC's Office of Inspector General.
Administrative Costs The e- rate program's administrative costs for 1997
through 1999, together
Remain a Small with the projected costs for 2000, show some overall growth
despite earlier
expectations that they would decline following the program's start- up
Percentage of Overall
phase. Program officials recently took action to reduce contract costs- the
Funding
source of most of the increase- but it is too early to determine the success
of their effort. Even with this growth, however, administrative costs remain
a small percentage of the program's total costs. We compared the e- rate
program with 34 other federal programs that can provide technology funding
to schools and libraries by calculating each program's administrative costs
as a percentage of its total program costs. The e- rate program's
administrative costs were 2.4 percent of its total program costs, while the
others ranged from less than 1 percent to 15 percent. Overall, the
percentage of administrative costs was higher for 12 of the 34 programs than
for the e- rate program, lower for 21, and the same for 1. However, it is
difficult to draw conclusions from this comparison, given the many
differences in these programs' characteristics and operations.
21 SLD selected a diverse sample of applications based on a variety of
factors, including highrisk designations.
Operating Expenses of the Most of the administrative cost of the e- rate
program stems from the
E- Rate Program operations of the program administrator. Table 3 provides a
breakdown of
Administrator the operating expenses for the Schools and Libraries
Corporation (which
operated from the inception of the program in September 1997 through 1998),
and the current administrator, the Schools and Libraries Division of USAC
(which has operated since January 1, 1999). The data, based on independently
audited financial statements, cover two time frames: the 16 months of the
Corporation's operational lifetime and the first 12 months of the current
administrator's operations.
Table 3: E- Rate Program's Operating Expenses, 1997- 99
Dollars in thousands
Schools and Libraries Corporation Schools and Libraries Division, USAC
Expense category (Sept. 1997 to Dec. 1998) (Jan. 1999 to Dec. 1999)
Compensation and related expenses $1, 269 $881 (includes program's staff
salaries and benefits)
Professional fees (includes legal, audit, 1, 574 510 bookkeeping expenses)
Other operating expense (includes rent,
1, 140 899 taxes, office supplies, postage and freight, travel, telephone,
computer support, dues, and subscriptions)
Depreciation and amortization (includes -89 furniture and computer software)
Contractual expenses (includes salaries and
23, 341 26, 555 expenses of NECA and its subcontractors for day- to- day e-
rate program support operations)
Total $27, 324 $28, 934
Source: Report by Arthur Andersen LLP to USAC's Board of Directors, dated
Apr. 12, 2000.
Audited financial statements for 2000 are not yet available. However, USAC
submits projections of its operating expenses to FCC in advance of each
quarter of the calendar year. The projected expenses for the four quarters
of 2000 total somewhat over $34 million. According to USAC, the actual
expenses should come close to these projections.
Together, the audited financial statements and the projections for 2000
indicate a small, but steady, growth in administrative expenses. In
testimony before the Senate Committee on Commerce, Science, and
Transportation on July 16, 1998, the head of the Schools and Libraries
Corporation at that time stated that “[ i] n future years, with start-
up costs behind us, we anticipate administrative costs will decline
accordingly.” As table 3 indicates, there were decreases in several
expense categories in 1999. These decreases are attributable to the change
in program administrators. According to USAC's Chief Executive Officer,
consolidating e- rate program operations with USAC's existing universal
service operations and rebidding contacts produced savings in compensation
and benefits, insurance, rent, independent audits, and general accounting.
However, contract costs for the day- to- day operational support performed
by NECA increased, rather than decreased. The former administrator of the
Schools and Libraries Corporation awarded a support services contract to
NECA without using a competitive bidding process involving formal requests
for proposals. NECA's contract was a “time and materials”
contract under which the Corporation agreed to pay “all reasonable,
actual costs” incurred by NECA in carrying out the agreed upon work.
The heavy workload for 1999 contributed to the increase in contract costs.
The policy of USAC, the current program administrator, requires that all
contracts over $100,000 be put out for competitive bid unless an exception
is approved by its Board. Accordingly, in December 1999, USAC issued a
request for proposals for programmatic support services for the e- rate
program and a related telecommunications program covering rural health care
providers. 22 Unlike the previous contract, whose price was based on actual
costs, the new solicitation was for a firm fixed- price contract. At the
conclusion of the competitive bidding process, USAC announced in May 2000
that it had awarded this new contract to the incumbent, NECA. The 3- year
contract, running from July 2000 through June 2003, is valued at $61. 6
million and covers both the schools and libraries and rural health support
mechanisms. USAC estimates that the new contract will result in a 25-
percent savings over the old contract. However, the actual savings depend on
the accuracy of the workload assumptions included in the contract's
statement of work. Although a lower- than- expected workload could result in
reduced contract costs, a higher- than- expected workload could result in
additional costs.
22 The Rural Health Care Program is a universal service support program
authorized by the Congress to provide reduced rates to rural health care
providers for telecommunications services related to the use of telemedicine
and telehealth. It can provide up to $400 million in support annually.
USAC also plans to solicit competitive bids for its billing and collections
services, which could result in additional savings in administrative costs.
The request for proposals for this service is expected to be issued this
fall, with the aim of having a new contract in place by July 2001. In
addition, USAC plans to seek competitive bids on its employee benefits
package, which could further reduce some administrative costs.
FCC's E- Rate Administrative The salaries of the FCC staff working on the
program are another
Costs component of the e- rate program's administrative costs. At the time
of our
review, four managers and nine staff in FCC's Common Carrier Bureau were
spending some portion of their time on e- rate activities, such as reviewing
USAC documents, forms, and audit plans; dealing with policy questions;
responding to inquiries from the public and the Congress; performing
outreach to the applicant and vendor communities; reviewing and providing
feedback on USAC's operational and financial audits; and resolving appeals
from schools and libraries.
The portion of FCC staff salaries that can be allocated to e- rate
administrative activities cannot be precisely determined because the Common
Carrier Bureau's procedures do not call for the staff to track the amount of
time they spend working on e- rate activities. However, Common Carrier
Bureau officials estimate their staff cost for administering the program
during fiscal year 2000 to be roughly $420,000 (the equivalent of about 5
full- time staff years). This is an increase from the fiscal year 1998
workload, which FCC estimated to be the equivalent of 2 full- time staff
years. Common Carrier Bureau officials attributed the increased staff
workload to several factors related to the e- rate program: the need for FCC
to respond to numerous appeals (as of July 2000, it had resolved 185 appeals
and had 253 pending); a steadily growing number of administrative and policy
issues; and audits and inquiries from the executive and legislative
branches.
