**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

In the Matter of )

)

Requests for Waiver )

of the Decision of the )

Universal Service Administrator by )

)

Illinois School for the ) File No. SLD-419654

Visually Impaired, Jacksonville, IL )

)

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

Support Mechanism )

**order**

**Adopted: April 3, 2006 Released: April 3, 2006**

By the Chief, Wireline Competition Bureau:

1.  In this Order, we grant the appeal of a decision by the Universal
    Service Administrative Company (USAC) rescinding funding already
    committed to the Illinois School for the Visually Impaired (Illinois
    School) for discounted services under the schools and libraries
    universal service mechanism. We waive section 54.504 of the
    Commission's rules, which states that an applicant for schools and
    libraries funding must have a legally binding agreement in place
    when it submits its FCC Form 471.[^1] We remand the appeal to USAC
    for action consistent with this Order, and, to ensure that it is
    resolved expeditiously, we direct USAC to reinstate the funding
    commitment no later than 30 days from the release of this Order.

2.  [*Background*.]{.underline} Under the schools and libraries
    universal service support mechanism, eligible schools, libraries,
    and consortia that include eligible schools and libraries may apply
    for discounts for eligible telecommunications, Internet access, and
    internal connections.[^2] The Commission's rules provide that, with
    one limited exception for existing, binding contracts, an eligible
    school, library, or consortium must seek competitive bids for all
    services eligible for support.[^3] In accordance with the
    Commission's rules, an applicant must file with USAC an FCC Form 470
    requesting services, which USAC posts onto its website.[^4] 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.[^5] The Commission's rules state that the FCC Form 471
    requesting support for the services ordered by the applicant shall
    be submitted "upon signing a contract for eligible services."[^6]
    Specifically, the instructions state that applicants must have a
    "signed contract" or a "legally binding agreement" with the service
    provider "for all services" ordered.[^7]

3.  The Illinois School has requested review of USAC's decision to
    rescind funding because it did not have a legally binding agreement
    in place when its FCC Form 471 was submitted.[^8] On February 4,
    2004, the Illinois School filed an FCC Form 471 which included
    Funding Request Number (FRN) 1191492 for internal connections.[^9]
    The contract award date provided for FRN 1191492 was February 3,
    2004, which was before the FCC Form 471 was certified and therefore
    in compliance with E-rate program rules.[^10] On April 14, 2005, the
    Illinois School requested a delivery deadline extension.[^11] In its
    request, the Illinois School noted that that it did not sign the
    contract with the service provider until April 2005, well after the
    date the Illinois School's FCC Form 471 was submitted.[^12] On
    November 4, 2005, USAC notified the Illinois School that it was
    rescinding funding for FRN 1191492 due to the fact that the Illinois
    School submitted its FCC Form 471 before signing its contract.[^13]
    On November 22, 2005, the Illinois School appealed USAC's decision
    to rescind its funding, acknowledging that the contract was not
    signed until April 1, 2005.[^14] USAC denied its appeal.[^15] The
    Illinois School then filed a request for review with the
    Commission.[^16]

4.  In its request for review, the Illinois School concedes that, on its
    FCC Form 471, it mistakenly listed the date it identified the
    successful bidder as the contract award date, instead of the date it
    executed the contract.[^17] Because the Illinois School is fully
    funded by the State of Illinois Department of Human Services, it
    must follow the State of Illinois Office of Central Management
    Services procedures to obtain a contract for a service
    provider.[^18] Consequently, the Illinois School was required by
    state regulations to wait until it received official notification
    from USAC that its application was fully funded before entering into
    an agreement with its service provider.[^19] Because this
    notification did not occur until January 11, 2005, the Illinois
    School had to wait until April to finalize and sign its contract
    with its service provider.[^20]

5.  The Commission may waive any provision of its rules on its own
    motion and for good cause shown.[^21] A rule may be waived where the
    particular facts make strict compliance inconsistent with the public
    interest.[^22] In addition, the Commission may take into account
    considerations of hardship, equity, or more effective implementation
    of overall policy on an individual basis.[^23] In sum, waiver is
    appropriate if special circumstances warrant a deviation from the
    general rule, and such deviation would better serve the public
    interest than strict adherence to the general rule.[^24]

