Skip Navigation

Federal Communications Commission

English Display Options

Commission Document


Download Options

Released: November 12, 2010

Federal Communications Commission

News Media Information 202 / 418-0500

445 12th Street, S.W.


Washington, D. C. 20554

TTY: 1-888-835-5322

This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action.
See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

November 10, 2010
Mark Wigfield, 202-418-0253



Washington, D.C. -- The Department of Justice today announced a civil settlement with Hewlett-
Packard Company (HP) for alleged E-rate fraud, following an extensive investigation by the
Federal Communications Commission and DOJ. The E-rate program, which funds Internet
connections in schools and libraries, has brought Internet connectivity to virtually every
classroom in the country.
Acting on tips from whistleblowers, the FCC and the DOJ investigated allegations that
contractors working with HP and other companies lavished gifts on Dallas Independent School
District and Houston Independent School District personnel in order to get contracts that
included some $17 million in HP equipment. Meals and entertainment -- including trips on a
yacht and tickets to the 2004 Super Bowl -- were provided by the contractors to get inside
information and win contracts that were supposed to be awarded through a competitive bidding
"Broadband is key to our children's 21st century education," said FCC Chairman Julius
Genachowski. "That's why one of the FCC's top priorities is making sure E-rate works to
benefit students and libraries. Today's settlement shows the extensive efforts of the FCC and
DOJ to protect the E-rate program from waste, fraud, and abuse, and to deter misconduct in the
As part of the settlement, HP has agreed to pay the government $16.25 million, most of which
will be returned to the E-rate program. In addition, the FCC has negotiated and will oversee a
compliance agreement with HP that will ensure that the company plays by the rules in the future.
"The FCC's compliance agreement with HP ensures that HP will train its employees thoroughly
on the FCC's gift and other E-Rate rules, and provides for audits of HP's E-Rate business," said
Austin Schlick, General Counsel of the FCC. "If HP fails to monitor its E-Rate activities closely
and abide by E-Rate Program requirements, it will face substantial penalties."
The FCC has already taken steps to guard against misconduct of this nature. In September the
FCC adopted an Order that bolsters and clarifies the agency's prohibition against E-rate
applicants soliciting or receiving gifts, and against service providers offering or providing gifts.
The FCC also codified additional rules to ensure a fair and competitive bidding process.

"We continue to be vigilant in our management and oversight to prevent any activities that
undermine the integrity of the E-rate program" said Sharon Gillett, Chief of the FCC's Wireline
Bureau. "The FCC will do all it can to ensure that E-rate funds are not diverted from their
purpose of increasing educational opportunities."
For more on the settlement, visit
News about the Federal Communications Commission can also be found
on the Commission's website

Note: We are currently transitioning our documents into web compatible formats for easier reading. We have done our best to supply this content to you in a presentable form, but there may be some formatting issues while we improve the technology. The original version of the document is available as a PDF, Word Document, or as plain text.


You are leaving the FCC website

You are about to leave the FCC website and visit a third-party, non-governmental website that the FCC does not maintain or control. The FCC does not endorse any product or service, and is not responsible for, nor can it guarantee the validity or timeliness of the content on the page you are about to visit. Additionally, the privacy policies of this third-party page may differ from those of the FCC.