Comparison of In August 1999, we reported on 35 federal programs (including
the e- rate
Administrative Costs for ERate program) that could be used as a source of
federal funding for schools and
libraries. 23 Using fiscal year 1998 data, we found that the annual and
Related Federal
administrative costs of the programs varied widely, with the National
Programs
Science Foundation's Connections to the Internet Program having the lowest
costs at $4,000 and FCC's e- rate program having the highest costs at
$26,909, 000. 24 However, to compare the programs, we calculated the
administrative costs as a percentage of the total program costs. 25 For
example, the program costs for Connections to the Internet for fiscal year
1998 were only $147,000, making the administrative costs 2.6 percent of the
program costs. For the e- rate program with its much higher funding level,
the administrative costs were 2.4 percent of the program costs, somewhat
lower than for the Connections to the Internet program. 26
Our analysis showed that the administrative costs of the 35 programs,
expressed as a percentage of the programs' total fiscal year 1998 costs,
ranged from less than 0.02 percent for the Department of Education's
Emergency Immigrant Education Assistance Program to 15 percent for the
Department of Commerce's Telecommunications and Information Infrastructure
Assistance Program. Twelve of the programs had higher percentages of
administrative costs to total program costs than the e- rate program; the e-
rate program and another program had the same percentage; and 21 others had
lower percentages. This analysis can be
23 Telecommunications Technology: Federal Funding for Schools and Libraries(
GAO/ HEHS99- 133, Aug. 20, 1999). 24 The e- rate administrative costs used
in our analysis of the 35 programs cover the 12- month period from Jan. 1,
1998, through Dec. 31, 1998. This total includes both FCC and SLD e- rate
administrative costs for this period.
25 Administrative costs as a percentage of total program costs are
calculated by dividing the 1998 administrative costs by the sum of the 1998
program funding and the 1998 administrative costs, except for programs (like
the e- rate program) that pay administrative costs out of program funds. For
those programs, administrative costs as a percentage of total program costs
are calculated by dividing the 1998 administrative costs by the 1998 program
funding.
26 The e- rate program was funded at $1. 66 billion for the 18- month period
from Jan. 1, 1998, through June 30, 1999. In order to calculate
administrative costs as a percentage of total program costs on an annual
basis, the 18- month figure of $1.66 billion was reduced by onethird to $1.1
billion. Even though funding commitments were not made until late 1998 and
early 1999, the applicants were being reimbursed the discounted portion of
bills they paid in full as early as Jan. 1998. Therefore, the one- third
reduction is a reasonably accurate estimate.
further refined by focusing on the 10 programs out of the 35 that
specifically target their funds to technology initiatives, rather than
simply including technology among the items they can fund. Of these 10
technology- targeted programs (which include the e- rate program), 6 had
higher percentages of administrative costs to total program costs than the
e- rate program and 3 had lower percentages. See appendix VI for details on
these 10 programs.
It is difficult to draw precise comparisons among these programs because the
nature of their administrative costs can vary. For example, some of the
programs distribute funding through a formula grant process, while others
use a competitive grant process that includes reviewing and scoring
applications as part of a selection process. And while most competitive
grant programs hired outside experts to review applications, one program
used volunteers and another used only agency staff. Moreover, the Department
of Education considers the cost of reviewers a “program
expense,” whereas other agencies consider this cost an
“administrative expense.” Other key variables include the number
of applications reviewed and the amount of funding distributed.
FCC Has Recently After some false starts, FCC recently developed meaningful
performance
Established New goals and measures for the e- rate program. Performance
measurement is
critical to managing a program and determining its progress in meeting
Performance Goals and
intended outcomes. In our July 1998 testimony before the Senate Measures for
the
Committee on Commerce, Science, and Transportation, we noted that Program
FCC's e- rate program lacked the kinds of specific goals and measures called
for under the Government Performance and Results Act of 1993 (the Results
Act). 27 At that time, we noted that FCC had simply informed the Congress in
its annual performance plan for fiscal year 1999 that it would “work
to improve the connections of classrooms, libraries, and rural health care
facilities to the Internet by the end of [fiscal year] 1999.” We
recommended that FCC develop specific goals and measures for the program
before the end of fiscal year 1998, in time to gauge the effect of the first
year's funding. We reiterated this recommendation in our March 1999 report
on the program, just after the first e- rate funding commitments had been
made to applicants.
27 The Results Act defines a performance goal as a target level of
performance expressed as a tangible, measurable objective against which
actual achievement is to be compared.
The program participation goals and measures that FCC set during the two
budget cycles following our July 1998 recommendation did not resolve our
initial concern. In February 1999, as part of its fiscal year 2000 budget
submission to the Congress, FCC listed a goal of ensuring that 30 percent of
eligible schools and libraries would have Internet access by the end of
fiscal year 2000. This goal was not meaningful because it was well under the
prevailing conditions. According to survey data from Department of
Education's National Center for Education Statistics, 89 percent of public
schools and 67 percent of private schools were already connected to the
Internet in 1998. For the fiscal year 2001 budget submission (dated Feb.
2000), FCC raised the goal to having 90 percent of schools and libraries
connected to the Internet by fiscal year 2001. But even this much higher
goal still fell short of actual conditions at public schools and libraries.
The National Center for Education Statistics reported that in 1999, over 95
percent of all public schools had Internet access. Even those public schools
serving the most economically disadvantaged or rural areas were reported to
be at least 90 percent connected in 1999. As for libraries, the American
Library Association reported in April 2000 that more than 90 percent of them
were connected to the Internet. The one area where the fiscal year 2001 goal
had potential relevance was private schools, since only 67 percent of them
were connected in 1998 (the most recent data available). 28
During our review, we spoke with FCC staff about the need for effective
performance goals and measures. On September 29, 2000, FCC finalized a new
performance plan for the e- rate program that has two key features: (1) it
recognizes that nearly all school buildings are already connected to the
Internet, and (2) it targets populations that are underserved by the e- rate
program. Instead of focusing on connections to school buildings, the plan
focuses on improving Internet connections to “instructional
classrooms.” The new goal is to have 100 percent of public school
instructional classrooms connected to the Internet by 2002 and 95 percent of
private school instructional classrooms connected by 2003. To help
accomplish this strategic goal, the plan includes tactical goals targeted at
increasing participation in the e- rate program by urban low- income school
districts and rural school districts located outside of towns. According to
FCC's data, the participation rates for both of these groups currently fall
below
28 The results of several years of surveys on Internet access by the
National Center for Education Statistics are summarized in Internet Access
in U. S. Public Schools and Classrooms: 1994- 99( NCES 2000- 086, Feb. 2000)
and Computer and Internet Access in Private Schools and Classrooms: 1995 and
1998( NCES 2000- 044, Feb. 2000).
the average participation rate for all eligible schools. Similarly, the plan
seeks to increase the e- rate program participation rates for rural
libraries and libraries serving small areas, which currently lag behind the
participation rates for libraries serving larger areas. These new goals,
benchmarked to current Internet connectivity rates and program participation
rates, should help FCC to assess whether the program is reaching the full
spectrum of eligible applicants.
It should be noted that FCC's participation goals do not attempt to measure
the impact of advanced telecommunications on improving educational outcomes.
This complex issue lies outside the range of FCC's expertise and comes under
the purview of the Department of Education, which has developed related
performance goals and measures.
Conclusions In our July 1998 testimony, we recognized that the e- rate
program faced many challenges and difficulties during its first year of
operation. These
challenges continue as the program enters its fourth year. SLD succeeded in
committing over $3.7 billion to applicants during the 1998 and 1999 program
years. However, a significant amount of these funds has not yet been paid
out, even though the deadlines for applicants and vendors to use the funds
have been extended more than once. Identifying and addressing the causes of
this problem could help increase the amount of funding that is actually used
to bring telecommunications services to schools and libraries. In addition,
it would be undesirable to have a significant percentage of committed funds
go unused at a time when the level of requests for funding greatly exceeds
the annual amount available.
