**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

In the Matter of )

)

Requests for Review of )

Decisions of the )

Universal Service Administrator by )

)

Colegio Nuestra Senora del Carmen ) File Nos. SLD-359532, 359494, *et
al*.

Hatillo, Puerto Rico, *et al.* )

)

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

Support Mechanism )

**order**

**Adopted: October 30, 2008 Released: October 30, 2008**

By the Acting Chief, Telecommunications Access Policy Division, Wireline
Competition Bureau:

**I. INTRODUCTION**

1.  In this order, we address six appeals of decisions by the Universal
    Service Administrative Company (USAC) denying requests for funding
    under the schools and libraries universal service support mechanism,
    also known as the E-rate program, on the ground that the underlying
    applications violated the Commission's competitive bidding
    requirements.[^1] As explained below, we find that, in five
    instances, the petitioners did not violate the Commission's
    competitive bidding rules.[^2] We therefore grant these appeals. In
    one instance, we find that good cause exists to grant a limited
    waiver of section 54.511 of the Commission's competitive bidding
    rules.[^3] Accordingly, we remand the underlying applications
    associated with these appeals to USAC for further action consistent
    with this order. To ensure that the underlying applications are
    resolved expeditiously, we direct USAC to complete its review of
    each application and issue a decision no later than 60 calendar days
    from the release date of this order.

## II. BACKGROUND

2.  Under 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.[^4] The Commission's rules provide that an
    eligible school, library, or consortium that includes eligible
    schools and libraries must seek competitive bids for all services
    eligible for support.[^5] Applicants thus must submit for posting on
    USAC's website an FCC Form 470 requesting discounts for E-rate
    eligible services, such as tariffed telecommunications services,
    month-to-month Internet access, or any services for which the
    applicant is seeking a new contract.[^6] The applicant must describe
    the requested services with sufficient specificity to enable
    potential service providers to submit bids for such services.[^7]
    The applicant must provide this description on its FCC Form 470 or
    indicate on the form that it has a Request for Proposal (RFP)
    available providing detail about the requested services.[^8] The RFP
    must be available to all potential bidders for the duration of the
    bidding process.[^9]

3.  After submitting an FCC Form 470, the applicant must wait 28 days
    before making commitments with the selected service providers.[^10]
    The applicant must consider all submitted bids prior to entering
    into a contract, and price must be the primary factor in selecting
    the winning bid.[^11] Once the applicant has selected a provider and
    entered into a service contract, the applicant must file an FCC Form
    471 requesting support for eligible services.[^12] USAC assigns a
    funding request number (FRN) to each request for discounted services
    and issues funding commitment decision letters (FCDLs) approving or
    denying the requests for discounted services.

4.  *[Price as a Primary Factor in Selecting a Bid]{.underline}*. Prior
    to Funding Year 2004, the Commission released only one order
    addressing an appeal of the requirement that price be the primary
    factor in selecting the winning bid.[^13] Specifically, in the
    *Tennessee Order*, released in 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.[^14] The Commission
    further concluded that other factors, such as prior experience,
    personnel qualifications, and management capability, also may form a
    reasonable basis on which to evaluate whether an offering is
    cost-effective.[^15]

5.  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*.[^16] In the *Ysleta Order*, the Commission
    concluded that price must be the primary factor in selecting a
    winning bid.[^17] 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.[^18] The
    Commission stated that, if, for example, a school assigns 10 points
    to reputation and 10 points to past experience, the school would be
    required to assign at least 11 points to price.[^19]

6.  *[Pattern Analysis Procedure]{.underline}*. Among other things, USAC
    is responsible for administering the application process for the
    E-rate program.[^20] Pursuant to this authority, USAC developed a
    procedure to detect applications that may be in violation of the
    Commission's competitive bidding rules by searching for similar
    language used in FCC Forms 470 filed by other schools, libraries,
    and consortia that selected the same service provider through their
    competitive bidding processes.[^21] This procedure, described by
    USAC as "pattern analysis," contemplates the possibility that a
    group of applicants, all with the same service provider, violated
    the competitive bidding rules.

