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Harbor Beach Community School District, Harbor Beach, MI

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Released: May 31, 2013

Federal Communications Commission

DA 13-1247

Before the

Federal Communications Commission

Washington, DC 20554

In the Matter of
)
)
Request for Review of a Decision of the
)
Universal Service Administrator by
)
)
Harbor Beach Community School District
)
File No. SLD-553882
Harbor Beach, MI
)
)
Schools and Libraries Universal Service
)
CC Docket No. 02-6
Support Mechanism
)

ORDER

Adopted: May 31, 2013

Released: May 31, 2013

By the Chief, Telecommunications Access Policy Division, Wireline Competition Bureau:
1.
In this Order, we grant a request for review from Harbor Beach Community School District
(Harbor Beach)1 of a decision of the Universal Service Administrative Company (USAC) under the E-rate
program (more formally known as the schools and libraries universal service support program) for
funding year 2007.2 In its decision, USAC found that the vendor selected to provide eligible services
under the E-rate program, Zimco, Incorporated/Air Advantage, LLC (Zimco/Air Advantage), assisted
Harbor Beach in filing its FCC Form 470; and therefore, denied Harbor Beach’s funding request.3
2.
Under the E-rate program, eligible schools, libraries, and consortia that include eligible
schools and libraries may apply for universal service support for eligible services.4 E-rate program rules
provide that these entities must seek competitive bids for services eligible for support.5 In accordance
with the Commission’s competitive bidding rules, applicants 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 After submitting an FCC Form 470, the


1 See Letter from Ronald L. Kraft, Harbor Beach Community School District, to Marlene H. Dortch, Secretary,
Federal Communications Commission, CC Docket No. 02-6 (filed Sept. 24, 2010) (relating to application number
553882, funding request number (FRN) 1527997).
2 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).
3 See Letter from USAC, Schools and Libraries Division, to Steve Hill, Harbor Beach Community School District
(dated Aug. 16, 2010) (USAC Funding Commitment Decision Letter (FCDL)).
4 47 C.F.R. §§ 54.501-54.502 (2007); see also 47 C.F.R. §§ 54.501-54.502 (2012).
5 47 C.F.R. § 54.504 (2007); see also 47 C.F.R. § 54.503 (2012).
6 47 C.F.R. § 54.504(b) (2007); see also 47 C.F.R. § 54.503(c) (2012).
7 47 C.F.R. § 54.503(c) (1)(ii) (2012).

Federal Communications Commission

DA 13-1247

applicant must wait 28 days before making commitments with the selected service providers.8 The
Commission’s rules require applicants to carefully consider all submitted bids prior to entering into a
contract, and that the price of eligible products and services must be the primary factor in selecting the
winning bid.9 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.10 USAC assigns an FRN to each
request for discounted services and issues FCDLs approving or denying the requests for discounted
services.11
3.
The competitive bidding process must be fair and open and must not have been
compromised because of improper conduct by the applicant, service provider, or both parties.12 Under the
Commission's rules, a service provider participating in the competitive bidding process cannot be
involved in the preparation of the entity's technology plan, FCC Form 470 or RFP.13 In addition, all


8 47 C.F.R. § 54.504(b) (4) (2007); see also 47 C.F.R. § 54.503(c)(4) (2012). See also Request for Review of the
Decision of the Universal Service Administrator by Approach Learning and Assessment Center et al.; Schools and
Libraries Universal Service Support Mechanism
, CC Docket No. 02-6, Order, 23 FCC Rcd 15510 (Wireline Comp.
Bur. 2008).
9 47 C.F.R. § 54.511(a) (2007); see also 47 C.F.R. § 54.511(a) (2012).
10 See Schools and Libraries Universal Service, Services Ordered and Certification Form, OMB 3060-0806
(November 2004) (FCC Form 471).
11 See USAC, Schools and Libraries, Funding Commitment Decision Letter, available at
http://www.universalservice.org/sl/applicants/step05/default.aspx (last visited May 29, 2013).
12 In the Schools and Libraries Sixth Report and Order, the Commission codified the requirement that the E-rate
competitive bidding process be fair and open. See Schools and Libraries Universal Service Support Mechanism; A
National Broadband Plan for Our Future
, CC Docket No. 02-6, GN Docket No. 09-51, Sixth Report and Order, 25
FCC Rcd 18762, 18798-800, paras. 85-86 (2010) (Schools and Libraries Sixth Report and Order). See 47 C.F.R §
54.503(a) (2012). See also Request for Review of Decisions of the Universal Service Administrator by MasterMind
Internet Services, Inc.; Federal-State Joint Board on Universal Service,
CC Docket No. 96-45, Order, 16 FCC Rcd
4028, 4033 (2000) (MasterMind Order) (finding that when an applicant delegates the power to control the
dissemination of information regarding requested services to an entity that also participates in the bidding process as
a prospective service provider, the applicant impairs its ability to hold a fair competitive bidding process); Request
for Review of the Decision of the Universal Service Administrator by Dickenson County Public Schools; 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, 97-21, 17 FCC Rcd 15747, 15748, para. 3 (Wireline Comp. Bur. 2002)
(noting that an applicant impairs its ability to hold a fair and open competitive bidding process when the applicant’s
FCC Form 470 contact person is also a service provider participating in the bidding process as a bidder); Requests
for Review of the Decisions of the Universal Service Administrator by Approach Learning and Assessment Center;
Schools and Libraries Universal Service Support Mechanism
, CC Docket No. 02-6, Order, 22 FCC Rcd 5296, 5303,
para. 19 (Wireline Comp. Bur. 2007) (finding that service provider participation suppressed fair and open
competitive bidding); Requests for Review of Decisions of the Universal Service Administrator by Marana Unified
School District et al.,
CC Docket No. 02-6, Order, 27 FCC Rcd 1525, 1529-30, para. 8 (Wireline Comp. Bur. 2012)
(finding that the applicant violated the Commission’s competitive bidding rules when that applicant and the service
providers engaged in routine and numerous contacts discussing all aspects of the applicant’s technology needs and
request for proposal (RFP), and the applicant provided the service provider with information about its current needs
and advised the service provider on what it should include in its bid response).
13 See, e.g., MasterMind Order, 16 FCC Rcd at 4033, para. 11; Request for Review of the Decision of the Universal
Service Administrator by Consorcio de Escuelas y Bibliotecas de Puerto Rico et al.; 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, 97-21, Order, 17 FCC Rcd 13624, 13626, paras. 6-8 (Wireline Comp. Bur. 2002) (finding that
the applicant violated the competitive bidding rules when it listed an employee of a service provider selected to
provided E-rate services as the contact for technical details and other information about E-rate supported services);
Requests for Review of Decisions of the Universal Service Administrator by Central Islip Free Union School District
et al.; Schools and Libraries Universal Service Support Mechanism
, CC Docket No. 02-6, Order, 26 FCC Rcd 8630,
(continued…)
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Federal Communications Commission