In addition, more funding would be available for eligible requests if SLD's
review procedures were more effective at identifying and denying ineligible
requests. Despite procedures requiring reviewers to deny funding for
ineligible items and to confirm that conditionally eligible services are
being used according to program rules, we identified millions of dollars in
funds incorrectly committed to ineligible products and services. In some
cases, reviewers simply overlooked ineligible items that were clearly
identified by applicants. In other cases, the lack of clear, consistent
rules likely contributed to mistakes made by both applicants and reviewers.
Furthermore, the reviewers' ability to identify ineligible requests is
limited when applications include vague or broad terms to describe the
services for which funding is requested. The frequency of such cases could
be reduced if the review procedures and criteria were clarified and if the
applicants submitted more details about the items for which they intend to
use program funds.
Finally, SLD's practice of approving most vendors' invoices without
reviewing how and where the committed funds are actually being spent leaves
the program vulnerable to further funding errors and potential abuse. In
particular, the larger applications involving dozens of sites and millions
of dollars need a higher level of quality assurance to determine that funds
are being spent as approved.
SLD has already taken some steps to address the issues we identified, such
as contracting with an outside auditor to review a limited number of
applicants, and is considering others. However, given the large amount of
funds involved in the e- rate program, cost- effective quality assurance
procedures that result in more consistent and reliable application and
invoice reviews are warranted. Because the next program year is not
scheduled to begin until July 2001, we believe that SLD and FCC have
adequate time to implement our recommendations.
Recommendations for In order to (1) improve the application review and
invoicing process to
Executive Action prevent funds from being used for ineligible services and
(2) maximize the
funding available to applicants to support eligible services, we recommend
that the Chairman, FCC, direct responsible FCC staff to complete the
following four actions before funding commitments are made for the fourth
program year:
Finalize all outstanding program rules and review procedures, including
determining the extent to which training, design, contingency, and repair
fees are eligible for program support. Implement procedures for promptly
clarifying additional eligibility
issues that arise during the application review process and publicizing such
clarifications to the applicant community in a timely manner. Revise the
list of eligible services available to applicants so that it
clearly identifies which services are eligible and ineligible for program
support. Additionally, the list should clearly identify as
“conditionally eligible” all products and services whose
eligibility is subject to conditions included in their descriptions, such as
cellular telephone service and video services. Revise the e- rate program's
application to require more detailed
information from applicants on the services they intend to purchase with
program funds.
In addition, the Chairman, FCC, should direct responsible staff to develop a
strategy for reducing the percentages of committed funds that go unused by
applicants. This effort should include (1) contacting applicants to
ascertain their reasons for not fully using their committed funds and (2)
determining whether changes to program rules and procedures are needed to
address the difficulties that applicants may be having in this regard.
Finally, the Chairman, FCC, should direct the Chief Executive Officer of
USAC to establish a quality assurance function in USAC responsible for (1)
ensuring that SLD's funding decisions follow FCC's program eligibility
rules, as well as SLD's management goals and procedures; and (2) developing
effective internal control procedures over the disbursement of funds to
ensure that they have been used as approved.
Agency Comments We provided a draft of this report to FCC and USAC for
comments. In general, they agreed with our findings and recommendations.
They stated
that they had begun to implement the recommendations and completed some
actions, which have already led to significant improvements in the program.
However, USAC provided details on some points in our report that USAC
believed could be misinterpreted. The full text of FCC's and USAC's comments
appears with our responses in appendix VII. FCC and USAC also provided us
with technical clarifications, which we included in the report where
appropriate.
We are sending copies of this report to interested congressional committees;
the Chairman, Commissioners, and Managing Director of FCC; the Director,
Office of Management and Budget; and other interested parties. We will also
make copies available to others upon request.
If you or your staff have any questions about this report, please call me on
(202) 512- 7631. Key contributors to this report are listed in appendix VII.
Stanley J. Czerwinski Director, Physical Infrastructure Issues
Appendi xes FCC's Authority to Set and Modify E- Rate's
Appendi xI
Annual Funding Level Section 254 of the Communications Act of 1934, as
amended, provides the Federal Communications Commission with the authority
to set the level of funding for the e- rate program. 1 Among other things,
this provision required the Commission, acting on the recommendations of a
FederalState Joint Board, to establish predictable and sufficient mechanisms
to preserve and advance universal service. 47 U. S. C. 254( a)( d). The
Joint Board recommended a $2.25 billion annual cap on support for schools
and libraries. The Board based its estimate on cost data extrapolated from a
1995 McKinsey and Company report entitled Connecting K- 12 Schools to the
Information Superhighwayadjusted to reflect the Board's modeling
assumptions. 2 On the basis of this and a few other sources, the Joint Board
estimated “that the total cost of the [eligible] communications
services [sought by schools and libraries] . . . would be approximately $3.1
to $3.4 billion annually during an initial four year deployment period, and
approximately $2. 4 to $2.7 billion annually during subsequent years.”
3 The Commission has not revisited this issue to obtain more current cost
data.
According to FCC officials, the Commission adopted the $2.25 billion annual
cap recommended by the Joint Board in accordance with section 254. 4 Each
year, the Commission bases the funding level for the schools and libraries
program on demand and on the expense of administering the program, subject
to the cap. FCC officials stated that as long as the Commission adopts a
funding level that is less than or equal to the cap, no formal proceeding is
generally necessary. They noted that the funding levels for the first and
second year were promulgated through formal FCC orders because of
extenuating circumstances. However, the funding level for the third year was
simply announced by the Chairman through a public statement. 5
1 Section 254 was added by the Telecommunications Act of 1996. 2 For
example, the Board adjusted the McKinsey base cost estimates for the full
classroom model. This model assumes one computer for every five students in
all classrooms, with a T1 connection.
3 Federal- State Joint Board on Universal Service Recommended Decision, 12
FCC Rcd. 87, 369- 70, para. 554 (1996). 4 Letter from Federal Communications
Commission Chairman, William E. Kennard to U. S. General Accounting Office
Assistant General Counsel Michael R. Volpe, dated Apr. 28, 2000. 5 Statement
of FCC Chairman William E. Kennard and Commissioner Gloria Tristani, 2000
FCC LEXIS 1906, Apr. 13, 2000.
Although the demand for program funds increased sharply in the third year
(to $4. 7 billion, according to program officials' estimates), the
Commission maintained the funding level for the schools and libraries
program at the $2. 25 billion annual cap. FCC officials stated that a
readjustment of the cap would require an amendment of FCC's rules. As of
September 2000, no rulemaking proceeding was under way to consider
readjusting the cap.
Questions have been raised as to whether e- rate funds are federal funds.