7.  In the *Academy of Careers Order*, released in May 2006, the
    Commission determined that USAC improperly denied requests for
    funding based on its "pattern analysis" procedure.[^22] The
    Commission found that USAC should not stop its review after
    identifying a pattern in certain applications without sufficiently
    examining whether the Commission's rules were actually violated due
    to improper third-party participation in the competitive bidding
    process.[^23] Additionally, the Commission required USAC to conduct
    further investigation and analysis prior to denying funding where
    USAC suspects that a service provider has improperly participated in
    an applicant's bidding process due to the results of its pattern
    analysis procedure.[^24]

8.  *[Requests for Review]{.underline}*. The petitioners submitted their
    FCC Forms 470 to USAC to initiate the competitive bidding process
    for eligible services under the E-rate program.[^25] Subsequently,
    the petitioners entered into contracts with their respective service
    providers and submitted their FCC Form 471 applications for Funding
    Years 2003, 2004, or 2005 to USAC.[^26] USAC denied funding to four
    petitioners -- Colegio Nuestra Senora del Carmen (Colegio), The Mill
    School (Mill), Thornton Township High School District (Thornton),
    and Edgewood Independent School District (Edgewood) -- because USAC
    found that they failed to use price as the primary factor in the
    vendor selection process.[^27] USAC also denied funding to Long
    Branch Free Public Library (Long Branch), Pinon Unified School
    District (Pinon), and Mill after determining that their selected
    service providers improperly participated in their respective
    bidding processes.[^28] USAC later affirmed these decisions on
    appeal.[^29] The petitioners then filed the instant requests for
    review with the Commission.[^30]

    **III. DISCUSSION**

9.  Consistent with our obligation to conduct a *de novo* review of
    appeals of decisions made by USAC, we grant the petitioners'
    requests for review.[^31] As explained below, we find that the
    petitioners did not violate the Commission's competitive bidding
    rules.[^32] We discuss these groups of appeals separately below.

10. [Price as a Primary Factor in Selecting a Bid]{.underline}. Four
    petitioners were denied funding because they failed to use price as
    the primary factor in the vendor selection process. Specifically,
    USAC rejected the funding requests of Colegio, Mill, Thornton, and
    Edgewood because they failed to give more weight to price in the
    competitive bidding process than to any other factor.[^33]

11. Consistent with our *Academia Order* precedent, we find that USAC
    improperly denied the petitioners' funding requests.[^34] Here, as
    in that order, the petitioners initiated the vendor selection
    process prior to the release of the *Ysleta Order*.[^35] Thus, as we
    found in *Academia Order*, USAC should have applied the standard the
    Commission articulated in the *Tennessee Order* by determining
    whether price was considered as a primary factor for vendor
    selection and whether the most cost-effective services were
    selected, not whether price was weighted the highest during bid
    evaluations.[^36]

12. The record shows that the petitioners provided documentation
    detailing the competitive bidding process, including bid requests,
    bid proposals, or cost evaluation criteria.[^37] Specifically, we
    find that Colegio considered price among the five evaluation
    criteria in its vendor selection process and awarded the contract to
    NEVESEM, Inc., because NEVESEM complied with the school's
    requirements and the established evaluation criteria.[^38] The
    record shows that Mill received two bids in response to its request
    for telecommunications services and evaluated price and previous
    experience before entering into a contract with the selected service
    providers.[^39] Finally, we find that Thornton evaluated two
    criteria in its vendor selection process, i.e., reliability and
    cost, and ultimately selected the vendor with the lowest bid.[^40]
    Thus, like the petitioners in the *Academia Order*, each petitioner
    evaluated the responsive bidders, using price as a primary
    consideration, and selected the vendor that offered the most
    cost-effective offering.[^41] Based on these factors, we find that
    the petitioners' competitive bidding processes did not violate
    program rules as they existed at that time. We therefore grant their
    requests for review.

13. With regard to Edgewood, we find that good cause exists to grant a
    limited waiver of section 54.511 of the Commission's rules.[^42] As
    noted above, the *Ysleta Order* was released on December 8,
    2003.[^43] Four days later, Edgewood released its information
    infrastructure RFP with evaluation criteria that complied with the
    *Tennessee Order*.[^44] Although the *Ysleta Order* was in effect
    when Edgewood released its RFP, we find that a limited waiver is
    warranted in this instance because the *Tennessee Order* was in
    effect while Edgewood drafted and prepared its RFP. Further, we find
    that Edgewood considered price as a primary factor in the vendor
    selection process, consistent with the standard articulated in the
    *Tennessee Order.*[^45] We therefore waive section 54.511 of the
    Commission's rules, grant Edgewood's request for review, and remand
    the underlying application to USAC for further processing.

