New eRate tool IDs questionable vendors

A new online tool created by the agency that administers the eRate can be used to find out which service providers in a given state might be engaging in questionable practices, some eRate consultants say—thereby warning applicants either to steer clear from these providers or ask tough questions before signing any contracts.

The Schools and Libraries Division (SLD) of the Universal Service Administrative Co., the agency that created the tool—which some applicants and consultants are calling the “single biggest advancement” to the eRate program in years—does not officially endorse this practice. On the other hand, the SLD doesn’t condemn the practice, either.

Service providers who spoke with eSchool News about the practice cautioned applicants to investigate companies further before leaping to conclusions.

The tool in question, called the Funding Request Data Retrieval Tool, allows anyone with internet access to download and examine Form 471 data from applicants in any given program year to find out key information: the dollar amounts specific applicants requested from the program, which vendors they selected, what services they applied for, whether they were approved for funding, and more. (Form 471 is the document schools submit to apply for eRate funding.)

“It is a powerful tool that allows people to go into our databases and find out just about anything on anybody,” SLD spokesman Mel Blackwell said. “It saves administrative work on our part and [provides] access to information people have wanted … in the past.”

The Data Retrieval Tool gives users the freedom to create customized queries specific to their needs. “It’s kind of like a car—you can get in and drive anywhere you want,” Blackwell said.

The data are downloaded in tab-delimited format, so they can be imported into Microsoft Excel or a similar spreadsheet program.

The tool is especially useful for state officials who need to identify which school districts under their jurisdiction need help applying for the eRate, so they can target their professional development resources accordingly.

“[These] data [were] never available before without calling the SLD and asking for each applicant in my state, ‘Have they done this yet?'” said Julie Tritt Schell, eRate consultant and former technology director for the Pennsylvania Department of Education.

“Without the Data Retrieval Tool, state coordinators are operating blind,” agreed Greg Weisiger, eRate coordinator for the Virginia Department of Education. The tool shows which schools or districts have filed which forms, he said, giving state coordinators the chance to contact their school districts and remind them of upcoming deadlines.

It also can point out discrepancies in funding levels, Weisiger said. The data easily can be sorted and analyzed to determine how much various school districts and companies have received, and who’s not getting any money.

For example, Weisiger used the tool to find out that an 18-school Arizona district received $26 million in discounts over two years. “The entire state of Virginia normally gets $23 [million] to $25 million for 1,800 schools,” Weisiger said.

After investigating further, he discovered the high-poverty Arizona district was installing fiber-optic cabling to the desktop and the eRate was paying for it. The district had hired a consultant to maximize its discount.

This is perfectly legal under the program’s rules, but many applicants and service providers try to stretch the rules and even defraud the $2.25 billion-a-year program outright, according to the SLD.

SLD Vice President George McDonald told eRate state coordinators attending a training conference in September that his agency is reviewing a number of applications to see if there is a pattern of attempted abuse.

McDonald and FCC auditor Tom Cline detailed some specific types of abuse they are finding. In one scheme, a router with a purchase price of $20,000 reportedly was being leased to an applicant for $20,000 per year. The applicant also had a maintenance agreement on the equipment of $96,000 per year.

Although the SLD won’t reveal which companies are suspected of such abuses, some consultants familiar with the program say the agency’s Data Retrieval Tool can be used to identify which service providers might be questionable.

“It clearly shows you which providers are requesting the most from the fund and who is getting denied the most,” Tritt Schell said of the tool.

In fact, eRate Central Inc., an eRate consulting group that serves New York state, has distributed advice to school districts about using the tool for this purpose.

The group’s Oct. 7 eMail newsletter says, “One suggestion for those seeking to avoid becoming embroiled in SLD investigations, by selecting and listing a suspect vendor on a Form 471 application, is to use the SLD’s new Data Retrieval Tool to identify vendors who seem to have been previously involved in a disproportionately high number of funding denials or delays.”

The newsletter gives specific steps to follow to check the approval rate of vendors. (For more information, see the link to “Questionable Supplier Practices” at the end of this story.)

In his own test, Win Himsworth, president of eRate Central, told eSchool News he identified at least 12 vendors listed on multiple New York schools’ eRate applications for funding year 2001 that had “unusually unsuccessful” approval rates.

“Ten of the 12 had never had a funding request funded on any of the applications on which they appeared,” Himsworth said.

The reason for this is unclear, he acknowledged; there could be problems or mistakes on the applicants’ part, the companies’ part, or it simply could be a matter of chance. But such a disproportionate number of funding requests under investigation and linked to the same service provider should raise a red flag for other applicants, he said.

Himsworth wouldn’t name the 12 companies he was referring to. But following eRate Central’s advice, eSchool News was able to find several service providers in New York listed on a disproportionate number of applications still pending for the 2001 program year—meaning these applications are being reviewed more closely by the SLD for possible violations of the program’s rules.

One of these companies was Connect2 Internet Networks Inc., a well-established internet service provider in business for 21 years that serves more than 100 small private schools in New York state. Using the Data Retrieval Tool, eSchool News found that of the 88 applications listing Connect2 as a service provider in 2001, three were funded, 27 were denied funding, and 58 are still pending.

“We’re being audited, but we strongly believe we will be exonerated,” said Jim Belits, area sales coordinator for Connect2.

Belits said using the Data Retrieval Tool to look at a company’s approval rate seems fair, but he recommended that schools also dig further and ask the company for references.

“If I were in the school’s shoes, I would use that to get an idea of how the service provider is doing—but I wouldn’t use it as the only indicator,” Belits said. “If you look at Year Three data [from the 2000 program year], you’ll see that we were very successful.”

Belits said selecting a company based solely on past approval rates is still a gamble.

“The guy you pick for Year Six because he got all his [applications] approved in Year Five could still get squashed in Year Six,” Belits said. “If you want a final word, call up your service provider and get a reference from current clients.”

Shortly after the initial report on this matter appeared at eSchool News Online, John Angelides, president of Connect2, contacted the editors to say his firm should not have been mentioned in the initial report. He took exception to Belits’ comments and said that Belits was not authorized to speak to the press. Angelides then offered the following comment by way of clarification:

“Connect2 has been funded 100 percent for Year One, 95.8 percent for Year Two, and 83 percent for Year Three. The fact that we didn’t receive all our funding for Year Four, could be any of a number of reasons, including a closer view of our schools’ applications.

“We have not been contacted by the FCC/SLD that Connect2 is under any audit whatsoever.

“Connect2 has been serving schools since the inception of the eRate program, and we will continue giving services to any school that needs them.”

These comments underscore the risks of reading too much into the raw results produced by the Data Retrieval Tool.

SLD’s Blackwell agreed that applicants should further investigate service providers before making any hasty judgments.

“We are giving you information, and you need to use it to make the best decisions. But you can’t just stop there,” Blackwell said. “You need to take it to the next step and ask those questions.”


Schools and Libraries Division

Funding Request Data Retrieval Tool

eRate Central Inc.

Questionable Supplier Practices (scroll down a bit)

Connect2 Internet Networks Inc.

eSchool News Staff

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