The Congressional Budget Office and the Office of Management and Budget
count payments into the universal service fund as federal revenues and
payments from the fund (including payments for e- rate support) as federal
outlays. Both agencies have interpreted the act to mean that the
expenditures from the fund should be part of the federal budget because the
transfer of income between various classes of telephone users would not
occur but for the exercise of the sovereign power of the United States. 6
Nevertheless, both the Commission and the Office of Management and Budget
have determined that these funds are appropriately maintained outside the
Treasury by a nongovernmental manager. Action by the U. S. Senate appears to
concur with this assessment. In 1997, the Senate passed a “sense of
the Senate” provision that stated, “Federal and State universal
service contributions are administered by an independent, non- Federal
entity and are not deposited into the Federal Treasury and therefore are not
available for Federal appropriations.” 7
6 Congressional Budget Office , Federal Subsidies of Advanced
Telecommunications for Schools, Libraries, and Health Care Providers, Jan.
1998, p. 5. 7 See section 614, H. R. 2267, as passed by the Senate (Oct. 1,
1997).
Appendi xII
Competitive Bidding Requirements FCC's rules generally require applicants to
seek competitive bids for all services eligible for e- rate support. 1 The
Commission found competitive bidding to be the most efficient means of
ensuring that applicants were informed about all of the choices available to
them. It also found that without competitive bidding, an applicant may not
receive the most costeffective services available, resulting in a higher-
than- necessary demand for e- rate support and, consequently, less support
available for other applicants. 2
Applicants May Consider FCC's competitive bidding rules require applicants,
as an initial step, to
Factors Other Than Price in provide the Schools and Libraries Division (SLD)
with a description of the
Selecting a Bid services for which e- rate support is sought. SLD then posts
this description
on its public Web site for all potential competing vendors to review. An
applicant must wait at least 4 weeks from the time the description is posted
on the Web site before entering into an agreement with a vendor in order to
give vendors an opportunity to evaluate and respond to the applicant's
stated needs. SLD will deny (and has denied) funding for services based on
contracts that were signed fewer than 28 days after the related service
descriptions were posted.
FCC concluded that applicants should consider price to be the primary factor
in selecting a bid. However, FCC does not require applicants to select the
lowest bid offered, even among bids for comparable services. In its
Universal Service Order, FCC concurred with the Joint Board's recommendation
that applicants should be given “maximum flexibility” to take
service quality into account and choose the offering that meets their needs
“most effectively and efficiently,” where this is consistent
with other procurement rules under which they must operate. The Commission
noted several other factors that applicants could also consider in
determining which vendor meets their needs “most effectively and
efficiently.” These additional factors- when permitted by state and
local procurement rules- include “prior experience, including past
performance; personnel qualifications, including technical excellence;
management capability, including schedule compliance; and environmental
objectives.” 3 FCC
1 Pre- existing contracts, as defined by FCC's rules, are exempt from
competitive bidding requirements. 47 C. F. R. sec. 54. 511( c). 2 Universal
Service Order, 12 FCC Rcd. at 9029, para. 480.
3 Universal Service Order, at 9028, para. 481.
cautioned, however, that when comparable services are being offered, price
needs to be carefully considered “to ensure that any considerations
between price and technical excellence (or other factors) are
reasonable.”
Although federal procurement regulations are not applicable to the contracts
between e- rate applicants and their vendors, FCC's e- rate competitive
bidding rules are similar to the rules and factors used in federal
procurements. In federal procurements, price must always be considered- but
is not necessarily the primary factor- in determining which bid is most
advantageous to the government. Federal contract officials may also address
the quality of the product or service by considering, along with price,
evaluation factors such as prior experience, personnel qualifications, and
technical excellence to form a reasonable basis for selecting an offer. With
negotiated procurements, federal acquisition regulations state that
“the objective of source selection is to select the proposal that
represents the best value.” And with invitations for bid, the
regulations state that the award is made to the “responsible bidder
whose bids, conforming to the invitation, will be most advantageous to the
Government, considering only the price and price- related factors . . .
included in the invitation.”
FCC has noted that its competitive bidding requirements are not intended to
preempt state and local bidding requirements. In fact, in addition to
complying with FCC's rules, applicants are required to certify on their
applications that they have complied with all applicable state and local
laws regarding procurements of services for which e- rate support is sought.
One of the reasons that FCC maintains it is sensible to rely on state and
local procurement practices for determining compliance with its own
competitive bidding requirements is “because such rules and practices
will generally consider price to be a ‘primary factor' . . . and
select the most cost- effective bid.”
No Performance Data Neither FCC nor SLD has data on the extent to which
applicants did not
Related to Vendor choose the lowest bidders. Although applicants must
maintain records of
Competition their bidding process, they were not required to report the
number of bids
they received or the number of times they did not choose vendors offering
the lowest- priced bids. Given the large number of applicants that have
received funding so far, it is likely that there are many thousands of
vendor contracts associated with the e- rate funding. Tracking this issue in
detail, therefore, would be a time- consuming undertaking for both
applicants and program officials. In 1999, FCC did establish a performance
goal related to vendor competition, which was to ensure that a majority of
the requests for
services posted on SLD's Web site received two or more bids. However, FCC
did not gather any data to measure its performance in meeting this goal and
decided to drop the goal from its subsequent performance plans.
E- Rate Appeals Have Vendors that have concerns about the competitive
bidding process can
Focused on Funding raise them through an appeal to SLD or FCC. Both
applicants and vendors
Decisions, Not Competition can appeal to SLD regarding decisions it makes
about e- rate applications
Issues and funding. If not satisfied with SLD's determination, they can
appeal to
FCC. According to SLD and FCC officials, as of the end of September 2000,
there were only four appeals related to vendor competition issues.
SLD received two appeals from a vendor in Alaska that was not awarded
contracts with two school districts, even though it had submitted the
lowest- price estimates. In one of the cases, SLD's general counsel
determined that the school district had considered price as the primary
factor when reviewing bids from different vendors and denied the appeal. In
the other case, SLD determined that price had not been considered the
primary factor and informed the school district that its application would
not be considered for e- rate funding.
FCC dealt with two other vendor appeals. One vendor appealed the outcome of
a competitive bidding process, complaining that the Department of Education
of the State of Tennessee (the applicant) awarded more bid points to a rival
vendor's bid, even though the rival's initial bid was greater. The rival was
ultimately awarded the contract. SLD's position on the vendor's complaint
was that it would “defer to the state and local competitive bidding
procurement review and procedures and findings.” In reviewing the
appeal, FCC determined that the applicant adequately considered price, as
well as other factors, in determining the most cost- effective bid. FCC
therefore denied the vendor's appeal. 4 In another case, the applicant had
the vendor prepare the applicant's description of requested services, and
the vendor was listed as the point of contact. The vendor was ultimately
awarded the contract for the requested services. SLD denied funding because
of the vendor's inappropriate involvement. The vendor appealed to FCC, but
FCC upheld in part SLD's decision to deny funding to the applicant on the
ground that having a
4 FCC 99- 216, (Order) rel. Aug. 11, 1999. Other issues were also considered
in this case.
vendor involved in the competitive bidding process in this way was contrary
to the principle of fair and open competition. 5
SLD's Reviews Disclosed SLD has identified other cases through its own
review procedures when a
Some Cases Involving vendor's actions have led SLD to conclude that the
vendor engaged in
Unfair Competition unfair competition. For example, in the third program
year, SLD found that
about 160 of more than 200 applications prepared by the same consultant
indicated that a particular vendor had been selected to deliver the
requested services. In addition, regardless of the school size or number of
students, every sample contract with the vendor provided for the same number
of servers at each location. SLD conducted a more thorough review and
discovered, among other things, that the consultant was listed as a
beneficiary in each of a sample of contracts that it reviewed and there was
evidence that prices had been inflated. On the basis of this information,
SLD, with FCC's knowledge, concluded there was evidence that prices had been
inflated, and SLD denied every application associated with this consultant
and vendor. The total amount of third- year program funding denied for these
applications was approximately $26 million.
