**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

In the Matter of )

)

Request for Review )

)

Wyoming Department of Education ) File No. SLD-338550

Cheyenne, Wyoming )

)

Schools and Libraries Universal Service ) CC Docket No. 02-6

Support Mechanism )

**order**

**Adopted: February 28, 2006 Released: February 28, 2006**

By the Chief, Wireline Competition Bureau:

**I. INTRODUCTION**

1.  In this Order, we grant a Request for Review filed by the Wyoming
    Department of Education, Cheyenne, Wyoming (Wyoming).[^1] Wyoming
    seeks review of a decision by the Universal Service Administrative
    Company (USAC, or Administrator) denying Wyoming's Funding Year 2003
    application for discounted services under the schools and libraries
    universal service support mechanism on the ground that Wyoming
    violated the Commission's competitive bidding requirements by not
    using price as a primary factor in the vendor selection.[^2] For the
    reasons set forth below, we find that a competitive bidding
    violation did not occur, and remand Wyoming's Funding Year 2003
    application to USAC for further consideration consistent with this
    Order.

    **II. BACKGROUND**

2.  Under the schools and libraries universal service support mechanism,
    commonly referred to as the E-rate program, eligible schools,
    libraries, and consortia that include eligible schools and
    libraries, may apply for discounts for eligible telecommunications
    services, Internet access, and internal connections.[^3] The
    Commission's rules provide that, with one limited exception for
    existing, binding contracts, an eligible school, library, or
    consortium that includes eligible schools and libraries must seek
    competitive bids for all services eligible for support.[^4]
    Generally, applicants file with USAC, for posting to its website, an
    FCC Form 470 requesting competitive bids for the services for which
    discounts are sought.[^5] The applicant must wait 28 days before
    entering into an agreement with a service provider for the requested
    services and submitting an FCC Form 471 requesting support for the
    services ordered by the applicant.[^6] USAC reviews the FCC Forms
    471 that it receives and issues funding commitment decisions in
    accordance with the Commission's rules.

3.  Consistent with these requirements, Wyoming public school districts
    submitted FCC Form 470 applications to USAC to initiate the
    competitive bidding process for E-rate eligible services.[^7]
    Subsequently, Wyoming entered into a multi-year contract with US
    West Communications (now Qwest Interprise America, Inc. (Qwest)), to
    provide telecommunications service, Internet access, and internal
    connections to all public schools in the state of Wyoming.[^8] On
    February 4, 2003, Wyoming filed its FCC Form 471 application on
    behalf of all Wyoming public schools in accordance with program
    rules.[^9] USAC denied Wyoming's application on the ground that the
    documentation provided by Wyoming during the selective review
    process demonstrated that price was not the primary factor in
    selecting Qwest as the service provider.[^10] USAC later affirmed
    this decision on appeal.[^11] Wyoming then filed the instant Request
    for Review.

    **III. DISCUSSION**

4.  For the reasons discussed below, we conclude that, contrary to
    USAC's finding, Wyoming did comply with the Commission's competitive
    bidding requirements. In particular, we find that Wyoming considered
    price, as well as other factors, in determining the most
    cost-effective bid. We therefore grant Wyoming's Request for Review.

5.  As a preliminary matter, we note that at the time Wyoming initiated
    its competitive bidding process for Funding Year 2003, the
    Commission had released only one order addressing the requirement
    that price be a primary factor in selecting the winning bid.[^12] In
    the *Tennessee Order*, released on August 11, 1999, the Commission
    determined that a competitive bidding process complies with program
    rules if price is taken into account during bid selection and the
    contract is awarded to the most cost-effective bidder.[^13] The
    Commission explained that:

    a school should have flexibility to select different levels of
    service, \[...\] but when selecting among comparable services, a
    school should be guided by price in its selection. Even among bids
    for comparable services, however, this does not mean that the lowest
    bid must be selected. Price, however, should be carefully considered
    at this point to ensure that any considerations between price and
    technical excellence (or other factors) are reasonable.[^14]