14. [Pattern Analysis Procedure]{.underline}. USAC denied funding to
    Pinon, Mill, and Long Branch after determining that their selected
    service providers improperly participated in their respective
    bidding processes. Specifically, in the case of Pinon, USAC
    determined that documentation submitted during the selective review
    process displayed striking similarities to the FCC Forms 470 and
    competitive bidding responses among applicants selecting the same
    service provider.[^46] In its request for review, Pinon argues,
    however, that the service provider was not involved in the
    submission of its FCC Form 470 or the competitive bidding
    process.[^47] Pinon also states that the "similarities" among
    applications could be because other schools on the Navajo
    reservation have similar needs and requested similar services.[^48]

15. With regard to Mill, USAC found that similarities in Mill's FCC Form
    470 and FCC Form 470 certification pages among applicants using the
    same service provider suggest service provider involvement in Mill's
    competitive bidding process.[^49] In its request for review, Mill
    states that it was not aware of any impropriety involving its FCC
    Form 470 and certifications relating to its applications.[^50] Mill
    further argues that USAC did not provide copies of the FCC Forms 470
    of other applicants to show where the alleged similarities actually
    existed.[^51] Mill also claims that the existence of alleged
    similarities alone is not sufficient to support USAC's finding that
    Mill relinquished control over the application process to the
    vendors.[^52]

16. In the case of Long Branch, USAC found that similarities in the
    cited FCC Form 470 and Item 12 descriptions of other applicants who
    selected the same service provider implied service provider
    involvement in Long Branch's competitive bidding process.[^53] In
    its request for review, Long Branch argues that the library did not
    surrender control of the bidding process to a service provider.[^54]
    Long Branch asserts that all bids were received by the library and
    that the library selected the service providers.[^55] Long Branch
    also maintains that no service provider contact information appears
    on the establishing FCC Form 470.[^56]

17. Consistent with precedent, we grant the requests for review filed by
    Pinon, Mill, and Long Branch.[^57] Here, as with the appeals
    resolved in the *Academy of Careers Order*, USAC denied the
    petitioners' requests for funding based on its "pattern analysis"
    procedure without sufficiently examining whether the Commission's
    rules were actually violated due to improper third-party
    participation in the competitive bidding process.[^58] We therefore
    remand these applications to USAC consistent with the Commission's
    direction provided in the *Academy of Careers Order.*[^59]

18. Therefore, based on the record before us, we find that five of the
    petitioners did not violate the Commission's competitive bidding
    rules, and we waive section 54.511 of the Commission's rules with
    respect to the sixth petitioner.[^60] In addition, at this time,
    there is no evidence of waste, fraud or abuse, or misuse of funds,
    or a failure to adhere to core program requirements. Accordingly, we
    grant these appeals and remand the underlying applications to USAC
    for further action consistent with this order. In remanding these
    applications to USAC, we make no finding as to the ultimate
    eligibility of the services or the petitioners' applications.[^61]
    We remind USAC of its obligation to independently determine whether
    the disbursement of universal service funds would be consistent with
    program requirements, Commission rules and orders, or applicable
    statutes, and to decline to disburse funds where this standard is
    not met. We direct USAC to complete its review of these applications
    and issue an award or denial based on a complete review and analysis
    no later than 60 calendar days from the release date of this
    order.[^62]

19. Finally, we emphasize that the Commission is committed to guarding
    against waste, fraud, and abuse, and ensuring that funds disbursed
    through the E-rate program are used for appropriate purposes.
    Although we grant the appeals addressed herein, this action does not
    affect the authority of the Commission or USAC to conduct audits or
    investigations to determine compliance with the E-rate program rules
    and requirements. Because audits or investigations may provide
    information showing that a beneficiary or service provider failed to
    comply with the statute or the Commission's rules, such proceedings
    can reveal instances in which universal service funds were disbursed
    improperly or in a manner inconsistent with the statute or the
    Commission's rules. To the extent the Commission finds that funds
    were not used properly, the Commission will require USAC to recover
    such funds through its normal processes. We emphasize that the
    Commission retains the discretion to evaluate the uses of monies
    disbursed through the E-rate program and to determine on a
    case-by-case basis that waste, fraud, or abuse of program funds
    occurred and that recovery is warranted. The Commission remains
    committed to ensuring the integrity of the program and will continue
    to aggressively pursue instances of waste, fraud, or abuse under the
    Commission's procedures and in cooperation with law enforcement
    agencies.