5 FCC 00- 167, (Order) rel. May 23, 2000.
Appendi xI II
Additional Eligible Students and Facilities The e- rate program is directed
at providing support to public and private elementary and secondary schools
and libraries. Prekindergarten education programs, adult secondary education
programs, and juvenile justice facilities (e. g., classes leading to the
General Educational Development High School Equivalency Test, or other
education that does not go beyond grade 12) may be eligible for program
funding depending on how state law defines elementary and secondary schools
in the state where the program or facility is located. Table 4 provides the
results of USAC's analysis of each state's definition of elementary and
secondary schools for the second and third program year funding decisions.
(“ Yes” indicates that the category of facility or student is
eligible for e- rate funding.)
Table 4: Additional Facilities and Students Eligible for E- Rate Funding
Prekindergarten Adult secondary education Juvenile justice State a
Facilities Students Facilities Students Facilities Students
Alabama No No No No Yes Yes Alaska Yes Yes No Yes No Yes American Samoa No
No No No Yes Yes Arizona No No No No No Yes Arkansas No No No No No Yes
California Yes Yes Yes Yes Yes Yes Colorado No No No No No No Connecticut No
Yes No Yes Yes b Yes b Delaware No No No No Yes Yes District of Columbia No
No No No Yes Yes Florida Yes Yes Yes Yes Yes Yes Georgia No Yes No Yes Yes
Yes Guam No No No No No No Hawaii Yes Yes Yes Yes Yes Yes Idaho No No No No
No Yes Illinois No Yes No Yes No Yes Indiana No No No Yes Yes Yes Iowa Yes
Yes Yes Yes Yes Yes Kansas No Yes No No Yes Yes Kentucky No No No No No No
Louisiana Yes Yes Yes Yes Yes Yes Maine No No No Yes Yes Yes
(Continued From Previous Page)
Prekindergarten Adult secondary education Juvenile justice State a
Facilities Students Facilities Students Facilities Students
Maryland Yes Yes No Yes c No No Massachusetts No No No No No No Michigan No
No No No Yes Yes Minnesota No No No No No Yes Mississippi No Yes No Yes Yes
Yes Missouri No Yes No Yes No Yes Montana No No No No No No Nebraska No No
No No No No Nevada No No No No No No New Hampshire No No No Yes No No New
Jersey No Yes No No Yes d Yes New Mexico No No No No No Yes d New York No
Yes No Yes Yes Yes North Carolina No Yes No No Yes Yes North Dakota No No
Yes Yes Yes Yes Ohio No No No No No No Oklahoma Yes Yes No Yes Yes Yes
Oregon No No No No No Yes Pennsylvania No No No No Yes Yes Puerto Rico No No
Yes Yes Yes Yes Rhode Island Yes Yes Yes Yes Yes Yes South Carolina No No No
No Yes d Yes South Dakota No Yes No No Yes d Yes Tennessee No No No No Yes
Yes Texas No Yes No Yes Yes Yes U. S. Virgin Islands No No Yes Yes Yes Yes
Utah No No No No No No Vermont No No No No Yes Yes Virginia No No No Yes Yes
Yes Washington Yes Yes Yes Yes Yes d Yes West Virginia No No No Yes Yes Yes
Wisconsin No Yes No No Yes Yes Wyoming No No No No No No
a USAC's legal counsel has not reviewed the eligibility of additional
programs or facilities in the Northern Mariana Islands. b Only juvenile
justice schools in District 1 are eligible.
c For General Educational Development (High School Equivalency). d Only
juvenile justice schools listed in statutes are eligible.
Source: SLD.
Funding Commitments and Authorized
Appendi xI V
Payments, 1998- 99 SLD provided us with a copy of its database for the first
3 program years. This database included all commitments and authorized
payments of committed funds as of August 31, 2000. Since SLD's database is
constantly changing as funding decisions and appeal decisions are reached,
the data included in this report constitute a snapshot in time. In addition,
we were unable to report the actual amount of discount funding requested by
applicants, since SLD has modified the requests. For example, some entries
in the database include the original amounts requested minus funding for
ineligible services removed by SLD. Other entries were adjusted to correct
mathematical errors made by the applicants. 1 In addition, we found that
discount funding restored through the appeal process was not reflected
consistently in the database- the committed amounts but not the requested
amounts were adjusted to reflect the appeal decisions. As a result, some
applicants appeared to receive more discount funds than the database showed
them requesting. SLD officials stated, however, that no applicant received
more discount funding than requested. 2
Table 5 shows the amounts of discount funding requested by applicants, as
well as the amounts of discount funding committed to applicants by SLD in
the first 2 program years. Table 6 presents the amounts of these committed
funds that SLD authorized to be paid out to vendors participating in the
program. 3
1 SLD officials said they could examine the record for each application in
the database to determine the original amount of discount funding requested
but doing so would be costly and time- consuming.
2 In the first program year, the data show that the schools and libraries
that applied for discount funding from Tennessee received more funding than
requested. According to SLD officials, this discrepancy reflects FCC's
reversal of an SLD decision to deny funds to the Tennessee Department of
Education. While SLD updated its data to reflect the funds committed, it did
not update the amount requested, which had been reduced to reflect the
original denial. We could not verify the accuracy of this statement.
3 According to SLD's database, American Samoa, the Northern Mariana Islands,
and the U. S. Virgin Islands were committed $10. 9 million in discount funds
during the first 2 program years. As of Aug. 31, 2000, SLD had authorized
payment of about $8. 8 million (81 percent) of these funds. Guam did not
request any program funding during the first 2 program years.