6.  *[Discussion]{.underline}.* We grant the appeal of the decision by
    USAC rescinding funding of the Illinois School for discounted
    services under the schools and libraries universal service
    mechanism. We find that good cause exists to waive section 54.504 of
    the Commission's rules, which states that an applicant for schools
    and libraries funding must have a legally binding agreement in place
    when it submits its FCC Form 471.[^25]

7.  Competitive bidding requirements are necessary to ensure more
    efficient pricing for telecommunications and information services
    purchased by schools and libraries. Section 54.504 requires that an
    applicant have a signed agreement in place before filing its FCC
    Form 471.[^26] The record demonstrates that the Illinois School
    technically missed the program deadline for having a written
    contract in place because its commitment had to be approved by the
    state and because it had to adhere to state procurement laws.[^27]
    As a result, the Illinois School was unable to sign a legally
    binding agreement prior to the close of the FCC Form 471
    window.[^28] Furthermore, while it missed the deadline, the Illinois
    School had a legally binding contract in place during the funding
    year and before the vendor began providing services.[^29] We find,
    therefore, that in these cases the policy behind the rule was
    satisfied even if the Illinois School did not technically meet the
    requirements of the rule.

8.  We emphasize that our competitive bidding rules are a central tenet
    of the E-rate program, and a tool for preventing waste, fraud and
    abuse. Here, we note there is no evidence in the record that the
    Illinois School engaged in activity intended to defraud or abuse the
    schools and libraries program. Finally, we find that, for this
    applicant, denying its requests for funding would create undue
    hardship and prevent it from receiving E-rate funding. Accordingly,
    we find that good cause exists to grant the Illinois School a waiver
    of section 54.504 of the Commission's rules, and remand this appeal
    to USAC for further processing consistent with our decision. To
    ensure that it is resolved expeditiously, we direct USAC to
    reinstate the funding commitment no later than 30 days from the
    release of this Order.

9.  We are committed to guarding against waste, fraud, and abuse, and to
    ensuring that funds disbursed through the E-rate universal service
    mechanism are used for appropriate purposes. We emphasize that we
    retain the discretion to evaluate the uses of monies disbursed
    through the E-rate mechanism and to determine on a case-by-case
    basis whether waste, fraud, or abuse of program funds occurred and
    whether recovery is warranted. If we find that funds were not used
    properly, we will require USAC to recover such funds through its
    normal processes. Although we grant the appeal addressed here, we
    reserve the right to conduct audits and investigations to determine
    compliance with the program rules and requirements.

## IV. ORDERING CLAUSES

10. ACCORDINGLY, IT IS ORDERED that, pursuant to the authority contained
    in sections 1-4 and 254 of the Communications Act of 1934, as
    amended, 47 U.S.C. §§ 151-154 and 254, and pursuant to authority
    delegated in sections 0.91, 0.291, 1.3 and 54.722(a) of the
    Commission's rules, 47 C.F.R. §§ 0.91, 0.291, 1.3 and 54.722(a),
    that the Request for Review filed by the Illinois School for the
    Visually Impaired IS GRANTED.

11. IT IS FURTHER ORDERED that, pursuant to the authority contained in
    sections 1-4 and 254 of the Communications Act of 1934, as amended,
    47 U.S.C. §§ 151-154 and 254, and pursuant to authority delegated in
    sections 0.91, 0.291, 1.3 and 54.722(a) of the Commission's rules,
    47 C.F.R. §§ 0.91, 0.291, 1.3 and 54.722(a), that section 47. C.F.R.
    § 54.504 IS WAIVED.

12. IT IS FURTHER ORDERED that, pursuant to the authority contained in
    sections 1-4 and 254 of the Communications Act of 1934, as amended,
    47 U.S.C. §§ 151-154 and 254, and pursuant to authority delegated in
    sections 0.91, 0.291, 1.3 and 54.722(a) of the Commission's rules,
    47 C.F.R. §§ 0.91, 0.291, 1.3 and 54.722(a), that the Request for
    Review filed by the Illinois School IS REMANDED to USAC for further
    consideration in accordance with the terms of this Order.