## IV. ORDERING CLAUSES

20. ACCORDINGLY, IT IS ORDERED, 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
    under sections 0.91, 0.291, and 54.722(a) of the Commission's rules,
    47 C.F.R. §§ 0.91, 0.291, 54.722(a), that the requests for review
    filed by Colegio Nuestra Senora del Carmen on June 8, 2005, Long
    Branch Free Public Library on April 23, 2007, The Mill School on
    April 26, 2005, Pinon Unified School District on November 18, 2005,
    Thornton Township High School District 205 on January 13, 2006, and
    Edgewood Independent School District on November 16, 2007, ARE
    GRANTED and REMANDED to USAC for further consideration in accordance
    with the terms of this order.

21. IT IS FURTHER ORDERED, 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 54.511 of
    the Commission's rules, 47 C.F.R. § 54.511, IS WAIVED to the limited
    extent provided herein.

22. IT IS FURTHER ORDERED, 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
    under sections 0.91, 0.291, and 54.722(a) of the Commission's rules,
    47 C.F.R. §§ 0.91, 0.291, 54.722(a), that USAC SHALL DISCONTINUE its
    recovery actions against Long Branch Free Public Library and
    Edgewood Independent School District.

23. IT IS FURTHER ORDERED, 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
    under sections 0.91, 0.291, and 54.722(a) of the Commission's rules,
    47 C.F.R. §§ 0.91, 0.291, 54.722(a), that USAC SHALL COMPLETE its
    review of each remanded application and SHALL ISSUE an award or a
    denial based on a complete review and analysis no later than 60
    calendar days from the release date of this order.

24. IT IS FURTHER ORDERED that, pursuant to section 1.102(b) of the
    Commission's rules, 47 C.F.R. § 1.102(b), this order SHALL BE
    EFFECTIVE upon release.

    FEDERAL COMMUNICATIONS COMMISSION

    Jennifer K. McKee

    Acting Chief

    Telecommunications Access Policy Division

    Wireline Competition Bureau

    **APPENDIX**

+--------------------------+----------+------------+-----------------+
| **Applicant**            | **App    | **Funding  | **Date Filed**  |
|                          | lication | Year**     |                 |
|                          | Num      |            |                 |
|                          | ber(s)** |            |                 |
+--------------------------+----------+------------+-----------------+
| Colegio Nuestra Senora   | 359532   | 2003       | June 8, 2005    |
| del Carmen               |          |            |                 |
|                          | 359494   |            |                 |
| Hatillo, PR              |          |            |                 |
+--------------------------+----------+------------+-----------------+
| Edgewood Independent     | 414366   | 2004       | November 16,    |
| School District          |          |            | 2007            |
|                          |          |            |                 |
| San Antonio, TX          |          |            |                 |
+--------------------------+----------+------------+-----------------+
| Long Branch Free Public  | 329836   | 2002       | April 23, 2007  |
| Library                  |          |            |                 |
|                          |          |            |                 |
| Capitol Heights, MD      |          |            |                 |
+--------------------------+----------+------------+-----------------+
| The Mill School          | 354229   | 2003       | May 20, 2005    |
|                          | 347420   |            |                 |
| Baltimore, MD            | 347435   |            |                 |
+--------------------------+----------+------------+-----------------+
| Pinon Unified School     | 402870   | 2004       | February 9,     |
| District #4              |          |            | 2006            |
|                          |          |            |                 |
| Pinon, AZ                |          |            |                 |
+--------------------------+----------+------------+-----------------+
| Thornton Township High   | 393315   | 2005       | September 15,   |
| School District 205      |          |            | 2006            |
|                          |          |            |                 |
| South Holland, IL        |          |            |                 |
+--------------------------+----------+------------+-----------------+

[^1]: The list of applicants is attached as an appendix to this order.
    In this order, we use the term "appeals" to generally refer to
    requests for review of decisions by USAC. Section 54.719(c) of the
    Commission's rules provides that any person aggrieved by an action
    taken by a division of USAC may seek review from the Commission. 47
    C.F.R. § 54.719(c).