Table 5: Amounts of Funds Requested and Committed for the First 2 Program
Years, as of August 31, 2000 First program year (1998) Second program year
(1999) Amount requested by
Amount committed by Amount requested by
Amount committed State applicants SLD applicants by SLD
Alabama $56, 882, 765 $46, 885, 216 $35,038, 876 $26,652, 386 Alaska 15,
276, 225 13, 577, 806 16, 521, 143 12, 189, 113 Arizona 51, 191,444 35,
640,711 55, 670, 736 38, 716, 994 Arkansas 15, 831, 916 13, 408, 504 13,
263, 241 10, 497, 241 California 288, 618, 184 212, 079, 600 396,351, 207
256,663, 058 Colorado 25, 608, 514 14, 316, 805 14, 703, 097 11, 786, 626
Connecticut 33, 548, 696 24, 192, 938 46, 207, 112 32, 133, 484 Delaware
4,062, 132 1, 017, 272 1,435, 969 1,393, 689 District of Columbia 17, 575,
100 4, 866,571 21, 822, 021 9, 348, 789 Florida 76, 942,833 49, 676,963 109,
560, 958 73, 022, 870 Georgia 90, 932,457 78, 357,505 104, 153, 221 91, 565,
615 Hawaii 7,307, 019 5, 891, 308 6,277, 569 5,301, 184 Idaho 6,220, 849 4,
620, 940 6,096, 407 5,124, 101 Illinois 113, 401, 873 81, 032, 031 199,076,
472 162,605, 582 Indiana 33, 757, 611 21, 906, 914 27, 661, 323 22, 876, 019
Iowa 26, 214, 828 7, 343,810 12, 612, 038 8, 140, 673 Kansas 15, 550, 865
10, 462, 313 19, 364, 587 14, 990, 120 Kentucky 57, 099, 768 50, 354, 985
75, 868, 966 57, 599, 372 Louisiana 45, 321, 832 40, 153, 955 46, 941, 793
37, 725, 411 Maine 3, 963, 159 3, 014,559 6, 025, 067 3, 649, 468 Maryland
23, 002, 868 15, 026, 602 28, 263, 284 22, 062, 531 Massachusetts 43, 592,
441 30, 264, 968 42, 756, 850 33, 836, 941 Michigan 94, 992, 053 58, 533,
358 111, 139, 905 78, 997, 144 Minnesota 33, 976,833 24, 757,330 41, 242,
594 29, 290, 076 Mississippi 26, 675,416 24, 373,162 34, 968, 751 30, 240,
179 Missouri 35, 363, 557 24, 916, 281 33, 732, 699 28, 776, 550 Montana
4,736, 337 3, 674, 052 4,468, 041 3,776, 331 Nebraska 6,384, 251 4, 926, 858
8,175, 526 6,811, 847 Nevada 9,840, 915 5, 380, 808 5,219, 146 3,147, 926
New Hampshire 3,151, 087 1, 619, 847 1,801, 528 1,269, 103 New Jersey 82,
341,010 62, 698,153 69, 456, 029 42, 938, 426 New Mexico 35, 762,517 19,
308,898 32, 967, 739 29, 168, 906 New York 215, 937, 895 172, 068, 433
266,812, 092 195,037, 891
(Continued From Previous Page)
First program year (1998) Second program year (1999) Amount requested by
Amount committed by Amount requested by
Amount committed State applicants SLD applicants by SLD
North Carolina 36, 970,225 26, 908,604 44, 328, 601 37, 790, 543 North
Dakota 4, 528, 745 2, 585,531 2, 690, 849 2, 212, 311 Ohio 74, 650, 282 58,
136, 696 52, 361, 094 42, 615, 140 Oklahoma 41, 015, 572 33, 696, 296 70,
186, 268 34, 114, 998 Oregon 14, 086, 139 9, 596,037 14, 489, 153 11, 101,
943 Pennsylvania 83, 437, 796 52, 219, 303 95, 013, 595 56, 633, 437 Puerto
Rico 47, 692, 072 47, 646, 855 68, 570, 966 67, 842, 733 Rhode Island 7,044,
468 6, 010, 398 10, 356, 442 7,831, 110 South Carolina 30, 540,070 26,
365,435 46, 266, 917 32, 368, 742 South Dakota 4, 487, 782 2, 965,172 3,
046, 233 2, 150, 742 Tennessee 49, 092,319 51, 665,111 69, 320, 100 61, 632,
448 Texas 198, 643, 013 129, 802, 466 189,290, 644 135,891, 161 Utah 7,522,
346 6, 386, 095 6,537, 625 5,430, 865 Vermont 3, 503, 543 2, 073,329 2, 060,
499 1, 604, 751 Virginia 39, 762, 879 25, 494, 960 37, 450, 614 25, 284, 943
Washington 51, 234, 165 29, 442, 396 47, 515, 398 31, 341, 756 West Virginia
10, 543, 250 9, 350,687 9, 421, 348 9, 375, 906 Wisconsin 87, 400,413 38,
244,130 34, 933, 585 26, 134, 345 Wyoming 2, 125, 917 1, 221,264 5, 391, 091
4, 989, 311 American Samoa, Northern
5, 739,277 b 5, 737,792 5, 972, 267 5, 146, 738 Mariana Islands, U. S.
Virgin Islands a
Total $2,401, 085, 524 $1,731, 898, 012 $2,710, 859, 274 $1,988, 829, 566
a Guam did not request any program funds in the first and second program
years. b The Northern Mariana Islands did not request any program funds the
first program year.
Source: SLD's database.
Table 6: Amounts of Funds Committed and Authorized for Payment by SLD for
the First 2 Program Years, as of August 31, 2000 First program year (1998)
Second program year (1999)
Program funds Program funds
Program funds authorized for
Program funds authorized for
State committed payment committed
payment
Alabama $46,885, 216 $40,810,055 $26, 652, 386 $16, 211, 376 Alaska 13,577,
806 8,759,085 12, 189,113 6, 111, 844 Arizona 35,640, 711 30, 105, 673 38,
716, 994 22, 931, 162 Arkansas 13,408, 504 10, 543, 027 10, 497, 241 6, 636,
497 California 212,079, 600 164,843,376 256, 663, 058 121, 723, 361 Colorado
14,316, 805 11, 494, 794 11, 786, 626 5, 445, 640 Connecticut 24,192, 938
21, 492, 462 32, 133, 484 25, 514, 375 Delaware 1,017, 272 922,451 1, 393,
689 536, 682 District of Columbia 4,866, 571 4,624,354 9, 348, 789 1, 127,
049 Florida 49,676, 963 41, 429, 911 73, 022, 870 35, 303, 208 Georgia
78,357, 505 56, 795, 293 91, 565, 615 43, 662, 006 Hawaii 5,891, 308
5,191,882 5, 301, 184 3, 016, 966 Idaho 4,620, 940 3,508,863 5, 124, 101 2,
650, 957 Illinois 81,032, 031 63, 829, 587 162, 605, 582 56, 493, 845
Indiana 21,906, 914 16, 127, 441 22, 876, 019 14, 194, 016 Iowa 7,343, 810
5,578,971 8, 140, 673 3, 554, 659 Kansas 10,462, 313 7,874,118 14, 990,120
7, 622, 748 Kentucky 50,354, 985 38, 220, 231 57, 599, 372 22, 063, 658
Louisiana 40,153, 955 33, 608, 775 37, 725, 411 26, 358, 899 Maine 3, 014,
559 2,243,649 3, 649, 468 1, 863, 445 Maryland 15,026, 602 13, 321, 165 22,
062, 531 11, 678, 928 Massachusetts 30,264, 968 24, 954, 239 33, 836, 941
23, 638, 936 Michigan 58,533, 358 49, 684, 389 78, 997, 144 38, 099, 072
Minnesota 24,757, 330 20, 244, 463 29, 290, 076 16, 493, 348 Mississippi
24,373, 162 19, 221, 676 30, 240, 179 19, 383, 924 Missouri 24,916, 281 20,
637, 661 28, 776, 550 17, 341, 361 Montana 3,674, 052 2,797,163 3, 776, 331
2, 649, 380 Nebraska 4,926, 858 4,196,382 6, 811, 847 3, 158, 944 Nevada
5,380, 808 4,067,259 3, 147, 926 1, 899, 684 New Hampshire 1,619, 847
1,269,193 1, 269, 103 617, 911 New Jersey 62,698, 153 53, 437, 478 42, 938,
426 20, 413, 844 New Mexico 19,308, 898 12, 660, 849 29, 168, 906 20, 499,
847 New York 172,068, 433 139,049,679 195, 037, 891 95, 404, 330
(Continued From Previous Page)
First program year (1998) Second program year (1999) Program funds
Program funds Program funds
authorized for Program funds
authorized for State committed
payment committed payment
North Carolina 26,908, 604 21, 035, 624 37, 790, 543 23, 723, 984 North
Dakota 2, 585, 531 2,191,752 2, 212, 311 1, 327, 158 Ohio 58,136, 696 50,
030, 883 42, 615, 140 19, 290, 911 Oklahoma 33,696, 296 27, 887, 035 34,
114, 998 22, 592, 264 Oregon 9,596, 037 7,558,639 11, 101,943 4, 133, 059
Pennsylvania 52,219, 303 45, 341, 213 56, 633, 437 23, 731, 474 Puerto Rico