6.  In its Request for Review, Wyoming states that it was directed by
    the Wyoming State Supreme Court to establish a statewide network
    that would ensure equal opportunity for a proper education for every
    student in Wyoming.[^15] In accordance with this directive, the
    State Superintendent of Public Instruction established the Wyoming
    Equality Network (WEN), a statewide, high-speed data and video
    network that connects all Wyoming public schools.[^16] The purpose
    of the WEN is to improve education in Wyoming by providing equitable
    delivery of high-quality educational material throughout Wyoming's
    sparse population.[^17] Pursuant to state legislation enacted in
    February 1997, Wyoming issued a Request for Proposal (RFP) to
    solicit responses from the telecommunications industry for the
    design, development, implementation, and support of the WEN.[^18]

7.  The RFP asked potential bidders to propose one of three options: (1)
    expansion of the existing infrastructure; (2) complete replacement
    of the existing infrastructure, with new cost-effective services;
    or (3) a combination of existing infrastructure and new
    services.[^19] The RFP emphasizes that the proposed facilities must
    be compatible with existing telecommunications-based delivery
    systems in use by the State.[^20] The RFP listed five criteria, from
    highest priority to lowest priority, to be used for evaluation
    purposes: functionality, pricing, vendor support, vendor
    qualifications, and project plan.[^21] Each criterion, which
    contained several sub-components, was weighted with a percentage:
    Functionality was given the highest weight of 30 percent; pricing
    and vendor support was 20 percent; and vendor qualifications and
    project plan was 15 percent.[^22]

8.  In its Request for Review, Wyoming states that it was necessary to
    assign the highest weight to "functionality" because Wyoming had to
    select a service provider that was capable of providing
    telecommunications services to all schools over a large and diverse
    geographic area.[^23] Wyoming states that the statewide data and
    two-way video conferencing connections also had to be compatible
    with the existing facilities so operation and maintenance on a state
    level would be more cost-effective.[^24] Wyoming further maintains
    that although functionality was given the highest weight, pricing
    was still a primary factor in awarding the contract to Qwest.[^25]
    Wyoming asserts that it requested bidders to provide in their
    proposals detailed information regarding one-time costs and
    recurring costs associated with the project, as well as a cost
    structure for possible contract extensions.[^26] Wyoming states that
    evaluators were asked to review the cost structures with the public
    and state's best interest in mind.[^27] Wyoming asserts that the
    evaluator's recommendation to select Qwest was based on Qwest's
    ability to provide cost-effective services to all entities
    throughout the state.[^28] Thus, Wyoming maintains that the service
    contract with Qwest was executed in accordance with state
    procurement law, state legislation, and E-rate program rules.[^29]

9.  As noted above, the Commission's rules require eligible schools,
    libraries, and consortia that include eligible schools and libraries
    to seek competitive bids on the services for which they seek
    discounts.[^30] In selecting a provider of eligible services,
    schools and libraries must carefully consider all bids submitted and
    must select the most cost-effective offering.[^31] Although the
    Commission has concluded that price should be the primary factor in
    selecting a bid, applicants are given maximum flexibility to take
    service quality into account and may choose the offering that meets
    their needs most effectively and efficiently.[^32] In this regard,
    the Commission has concluded that other factors, such as prior
    experience, personnel qualifications, and management capability, may
    form a reasonable basis on which to evaluate whether an offering is
    cost-effective.[^33] These rules apply in addition to state and
    local competitive bidding requirements and are not intended to
    preempt such state or local requirements.[^34]

10. The record in this case indicates that Wyoming's procurement process
    required selection of the most cost-effective bid after evaluating
    price as a primary factor. The typical method for procuring
    supplies, materials, equipment and services for use by the State of
    Wyoming is by competitive sealed bidding, in order to secure
    acceptable products at the lowest possible cost to the taxpayers of
    the State.[^35] According to Wyoming procurement regulations, awards
    are given to the lowest responsive and responsible bidder, based on
    criteria specified in the RFP.[^36] The underlying record shows that
    Qwest's proposal satisfied the objectives set forth in Wyoming's
    RFP; it not only received the highest number of points in the bid
    evaluation, but it also represented the lowest cost of the proposals
    submitted.[^37] These factors support the conclusion that the
    procurement process at issue did not violate our competitive bidding
    requirements. We therefore grant Wyoming's Request for Review.

## IV. ORDERING CLAUSE

11. ACCORDINGLY, IT IS ORDERED, pursuant to authority delegated under
    sections 0.91, 0.291, and 54.722(a) of the Commission's rules, 47
    C.F.R. §§ 0.91, 0.291, and 54.722(a), that the Request for Review
    filed by Wyoming Department of Education on April 18, 2005 is
    GRANTED and remanded to USAC for further consideration.