[^2]: 47 C.F.R. §§ 54.504, 54.511.

[^3]: 47 C.F.R. § 54.511

[^4]: 47 C.F.R. §§ 54.501-54.503.

[^5]: 47 C.F.R. § 54.504. An existing contract signed on or before July
    10, 1997 is exempt from the competitive bidding requirements. *See*
    47 C.F.R. § 54.511(c).

[^6]: 47 C.F.R. § 54.504(b).

[^7]: *Id.*

[^8]: *See, e.g.,* Schools and Libraries Universal Service, Description
    of Services Requested and Certification Form, OMB 3060-0806
    (September 1999) (FCC Form 470); Schools and Libraries Universal
    Service, Description of Services Requested and Certification Form,
    OMB 3060-0806 (October 2004) (current FCC Form 470).

[^9]: FCC Form 470.

[^10]: 47 C.F.R. §§ 54.504(b)-(c).

[^11]: 47 C.F.R. § 54.511(a).

[^12]: *See* Schools and Libraries Universal Service, Services Ordered
    and Certification Form, OMB 3060-0806 (October 2000) (FCC Form 471);
    Schools and Libraries Universal Service, Services Ordered and
    Certification Form, OMB 3060-0806 (November 2004) (current FCC Form
    471).

[^13]: *See Request for Review by the Department of Education of the
    State of Tennessee of the Decision of the Universal Service
    Administrator*, *Request* *for Review by Integrated Systems and
    Internet Solutions, Inc., of the Decision of the Universal Service
    Administrator, Request for Review by Education Networks of America
    of the Decision of the Universal Service Administrator,
    Federal-State Joint Board on Universal Service, Changes to the Board
    of Directors of the National Exchange Carrier Association, Inc*., CC
    Docket Nos. 96-45 and 97-21, Order, 14 FCC Rcd 13734 (1999)
    (*Tennessee Order*). The Commission used two different phrases to
    discuss how price should be taken into account; it said price should
    be "a primary factor," but in discussing prior precedent, the order
    also said price should be "the primary factor." *Id.* at 13739-40,
    paras. 10-11. Subsequently, in the *Ysleta Order*, the Commission
    acknowledged that the "varying phraseology in the same decision
    created some ambiguity on this issue." *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, 26429, para. 50 (2003) (*Ysleta Order*).

[^14]: *See Tennessee Order,* 14 FCC Rcd at 13737-39, paras. 7-9; *see
    also* *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 First Report and Order*) (subsequent history
    omitted) (stating that price should be the primary factor in
    selecting a bid, but applicants are given maximum flexibility to
    take service quality into account and may choose the offering that
    meets their needs most effectively and efficiently).

[^15]: *Tennessee Order,* 14 FCC Rcd at 13739-40, para. 10; *see also*
    47 C.F.R. §§ 54.504(b)(2)(vii), 54.511(a).

[^16]: *See* *Ysleta Order,* 18 FCC Rcd at 26429, para. 50.

[^17]: *Id*. This rule was originally codified in 2003. *See Schools and
    Libraries Universal Service Support Mechanism*, CC Docket No. 02-6,
    Second Report and Order and Further Notice of Proposed Rulemaking,
    18 FCC Rcd 9202 (2003) (codifying 47 C.F.R. § 54.511(a)); *see also
    Schools and Libraries Universal Service Support Mechanism*, CC
    Docket No. 02-6, Fifth Report and Order and Order, 19 FCC Rcd 15808
    (2004) (codifying 47 C.F.R. § 54.504(b)(2)(vii) and 47 C.F.R. §
    54.504(c)(1)(xi)).

[^18]: *See* *Ysleta Order*, 18 FCC Rcd at 26429, para. 50.

[^19]: *Id*. at n.138.

[^20]: *Changes to the Board of Directors of the National Exchange
    Carrier Association, Inc., Federal-State Joint Board on Universal
    Service*, Third Report and Order in CC Docket No. 97-21, Fourth
    Order on Reconsideration in CC Docket No. 97-21, and Eighth Order on
    Reconsideration in CC Docket No. 96-45, 13 FCC Rcd 25058, 25064-65,
    para. 12 (1998).