47,646, 855 22, 056, 308 67, 842, 733 27, 497, 004 Rhode Island 6,010, 398
5,843,552 7, 831, 110 3, 993, 011 South Carolina 26,365, 435 23, 001, 684
32, 368, 742 19, 022, 935 South Dakota 2, 965, 172 2,010,585 2, 150, 742
976, 252 Tennessee 51,665, 111 45, 767, 927 61, 632, 448 37, 864, 701 Texas
129,802, 466 114,831,265 135, 891, 161 80, 295, 742 Utah 6,386, 095
5,216,653 5, 430, 865 2, 296, 329 Vermont 2, 073, 329 1,303,886 1, 604, 751
666, 551 Virginia 25,494, 960 21, 227, 017 25, 284, 943 12, 831, 582
Washington 29,442, 396 22, 468, 500 31, 341, 756 13, 959, 886 West Virginia
9,350, 687 5,519,416 9, 375, 906 2, 663, 463 Wisconsin 38,244, 130 31, 935,
968 26, 134, 345 11, 898, 359 Wyoming 1, 221, 264 853,053 4, 989, 311 2,
188, 798 American Samoa, Northern
5,737, 792 b 4,920,320 5, 146, 738 3, 889, 492 Mariana Islands, U. S. Virgin
Islands a
Total $1,731,898, 012 $1, 394, 546, 877 $1,988, 829, 566 $1,009, 114, 854 a
Guam did not request any program funds in the first and second program
years.
b The Northern Mariana Islands did not request any program funds the first
program year. Source: SLD database.
Application Sampling Methodology and
Appendi xV
Detailed Results One of the objectives mandated for inclusion in our review
was to determine whether ineligible products and services had received e-
rate funding support. From the 9, 770 applications for the second program
year (1999), we reviewed a sample of 44 that received funding commitments
for internal connections. This was the most recent complete funding year at
the time of our review, and internal connections was the area most likely to
include ineligible products and services. The 44 applications in our sample
contained over 2, 300 separate requests for internal connections and
accounted for $285 million of the $1.2 billion in second- year internal
connections funding committed through November 1999. The applications were
selected for review with probability proportionate to size, as measured by
the number of dollars committed for internal connections. For example, an
application with a $2 million commitment for internal connections was twice
as likely to be selected for our review as an application with a $1 million
internal connections commitment. The applications we reviewed included a
geographically dispersed group of 22 states or territories. The amount of
program funding committed for internal connections in these applications
ranged from $57. 3 million to $5,527. The unweighted results of our review
are presented in table 7.
Table 7: Unweighted Results of GAO's Review of Internal Connections Funding
Denied or Committed From 44 Applications From the Second Program Year,
Through November 1999
Dollars in millions
Dollars denied or Unweighted results from 44 applications committed
Total funding denied by SLD $20. 2 Committed Funding
Funding based on requests with no evidence of ineligible $192. 5 services
Funding based on requests with clear evidence of ineligible
6.3 services Funding based on requests with evidence of ineligible or
86. 4 potentially ineligible services a Total funding committed $285. 2
Note: These results exclude applications on which SLD denied all requests
for internal connections funding. a Dollars included in this category come
from requests containing ineligible services with unknown
costs or services whose eligibility could not be determined.
We properly weighted the results from our sample shown in table 7 to
represent the population of 9, 770 applications containing funds committed
to internal connections. These estimates for the 9, 770 applications are
presented in table 8. However, the estimates contain a substantial margin of
error because there was great variation in the amounts of the errors we
observed from one application to the next in our sample. As a result, we do
not present the results of this analysis in the body of our report.
Table 8: GAO's Estimates of Internal Connections Funding Denied or Committed
From the Second Program Year, Through November 1999
Dollars in millions
Dollars SLD denied or committed Estimate Margin of error a Total funding
denied by SLD b $135.7 $98. 2
Committed Funding
Funding based on requests with no evidence of $780.5 $138. 0 ineligible
services Funding based on requests with clear evidence of
87. 6 80. 5 ineligible services Funding based on requests with evidence of
348.1 130. 1 ineligible or potentially ineligible services Total $1,216.3 c
a Margin of error is reported at the 95- percent confidence level. b This
estimate includes the amount SLD denied on applications when some internal
connections funding was committed; it excludes amounts on applications with
all requests for internal connections denied. c Not applicable.
Administrative Costs of Selected Technology
Appendi xVI
Support Programs Table 9 provides information on the fiscal year 1998
administrative costs of 10 federal programs that specifically target funds
for technology. The first four technology programs target funds exclusively
to schools and libraries. The other six programs have goals and activities
that are targeted to technology, but not exclusively to schools and
libraries. More detailed information on these and 25 other programs that
schools and libraries could use as a source of funding for
telecommunications and information technology in fiscal year 1998 is found
in our August 1999 report on this subject. 1
Table 9: Fiscal Year 1998 Administrative Costs for Selected Federal Programs
That Target Technology
Dollars in thousands
Federal administrative costs as a percentage 1998 estimated
1998 program of total program
Program (Agency) Program goals administrative costs a funding b costs c
Star Schools (Dept. To use distance learning to (1)
$1, 175 $34, 000 3.3 of Education) improve instruction in mathematics,
science, foreign languages, and other subjects, such as literacy skills and
vocational education, and (2) serve underserviced populations, including the
disadvantaged, illiterate, limited- English proficient, and individuals with
disabilities.
Technology To implement, evaluate, and
740 106, 000 0.7 Innovation Challenge
document innovative applications of Grants (Dept. of
information and computer Education)
technologies to support systemic educational reform.
Technology Literacy To implement state strategies
71 425,000 <0. 1 Challenge Fund
designed to enable all schools to (Dept. of Education)
integrate technology into the curriculum so that all students become
technologically literate in reading, math, science, and other core academic
skills essential for their success in the 21st century.
1 Telecommunications Technology: Federal Funding for Schools and Libraries(
GAO/ HEHS99- 133, Aug. 20, 1999).
