Most Groups Reject FCC Proposed E-rate Competitive Bidding Portal

E-rate groups and industry broadly rejected the FCC’s proposal to establish a centralized online bidding portal for the E-rate program, as expected (see 2112070053). Groups asked the agency to abandon the NPRM, saying the record doesn’t reflect a need for such a change to E-rate, in comments posted Thursday in docket 21-455.

Some noted the proposal cites a 2020 GAO report identifying potential opportunities for fraud in the program and a 2017 Office of Inspector General report recommending the portal (see 2112140062). There's "no sound policy or legal basis that justified mandating a national bidding portal," said the State E-rate Coordinators' Alliance: "Grouping fraud and inadvertent technical errors together ... does a great disservice to the overwhelming majority of well-intentioned applicants" that were found to not comply with current bidding rules, SECA said.

The FCC should “proceed cautiously when identifying the best possible solutions for addressing this challenge in order to avoid possible regulatory overreach,” said the Consortium for School Networking and State Educational Technology Directors Association in joint comments. The groups said the problem doesn't "appear to rise to the level of calling for fundamental changes to the E-rate application process."

The proposal would "hinder competition and participation in the program," said the Schools, Health & Libraries Broadband Coalition. “Smaller providers and applicants will be the least able to adapt to and absorb the cost of these new requirements,” the group said: The “excessively burdensome approach is unwarranted given the small number of competitive bidding problems identified by GAO and OIG.” The FCC could adopt a "fraud risk assessment plan" and "improve its data analytics capabilities" instead, SHLB said.

The portal would "add unwelcome complexity to what is an already extremely complex program," said Verizon, adding it could "seriously burden and deter program participation." Verizon questioned whether the Universal Service Administrative Co., which would be responsible for managing the portal, "has the resources to take on such a task" (see 2204040049). The FCC could require E-rate applicants to submit competitive bidding compliance records when they submit their Form 471 in the e-rate productivity center when seeking funding, the ISP said.

Some smaller libraries may choose to leave the program, said the American Library Association. Requiring applicants to upload all bids and related documents to a portal would "increase their workload and needlessly place them in a precarious position that could jeopardize their funding," ALA said. It opposed requiring E-rate applicants to follow the same documentation requirements as rural healthcare program participants.

There are "already several current safeguards" to prevent waste, fraud and abuse in E-rate, said the Wisconsin Department of Public Instruction. The department opposed the "fundamental change to the E-rate program," saying it's "very skeptical" that a bidding portal would achieve that goal. It said a centralized bidding portal would "most definitely" conflict with state and local procurement rules and could "significantly delay" approval of applications. Several state agencies opposed establishing a portal, including the Nebraska Department of Administrative Services' Offices of the Chief Information Officer, South Dakota's Department of Education, Kentucky's Department of Education and the Illinois Office of Broadband.

Such a portal would be "unable to avoid a significant number of material conflicts with state, local, and tribal law," said WTA. It's also unclear what USAC's "initial and ultimate responsibilities" will be, the group said: The "costs of the proposed bid portal to the commission and USAC ... can significantly outweigh any benefits." Incompas agreed and expressed concern that the proposed portal would “unnecessarily disrupt the E-rate provider selection process.”

The proposed 14-day limit for bid selections "will have an adverse impact" on broadband deployment in Oklahoma "by limiting available funding" because it "will not allow the school or library sufficient time to take advantage of Oklahoma's statutorily created preapproval process" needed to participate in the state match program, said Brandy Wreath, Oklahoma’s state USF administrator. It could also put a beneficiary in violation of state law if they can't provide required documentation to the state USF administrator, Wreath said, saying the FCC should "consider permitting state [USF] administrators ... the ability to access the bidding portal and proposed central document repository."

Some rural providers in Michigan, Texas and Arizona backed the portal. Barry County Telco, Central Texas Telephone Co-op, Peoples Telephone Co-op, Totelcom Communications and Valley Telephone Co-op said "increased transparency in the bidding process will ensure the cost effectiveness of the proposed services and reduce waste." The providers recommended the portal be able to "send an automatic notification to providers" if a request for proposal "has a zip code within their operating area."