[^21]: *See* *Request for Review of the Decision of the Universal
    Service Administrator by Academy of Careers and Technologies, San
    Antonio, TX, et al*., *Schools and Libraries Universal Service
    Support Mechanism*, CC Docket No. 02-6, Order, 21 FCC Rcd 5348,
    5349, para. 3 (2006) (*Academy of Careers Order*).

[^22]: *Id.* at 5350-51, para. 6.

[^23]: *Id.*

[^24]: *Id*. at 5351, para. 7.

[^25]: FCC Form 470, Colegio Nuestra Senora del Carmen (posted Nov. 25,
    2003); FCC Form 470, Long Branch Free Public Library (posted Dec.
    20, 2001); FCC Form 470, Pinon Unified School District #4 (posted
    Nov. 6, 2003); FCC Form 470, The Mill School (posted Nov. 12, 2002);
    FCC Form 470, Thornton Township High School District 205 (posted
    Nov. 25, 2003); FCC Form 470, Edgewood Independent School District
    (posted Dec. 12, 2003).

[^26]: FCC Form 471, Colegio Nuestra Senora del Carmen (filed Feb. 4,
    2004); FCC Form 471, Long Branch Free Public Library (filed Jan. 17,
    2002); FCC Form 471, Pinon Unified School District #4 (filed Jan.
    28, 2004); FCC Form 471, The Mill School (filed Feb. 3, 2003); FCC
    Form 471, Thornton Township High School District 205 (filed Feb. 2,
    2004); FCC Form 471, Edgewood Independent School District (filed
    Jan. 30, 2004).

[^27]: Letter from USAC, Schools and Libraries Division, to Carmen Diaz,
    Colegio Nuestra Senora Del Carmen (dated Apr. 9, 2005); Letter from
    USAC, Schools and Libraries Division, to Anne Davis, The Mill School
    (dated Feb. 24, 2005); Letter from USAC, Schools and Libraries
    Division, to Larry Scaletta, Thornton Township High School District
    205 (dated Nov. 16, 2005); Letter from USAC, Schools and Libraries
    Division, to J.J. McQuade, Edgewood Independent School District
    (dated Sept. 20, 2007). We note that Mill was also denied funding
    based on USAC's pattern analysis procedure, which is discussed in
    more detail below. *See infra* paras. 14-15.

[^28]: *See* Letter from USAC, Schools and Libraries Division, to Steve
    Huxhold, Pinon Unified School District #4 (dated May 10, 2005);
    Letter from USAC, Schools and Libraries Division, to Anne Davis, The
    Mill School (dated July 27, 2004). We note that during post-funding
    review, USAC determined that Long Branch's FCC Form 470 contained
    service provider contact information. Long Branch was then subject
    to a funding commitment adjustment by USAC, which rescinded Long
    Branch's funding commitment.  *See* Letter from USAC, Schools and
    Libraries Division, to Ingrid Bruck, Long Branch Public Library
    (dated Nov. 3, 2006). In light of our decision herein, we direct
    USAC to discontinue recovery actions against Long Branch pending
    completion of its review of Long Branch's application on remand.

[^29]: *See* Letter from USAC, Schools and Libraries Division, to Ingrid
    Bruck, Long Branch Public Library (dated Mar. 7, 2007) (Long Branch
    Administrative Decision Letter); Letter from USAC, Schools and
    Libraries Division, to Steve Huxhold, Pinon Unified School District
    #4 (dated Sept. 19, 2005); Letter from USAC, Schools and Libraries
    Division, to Anne Davis, The Mill School (dated Feb. 24, 2005).

[^30]: Letter from Carmen Diaz, Colegio Nuestra Senora del Carmen, to
    Office of the Secretary, Federal Communications Commission, CC
    Docket No. 02-6 (dated June 8, 2005); Letter from Paul Sandler, The
    Mill School, to Office of the Secretary, Federal Communications
    Commission, CC Docket No. 02-6 (dated Apr. 26, 2005); Letter from
    Ingrid Bruck, Long Branch Public Library, to Office of the
    Secretary, Federal Communications Commission, CC Docket No. 02-6
    (dated Apr. 23, 2007); Letter from Steve Huxhold, Pinon Unified
    School District #4, to Office of the Secretary, Federal
    Communications Commission, CC Docket No. 02-6 (dated Nov. 18, 2005);
    Letter from Larry Scaletta, Thornton Township High School District
    205, to Office of the Secretary, Federal Communications Commission
    (dated Jan. 13, 2006); Letter from Richard Bocanegra, Edgewood
    Independent School District, to Office of the Secretary, Federal
    Communications Commission (dated Nov. 16, 2007) (collectively,
    Requests for Review).