(Continued From Previous Page) Dollars in thousands
Federal administrative costs as a percentage 1998 estimated
1998 program of total program
Program (Agency) Program goals administrative costs a funding b costs c
E- Rate Program for To improve schools' and libraries'
26,909 d 1, 108,982 e 2.4 e
Schools and Libraries access to modern
in discounts (FCC)
telecommunications services. for the 12 mos.
beginning Jan. 1, 1998.
Special Education To promote the development,
786 34, 023 2. 3 Technology and
demonstration, and utilization of Media Services for
technology and to support Individuals with
educational media activities for Disabilities (Dept. of
children with disabilities. Education)
Public To extend telecommunications
1,823 (included in program 21, 767 8.4 Telecommunications
services, including public funding) Facilities Program
broadcasting and nonbroadcast (Dept. of Commerce)
technologies; increase public broadcasting services and facilities available
to, operated by, and owned by minorities and women; strengthen the
capability of existing public television and radio stations; and facilitate
the development of a variety of technology- oriented distance learning
projects.
Telecommunications To promote the development,
3,271 (included in program 21, 782 15. 0 and Information
widespread availability, and use of funding) Infrastructure
advanced telecommunications and Assistance Program
information technologies to serve (Dept. of Commerce)
the public interest. Distance Learning
To enhance learning and health care 2, 010 12, 500 13.9 and Telemedicine
opportunities for rural residents. Grants (Dept. of Agriculture) Information
Systems
To foster the use of computer and 97 1,550 5. 9
and Access Grants telecommunications technologies to
(National Institutes of coordinate and disseminate health
Health) information.
Connections to the Encourage Internet connections for
4 147 2. 6 Internet (National
highly innovative strategies with Science Foundation)
potential for accelerating network development.
a Administrative costs are in addition to program funding except where
noted. In those cases, administrative costs are included in program funding.
b Program funding includes all funding available as grants and includes- but
may not be limited to-
funds spent on technology.
c Administrative costs as a percentage of total program costs are calculated
by dividing the 1998 administrative costs by the sum of the 1998 program
funding and the 1998 administrative costs, except for programs that pay
administrative costs out of program funds. In those cases, the
administrative cost as a percentage of program funding is calculated by
dividing the 1998 administrative cost by the 1998 program funding. d
Includes both FCC's and SLD's administrative costs.
e The e- rate program was funded for the 18- month period from Jan. 1, 1998,
through June 30, 1999, and the administrative costs are for the 12- month
period from Jan. 1, 1998, through Dec. 31, 1998. In order to calculate
administrative costs as a percentage of total program costs on an annual
basis, the 18- month figure of $1.66 billion was reduced by one- third to
$1.1 billion. Even though funding commitments were not made until late 1998
and early 1999, the applicants were being reimbursed the discounted portion
of the bills they paid in full as early as Jan. 1998. Therefore, the one-
third reduction is a reasonably accurate estimate.
Comments From the Federal Communications Commission and Univeral Service
Appendi xVII Administrative Company
See comment 1.
See comment 2. See comment 3.
The following are GAO's comments on the Universal Service Administrative
Company's letter dated November 22, 2000.
GAO's Comments 1. While our methodology was designed to select more high-
dollar applications than would be expected under a random sample, a
significant
number of the applications we reviewed were for less than $500,000. Twelve
of the 44 were for amounts under $250,000, and another 7 were for amounts
between $250, 000 and $500,000. We found errors in these applications as
well. Also, we did not attempt to measure the complexity of any application.
2. While we agree that some of the funding we classify as “committed
in error” was for services that are themselves eligible, we disagree
that such funding should be excluded from the level of error. Our
methodology followed SLD's quality assurance procedures, which require the
complete denial of any request in which at least 30 percent of the amount
requested is ineligible. In addition, the $20 million SLD denied to the
applications in our sample includes funding that SLD denied under this
procedure. Therefore, when comparing the $20 million SLD denied with the $6
million it should have denied but did not deny, it is appropriate to include
all reasons for denial.
3. We excluded from our sample any applications that were denied in full
because there was no chance that funds would have been committed in error.
This exclusion is consistent with SLD's internal goals, which measure
improper funding as a percentage of funds committed. USAC's response states
that SLD denied $700 million for the second program year. This amount
represents the total amount denied for all reasons and all categories of
service. The portion of this total that relates to denials for internal
connections is $400 million.
Appendi xVI II
GAO Contacts and Staff Acknowledgments GAO Contacts Stanley J. Czerwinski,
(202) 512- 7631 John P. Finedore, (202) 512- 6248 Acknowledgments Other key
contributors to this report were Karen Bracey, Krista Ely, D.
Allan Rogers, Teresa Russell, James R. Sweetman, Jr., Michael R. Volpe,
Edward Warner, and Mindi Weisenbloom.
(385812) Lett er
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GAO United States General Accounting Office
Page 1 GAO- 01- 105 Schools and Libraries Program
Contents
Contents Page 2 GAO- 01- 105 Schools and Libraries Program
Page 3 GAO- 01- 105 Schools and Libraries Program United States General
Accounting Office
Washington, D. C. 20548 Page 3 GAO- 01- 105 Schools and Libraries Program
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Appendix I
Appendix I FCC's Authority to Set and Modify E- Rate's Annual Funding Level
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Appendix II
Appendix II Competitive Bidding Requirements
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Appendix II Competitive Bidding Requirements
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Appendix II Competitive Bidding Requirements
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Appendix III
Appendix III Additional Eligible Students and Facilities
Page 47 GAO- 01- 105 Schools and Libraries Program
Appendix III Additional Eligible Students and Facilities
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Appendix IV
Appendix IV Funding Commitments and Authorized Payments, 1998- 99
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Appendix IV Funding Commitments and Authorized Payments, 1998- 99
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Appendix IV Funding Commitments and Authorized Payments, 1998- 99
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Appendix IV Funding Commitments and Authorized Payments, 1998- 99
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Appendix V
Appendix V Application Sampling Methodology and Detailed Results
Page 55 GAO- 01- 105 Schools and Libraries Program
Page 56 GAO- 01- 105 Schools and Libraries Program
Appendix VI
Appendix VI Administrative Costs of Selected Technology Support Programs
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Appendix VI Administrative Costs of Selected Technology Support Programs
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Appendix VII
Appendix VII Comments From the Federal Communications Commission and
Univeral Service Administrative Company
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Appendix VII Comments From the Federal Communications Commission and
Univeral Service Administrative Company
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Appendix VII Comments From the Federal Communications Commission and
Univeral Service Administrative Company
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Appendix VII Comments From the Federal Communications Commission and
Univeral Service Administrative Company
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Appendix VII Comments From the Federal Communications Commission and
Univeral Service Administrative Company
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Appendix VII Comments From the Federal Communications Commission and
Univeral Service Administrative Company
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Appendix VII Comments From the Federal Communications Commission and
Univeral Service Administrative Company
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Appendix VII Comments From the Federal Communications Commission and
Univeral Service Administrative Company
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Appendix VIII
United States General Accounting Office Washington, D. C. 20548- 0001
Official Business Penalty for Private Use $300
Address Correction Requested Bulk Rate
Postage & Fees Paid GAO Permit No. GI00
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