DA 13-1247

potential bidders and service providers must have access to the same information and must be treated in
the same manner throughout the procurement process.14
4.
In this instance, USAC denied Harbor Beach’s funding request on the basis that Zimco/Air
Advantage assisted Harbor Beach in filling out Harbor Beach’s FCC Form 470.15 Upon review of the
record, we find no evidence supporting USAC’s determination that Zimco/Air Advantage assisted Harbor
Beach in filling out Harbor Beach’s application. The record does include a representation from
Zimco/Air Advantage that “during the normal course” of Zimco/Air Advantage’s business relationship
with Harbor Beach it “may have been asked [by Harbor Beach employee’s] questions regarding internet
bandwidth usage, anticipated new internet applications and its effect on current bandwidth provided, or
other general internet related questions.”16 We do not consider this representation evidence that Harbor
Beach failed to comply with the Commission’s competitive bidding requirements for the E-rate program.
In particular, we find that the communication between Harbor Beach and Zimco/Air Advantage,
concerning Harbor Beach’s existing services and needs as part of their ongoing business relationship, did
not adversely influence Harbor Beach’s competitive bidding process. We therefore grant Harbor Beach’s
request for review and remand the underlying application to USAC for further action consistent with this
order. To ensure that the underlying application is resolved expeditiously, we direct USAC to complete
its review of the underlying application no later than 60 calendar days from the release date of this order.
In remanding this application to USAC, we make no finding as to the ultimate eligibility of the services or
the underlying application.
5.
Lastly, on our own motion, we waive section 54.507(d) of the Commission’s rules with
respect to Harbor Beach’s funding year 2007 FCC Form 471 application, and direct USAC to waive any
procedural deadline, such as the invoicing deadline, that might be necessary to effectuate our ruling.17
We find good cause to waive section 54.507(d) because filing an appeal of a denial of support is likely to
cause the petitioner to miss the program’s subsequent procedural deadlines in that funding year.18
6.
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 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 Harbor Beach Community School District, Harbor Beach, Michigan IS
(Continued from previous page)


8636, para. 14 (finding that “[a] person assisting in the preparation of a technology plan can influence the products
and services that are requested” and “[w]hen an applicant allows an entity to formulate a technology plan and also
participate in the competitive bidding process as a prospective service provider, the applicant impairs its ability to
hold a fair and open competitive bidding process”).
14 See Schools and Libraries Sixth Report and Order, 25 FCC Rcd at 18799, para. 86.
15 See USAC FCDL.
16 Id. See Letter from Dawn Zimmer, Scott Zimmer, Zimco Incorporated/Air Advantage, LLC, to USAC, Schools
and Libraries Division (dated Apr. 19, 2010).
17 47 C.F.R. § 54.507(d).
18 Generally, the Commission’s rules may be waived if good cause is 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
). 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 v. FCC, 418 F.2d 1153, 1159 (D.C. Cir.
1969); Northeast Cellular, 897 F.2d at 1166. Waiver of the Commission’s rules is appropriate only if both (i)
special circumstances warrant a deviation from the general rule, and (ii) such deviation will serve the public
interest. Northeast Cellular, 897 F.2d at 1166.
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Federal Communications Commission

DA 13-1247

GRANTED, that section 54.507(d) of the Commission’s rules, 47 C.F.R. § 54.507(d), IS WAIVED to
the limited extent provided herein, and the underlying application IS REMANDED to USAC for further
consideration in accordance with the terms of this Order.
FEDERAL COMMUNICATIONS COMMISSION
Kimberly A. Scardino
Chief
Telecommunications Access Policy Division
Wireline Competition Bureau
4

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