[^31]: *See* 47 C.F.R. § 54.723; *infra* Appendix. We estimate that the
    appeals granted in this order involve applications for approximately
    \$3.2 million in funding. We note that USAC has already reserved
    sufficient funds to address outstanding appeals. *See, e.g.,*
    Universal Service Administrative Company, Federal Universal Service
    Support Mechanisms Fund Size Projections for the Fourth Quarter 2008
    (Aug. 1, 2008). Thus, we determine that the action we take today
    should have minimal impact on the universal service fund as a whole.

[^32]: 47 C.F.R. §§ 54.504, 54.511.

[^33]: Letter from USAC, Schools and Libraries Division, to Carmen Diaz,
    Colegio Nuestra Senora Del Carmen (dated Apr. 9, 2005); Letter from
    USAC, Schools and Libraries Division, to Anne Davis, The Mill School
    (dated Feb. 24, 2005); Letter from USAC, Schools and Libraries
    Division, to Larry Scaletta, Thornton Township High School District
    205 (dated Nov. 16, 2005); Letter from USAC, Schools and Libraries
    Division, to J.J. McQuade, Edgewood Independent School District
    (dated Sept. 20, 2007). We note that during post-funding review,
    USAC determined that Edgewood failed to provide documentation to
    indicate that price was the primary factor in the vendor selection
    process. Edgewood was then subject to a funding commitment
    adjustment by USAC, which rescinded Edgewood's funding commitment. 
    In light of our decision herein, we direct USAC to discontinue
    recovery actions against Edgewood pending completion of its review
    of Edgewood's application on remand.

[^34]: *See, e.g.,* *Request for Review of the Decision of the Universal
    Service Administrator by Academia Discipulos de Cristo*, *et al*.,
    *Schools and Libraries Universal Service Support Mechanism*, CC
    Docket No. 02-6, Order, 21 FCC Rcd 9210 (2006) (finding that USAC
    erroneously required applicants to give more weight to price in the
    competitive bidding process than to any other factor) (*Academia
    Order*).

[^35]: The *Ysleta Order* was released on December 8, 2003. *See Ysleta
    Order*, 18 FCC Rcd 26406. Mill initiated its competitive bidding
    process in 2002, and Colegio and Thornton initiated their
    competitive bidding processes in November 2003. Edgewood drafted and
    prepared its RFP before the *Ysleta Order* was released. *See* FCC
    Form 470, The Mill School (posted Nov. 12, 2002); FCC Form 470,
    Colegio Nuestra Senora Del Carmen (posted Nov. 25, 2003); FCC Form
    470, Thornton Township High School District 205 (posted Nov. 25,
    2003); FCC Form 470, Edgewood Independent School District (posted
    Dec. 12, 2003).

[^36]: *See Academia Order*, 21 FCC Rcd at 9213-14, paras. 9-10;
    *Tennessee Order,* 14 FCC Rcd at 13737-13739, paras. 7-9; *see also
    supra* paras. 4-5.

[^37]: *See* Colegio Request for Review at Appendix 2; Mill Request for
    Review at 2; Thornton Request for Review at 1; Edgewood Request for
    Review at 3-6.

[^38]: *See* Colegio Request for Review at Appendix 4. Colegio reviewed
    the following criteria: (1) school's individual approach; (2) E-rate
    project reference; (3) technical capabilities; (4) K-12 experience;
    and (5) price.

[^39]: *See* Mill Request for Review at 2 and Exhibit B; *see also*
    Facsimile from Anne Davis, Florence Crittendon Services, on behalf
    of The Mill School, to Noel O'Flanagan, USAC, Schools and Libraries
    Division (dated July 17, 2003).

[^40]: *See* Thornton Request for Review at 1.

[^41]: Colegio Request for Review at Appendices 2, 4; Mill Request for
    Review at 2; Facsimile from Larry Scaletta, Thornton Township High
    School District, to Robert Sniecinski, USAC, Schools and Libraries
    Division (dated Dec. 6, 2004).