    FEDERAL COMMUNICATIONS COMMISSION

    Thomas J. Navin

> Chief
>
> Wireline Competition Bureau

[^1]: Letter from Clementina Jimenez, Wyoming Department of Education,
    to Federal Communications Commission, filed April 18, 2005 (Request
    for Review). Section 54.719(c) of the Commission's rules provides
    that any person aggrieved by an action taken by a division of the
    Universal Service Administrative Company (Administrator) may seek
    review from the Commission. 47 C.F.R. § 54.719(c).

[^2]: Letter from Schools and Libraries Division, Universal Service
    Administrative Company, to Clementina Jimenez, Wyoming Department of
    Education, dated February 24, 2005 (Administrators Decision on
    Appeal).

[^3]: 47 C.F.R. §§ 54.501-54.503.

[^4]: [47 C.F.R. §§
    54.504](http://web2.westlaw.com/find/default.wl?DB=1000547&DocName=47CFRS54.504&FindType=L&AP=&mt=Westlaw&fn=_top&sv=Split&vr=2.0&rs=WLW5.02),
    [54.511(c)](http://web2.westlaw.com/find/default.wl?DB=1000547&DocName=47CFRS54.511&FindType=L&AP=&mt=Westlaw&fn=_top&sv=Split&vr=2.0&rs=WLW5.02).

[^5]: *See* Schools and Libraries Universal Service, Description of
    Services Requested and Certification Form, OMB 3060-0806 (September
    1999) (FCC Form 470).

[^6]: [47 C.F.R. §
    54.504(c)](http://web2.westlaw.com/find/default.wl?DB=1000547&DocName=47CFRS54.504&FindType=L&AP=&mt=Westlaw&fn=_top&sv=Split&vr=2.0&rs=WLW5.02);
    *see* *also* Schools and Libraries Universal Service, Services
    Ordered and Certification Form, OMB 3060-0806 (September 1999) (FCC
    Form 471).

[^7]: *See,* e.g., FCC Form 470, Fremont School District No. 1, posted
    November 28, 2001; FCC Form 470, Weston County School District No.
    1, posted November 28, 2001.

[^8]: *See* Request for Review at 3-4. On April 3, 1998, Wyoming entered
    into a five-year contract with US West (now Qwest) to create a
    telecommunications network within the State of Wyoming. The term of
    the original contract was from July 1, 1998 through June 30, 2003.
    *Id*. In 2001, the term of the contract was extended to June 30,
    2006. *Id*. at 4. In addition to providing telecommunications
    services, Internet access, and internal connections for Wyoming,
    Qwest serves as the agent for the following local independent
    telecommunications providers: TCT West, Inc., Union
    Telecommunications Company, Tri-County Telephone Association, Inc.,
    Dubois Telephone Exchange, Inc., Century Telecommunications of
    Wyoming Inc., RT Communications, Inc., Range Telephone Cooperative,
    Inc., Sprint/United Telephone Company of the West, Silver Star
    Telephone Company, Inc., All West Communications, Inc., and Project
    Telephone Company, Inc. *See* Letter from Clementina Jimenez,
    Wyoming Department of Education, to Schools and Libraries Division,
    Universal Service Administrative Company, dated November 17, 2003.

[^9]: *See* FCC Form 471, Wyoming Department of Education, filed
    February 4, 2003. In Funding Years 2000 and 2001, Wyoming requested
    support for the services underlying the Wyoming-US West state master
    contract at issue here. USAC denied these funding requests because
    the contract was signed before the end of the 28-day waiting period.
    Subsequently, Wyoming sought Commission review of these decisions.
    *See* Request for Review by the State of Wyoming, to Federal
    Communications Commission, SLD File No. 202111, filed December 20,
    2002; Request for Review by the State of Wyoming, to Federal
    Communications Commission, SLD File No. 218236, filed February 12,
    2003. In a separate order released today, the Bureau denies
    Wyoming's Requests for Review, but, on its own motion, grants a
    waiver of section 54.504(b) of the Commission's rules. Specifically,
    the Bureau finds that a waiver of the 28-day competitive bidding
    rule is appropriate to enable Wyoming public schools to obtain
    services from the Wyoming state master contract. *See Request for
    Review by the Wyoming Department of Education of the Decision of the
    Universal Service Administrator*, CC Docket Nos. 96-45, 97-21,
    Order, DA 06-484 (Wireline Comp. Bur. 2006).