13. IT IS FURTHER ORDERED that, pursuant to the authority contained in
    sections 1-4 and 254 of the Communications Act of 1934, as amended,
    47 U.S.C. §§ 151-154 and 254, USAC SHALL REINSTATE the funding
    commitment no later than 30 calendar days from release of this
    Order.

    Thomas J. Navin

    Chief

    Wireline Competition Bureau

[^1]: 47 C.F.R. § 54.504.

[^2]: 47 C.F.R. §§ 54.502, 54.503.

[^3]: 47 C.F.R. §§ 54.504, 54.511(c).

[^4]: *See* Schools and Libraries Universal Service, Description of
    Services Requested and Certification Form, OMB 3060-0806 (September
    1999) (FCC Form 470).

[^5]: 47 C.F.R. § 54.504(c); *see* *also* Schools and Libraries
    Universal Service, Services Ordered and Certification Form, OMB
    3060-0806 (September 1999) (FCC Form 471).

[^6]: *Id.* *See also Request for Review of Waldwick School District,
    Schools and Libraries Universal Service Support Mechanisms*, File
    No. SLD-234540, CC Docket No. 02-6, Order, 18 FCC Rcd 22994, 22995,
    para. 3 (Wireline Comp. Bur. 2003) (*Waldwick Order*); *Request for
    Review of St. Joseph High School, Schools and Libraries Universal
    Service Support Mechanisms*, File No. SLD-234540, CC Docket Nos.
    96-45, 97-21, Order, 17 FCC Rcd 22499, 22500-01, para. 4 (Wireline
    Comp. Bur. 2002) (*St. Joseph Order*).

[^7]: Instructions for Completing the Universal Service Schools and
    Libraries Services Ordered and Certification Form (FCC Form 471),
    OMB 3060-0806 (December 2002) (FCC Form 471 Instructions).

[^8]: Letter from Brenda Stewart, Illinois School for the Visually
    Impaired, to Schools and Libraries Division, Universal Service
    Administrative Company (filed March 16, 2006) (Request for Review).
    *See* 47 C.F.R. § 54.504(c).

[^9]: FCC Form 471, Illinois School for the Visually Impaired, certified
    February 4, 2004 (Illinois School FCC Form 471).

[^10]: *See* 47 C.F.R. § 54.504(c).

[^11]: Letter from Brenda Stewart, Illinois School for the Visually
    Impaired, to Schools and Libraries Division, Universal Service
    Administrative Company (dated April 14, 2005) (Request for Delivery
    Deadline Extension).

[^12]: *Id.*

[^13]: Letter from Schools and Libraries Division, Universal Service
    Administrative Company, to Les Stevens, Illinois School for the
    Visually Impaired (dated November 4, 2005) (Notification of
    Commitment Adjustment Letter).

[^14]: Letter from Brenda Stewart, Illinois School for the Visually
    Impaired, to Schools and Libraries Division, Universal Service
    Administrative Company (dated November 22, 2005) (Request for
    Appeal).

[^15]: Letter from Schools and Libraries Division, Universal Service
    Administrative Company, to Brenda Stewart, Illinois School for the
    Visually Impaired (dated February 24, 2006) (Administrator's
    Decision on Appeal).

[^16]: Request for Review.

[^17]: *Id.* at 4.

[^18]: *Id.* at 5.

[^19]: *Id.*

[^20]: *Id.* at 4-5.

[^21]: 47 C.F.R. § 1.3.

[^22]: *Northeast Cellular Telephone Co. v. FCC*, 897 F.2d 1164, 1166
    (D.C. Cir. 1990) (*Northeast Cellular*).

[^23]: *WAIT Radio v. FCC*, 418 F.2d 1153, 1157, (D.C. Cir. 1969),
    *affirmed by* *WAIT Radio v. FCC*, 459 F.2d 1203 (D.C. Cir. 1972).

[^24]: *Northeast Cellular*, 897 F.2d at 1166.

[^25]: 47 C.F.R. § 54.504.

[^26]: *Id.*

[^27]: Request for Review at 5.

[^28]: The Funding Year 2004 FCC Form 471 window closed February 4,
    2004. *See* USAC Website, FY2004 Form 471 Window Dates Set,
    available at
    <http://www.universalservice.org/sl/tools/news-archive/2003/092003.asp#091703>.

[^29]: Request for Review at 4-5.