[^42]: 47 C.F.R. § 54.511. Generally, the Commission's rules may be
    waived for good cause shown. 47 C.F.R. § 1.3. The Commission may
    exercise its discretion to waive a rule where the particular facts
    make strict compliance inconsistent with the public interest.
    *Northeast Cellular Telephone Co. v. FCC*, 897 F.2d 1164, 1166 (D.C.
    Cir. 1990) (*Northeast Cellular*); *see also WAIT Radio v. FCC*, 418
    F.2d 1153, 1159 (D.C. Cir. 1969) (*WAIT Radio*), *cert. denied,* 409
    U.S. 1027 (1972). In addition, the Commission may take into account
    considerations of hardship, equity, or more effective implementation
    of overall policy on an individual basis. *WAIT Radio,* 418 F.2d at
    1157. Waiver of the Commission's rules is therefore appropriate only
    if special circumstances warrant a deviation from the general rule,
    and such deviation will serve the public interest. *Northeast
    Cellular,* 897 F.2d at 1166.

[^43]: *See Ysleta Order*, 18 FCC Rcd 26406.

[^44]: *See Tennessee Order,* 14 FCC Rcd at 13739-40, para. 10. *See
    also* FCC Form 470, Edgewood Independent School District (posted
    Dec. 12, 2003).

[^45]: *See Tennessee Order,* 14 FCC Rcd at 13739-40, para. 10. Edgewood
    evaluated three criteria in its vendor selection process: technical
    integrated solutions, references and past performance, and price.
    *See* Edgewood Request for Review at Exhibit B.

[^46]: *See* Letter from USAC, Schools and Libraries Division, to Steve
    Huxhold, Pinon Unified School District (dated May 10, 2005). USAC
    selects some applicants for a selective review to ensure that they
    are following certain E-rate program rules. Applicants are asked to
    provide the following information covering all of the billed
    entity's Forms 471 for the funding year: (1) documentation regarding
    their competitive bidding and vendor selection process; (2)
    documentation of their ability to pay their share of the cost of the
    products and services eligible for schools and libraries program
    support; (3) proof that they have obtained the (ineligible)
    hardware, software, professional development, electrical capacity or
    other retrofitting, and maintenance necessary to make effective use
    of the requested discounts. *See* USAC website, Schools and
    Libraries, Undergo Application Review,
    http://www.universalservice.org/sl/applicants/step08/ (regarding the
    selective review process) (retrieved Aug. 20, 2008).

[^47]: Pinon Request for Review at 1.

[^48]: *Id.*

[^49]: *See* Letter from USAC, Schools and Libraries Division, to Anne
    Davis, The Mill School (dated July 27, 2004). In the past, after
    identifying applications that contained similar language through its
    "pattern analysis" procedure, USAC typically informed an applicant
    that "similarities in Forms 470 among applicants with this vendor
    indicate that the vendor was improperly involved in the competitive
    bidding and vendor selection process," and rejected the applicant's
    funding request. *See Academy of Careers Order,* 21 FCC Rcd at 5352,
    n.13. In most cases, no other detail concerning a violation of the
    Commission's rules was provided to the applicant. *Id.* at n.14.

[^50]: Mill Request for Review at 3.

[^51]: *Id.*

[^52]: *Id.*

[^53]: *See* Long Branch Administrative Decision Letter.

[^54]: Long Branch Request for Review at 1.

[^55]: *Id*.

[^56]: *Id*.

[^57]: *See Academy of Careers Order,* 21 FCC Rcd 5348.

[^58]: *Id*. at 5349-52, paras. 6-8.

[^59]: *Id*. at 5351-52, paras. 7-8.

[^60]: 47 C.F.R. § 54.511.

[^61]: Additionally, nothing in this order is intended: (1) to authorize
    or require payment of any claim that previously may have been
    released by a service provider or applicant, including in a civil
    settlement or plea agreement with the United States; or (2) to
    authorize or require payment to any person or entity that has been
    debarred from participation in the E-rate program.

[^62]: In performing a complete review and analysis of each underlying
    application, USAC shall either grant the underlying application
    before it, or, if denying the application, provide the applicant
    with any and all grounds for denial.