[^10]: Letter from Schools and Libraries Division, Universal Service
    Administrative Company, to Linda Carter, State of Wyoming,
    Department of Administration and Information, dated June 29, 2004
    (Funding Commitment Decision Letter). *See also* Request for Review
    at 1 (listing FRNs that are the subject of this appeal).

[^11]: *See* Administrative Decision on Appeal; Letter from Clementina
    Jimenez to Schools and Libraries Division, to Schools and Libraries
    Division, Universal Service Administrative Company, dated August 24,
    2004.

[^12]: *See* *Request for Review by the Department of Education of the
    State of Tennessee of the Decision of the Universal Service
    Administrator*, CC Docket Nos. 96-45, 97-21, Order, 14 FCC Rcd 13734
    (1999) (*Tennessee Order*).

[^13]: *Id*. at 13737-38, paras. 7-8.

[^14]: *Id.* at 13739, para. 9. Four years later, after the conclusion
    of the Funding Year 2003 competitive bidding process, the Commission
    released the *Ysleta Order* in which it revised the policies
    established in the *Tennessee Order*. *See* *Request for Review by
    Ysleta Independent School District of the Decision of the Universal
    Service Administrator*, CC Docket Nos. 96-45, 97-21, Order, 18 FCC
    Rcd 26406 (2003) (*Ysleta Order*). In Ysleta, the Commission
    concluded that price must be the primary factor in selecting a
    winning bid. *Id*. The Commission explained that if a school were to
    assign 10 points to reputation and 10 points to past experience, the
    school would be required to assign at least 11 points to price.
    *Id*. at n. 138. This policy differs from the direction given in the
    *Tennessee Order* in that schools are now required to have a
    separate "cost category" when evaluating bids and that category must
    be given more weight than any other category. Because the *Ysleta
    Order* was released after the completion of Wyoming's competitive
    bidding process in Funding Year 2003, however, it is not applicable
    here. We therefore look to the *Tennessee Order* for guidance.

[^15]: Request for Review at 3, *citing Campbell Co. School District v.
    Wyoming*, 907 O.2d 1238 (Wyo. 1995).

[^16]: Request for Review at 3*.*

[^17]: *Id.*

[^18]: *Id*.

[^19]: *See* Wyoming Request for Proposal at 19.

[^20]: *Id.*

[^21]: *Id*. at 22.

[^22]: *See* Request for Review at 4.

[^23]: *Id.* at 5.

[^24]: *Id*.

[^25]: *Id*.

[^26]: *Id*.

[^27]: *Id*.

[^28]: *Id*.

[^29]: *Id*.

[^30]: [47 C.F.R. §§
    54.504](http://web2.westlaw.com/find/default.wl?DB=1000547&DocName=47CFRS54.504&FindType=L&AP=&mt=Westlaw&fn=_top&sv=Split&vr=2.0&rs=WLW5.02),
    [54.511(c)](http://web2.westlaw.com/find/default.wl?DB=1000547&DocName=47CFRS54.511&FindType=L&AP=&mt=Westlaw&fn=_top&sv=Split&vr=2.0&rs=WLW5.02).

[^31]: 47 C.F.R. § 54.511.

[^32]: *See* *Federal-State Joint Board on Universal Service,* CC Docket
    No. 96-45, Report and Order, 12 FCC Rcd 8776, 9029, para. 481 (1997)
    (*Universal Service Order*) (subsequent history omitted).

[^33]: *Id.; Tennessee Order,* 14 FCC Rcd 13739-40, para. 10. *See also*
    47 C.F.R. §§ 54.504(b)(2)(vii), 54.511(a).

[^34]: 47 C.F.R. § 54.504(a).

[^35]: *See* Department of Administration and Information, Procurement
    Section, Procurement Procedures Manual at section 2703.00 (1999).

[^36]: *See* Request for Review at Attachment 2 (Administration and
    Information, General Services Division, "A Vendor's Guide: How to do
    Business with the State of Wyoming").

[^37]: *See* Request for Review at Attachment 7; *see also* para. 7,
    *supra*.