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Sting Communications and Glendale School District

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Released: March 19, 2014

Federal Communications Commission

DA 14-372

Before the

Federal Communications Commission

Washington, DC 20554

In the Matter of
)
)
Request for Review of a
)
Decision of the
)
Universal Service Administrator by
)
)
Last Mile, Inc., d/b/a Sting Communications
)
File No. SLD-527677
)
and
)
)
Request for Waiver of the Commission’s
)
Rules by
)
)
Glendale School District
)
File No. SLD-527677
Flinton, PA
)
)
Schools and Libraries Universal Service
)
CC Docket No. 02-6
Support Mechanism
)

ORDER

Adopted: March 19, 2014


Released: March 19, 2014

By the Chief, Telecommunications Access Policy Division, Wireline Competition Bureau:
1.
Consistent with precedent,1 we grant an appeal filed by Last Mile, Inc., d/b/a Sting
Communications (Sting),2 of a decision made by the Universal Service Administrative Company (USAC)


1 See Federal-State Joint Board on Universal Service, CC Docket No. 96-45, Report and Order, 12 FCC Rcd 8776,
9076-80, paras. 570-80 (1997) (Universal Service Order) (subsequent history omitted) (requiring applicants to
conduct a fair and open competitive bidding process when seeking support for eligible products and services);
Request for Review of the Decision of the Universal Service Administrator by Ysleta Independent School District 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, 18 FCC Rcd 26407, 26419, para. 26 (2003)
(explaining that the FCC Form 470 puts potential bidders on notice of the applicant’s specific need to encourage
competitive bids, and that the Commission’s rules contemplate that providers will bid on the cost of the desired
products and services eligible for discounts); Federal-State Joint Board on Universal Service; Changes to the Board
of Directors for the National Exchange Carrier Association, Inc.; Schools and Libraries Universal Service Support
Mechanism
, CC Docket Nos. 96-45, 97-21 and 02-6, Order on Reconsideration and Fourth Report and Order, 19
FCC Rcd 15252, 15255-57, paras. 10-15 (2004) (Schools and Libraries Fourth Report and Order) (directing USAC
to pursue recovery actions against the party or parties that have violated the Commission’s rules); Requests for
Review of Decisions of the Universal Service Administrator by Bell South Telecommunications, Inc. and Union
Parish School Board; Schools and Libraries Universal Service Support Mechanism
, CC Docket No. 02-6, Order, 27
FCC Rcd 11208 (Wireline Comp. Bur. 2012) (Bell South Order) (seeking recovery of funding only from the party
that violated the Commission’s rules).

Federal Communications Commission

DA 14-372

seeking to recover funds already disbursed pursuant to Glendale School District’s (Glendale's) FCC Form
471 application for discounted services under the E-rate program (more formally known as the schools
and libraries universal service support program) for FY 2006.3 We also deny a request from Glendale
seeking a waiver of the deadline for it to appeal USAC's decision to seek recovery from Glendale.4
2.
Under the Commission’s competitive bidding rules, applicants must submit for posting on
USAC’s website an FCC Form 470 requesting bids for E-rate eligible services.5 The applicant must
describe the requested services with sufficient specificity to enable potential service providers to submit
bids for such services.6 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.7
After submitting an FCC Form 470, the applicant must wait 28 days before making commitments with the
selected service providers.8 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.9 The Commission’s rules do
not require applicants to post a new FCC Form 470 every funding year during the term of a multi-year
contract if that contract was initiated by a competitive bidding process, as provided in the Commission’s
rules.10 However, if the applicant posts an FCC Form 470, it must comply with the Commission’s
competitive bidding rules.11
(Continued from previous page)


2 See Letter from Robert Roland, Chief Operating Officer, Sting, to Marlene H. Dortch, Secretary, FCC, CC Docket
No. 02-6 (filed June 1, 2012) (regarding funding year (FY) 2006 FCC Form 471 application number 527677,
funding request number (FRN) 1455006).
3 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).
4 See Letter from Aimee L. Willet, Counsel for Glendale, to Marlene H. Dortch, Secretary, FCC, CC Docket No. 02-
6 (filed June 1, 2012) (Glendale Waiver Request). See also Letter from USAC, Schools and Libraries Division, to
Dennis Bruno, Glendale (dated Apr. 2, 2012) (regarding FY 2006 FCC Form 471 application number 527677, FRN
1455006) (Notification of Commitment Adjustment Letter (Glendale COMAD)). Specifically, Glendale requests a
60-day extension of the filing deadline to enable it to ascertain whether it has a legitimate basis to appeal the
recovery action by USAC. See Glendale Waiver Request. The Commission may waive any provision of its rules on
its own motion and for good cause shown. 47 C.F.R. § 1.3. A 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. Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990);
Accord Network IP, LLC v. FCC, 548 F.3d 116, 127 (D.C. Cir. 2008).
5 47 C.F.R. § 54.503 (2011); 47 C.F.R. § 54.504 (2006). In this Order, we describe the requirements of the E-rate
program as they currently exist, but because the order involves an application from FY 2006, and the Commission
has reorganized the E-rate rules since then, where the Commission’s codification of the rules in the Code of Federal
Regulations has changed, we also cite to the relevant rules as they existed during the relevant funding year.
6 Id.
7 See Schools and Libraries Universal Service, Description of Services Requested and Certification Form, OMB
3060-0806 (October 2004) (FCC Form 470).
8 47 C.F.R. § 54.503 (2011); 47 C.F.R. § 54.504 (2006).
9 47 C.F.R. §§ 54.503, 54.511 (2011); 47 C.F.R. §§ 54.504, 54.511 (2006).
10 See USAC, Schools and Libraries, Applicants, http://www.universalservice.org/sl/applicants/step02/default.aspx
(last visited Mar. 12, 2014).
11 See, e.g., Request for Review of the Decision of the Universal Service Administrator by Kalamazoo 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, Order on Reconsideration, 17 FCC Rcd 22154,
22157, para. 6 (Wireline Comp. Bur. 2002) (Kalamazoo Order) (“[W]e recognize that Kalamazoo was not
(continued…)
2

Federal Communications Commission

DA 14-372

3.
USAC is seeking to recover funds from Glendale and Sting on the basis that Glendale
violated the Commission’s competitive bidding requirements by indicating on its FCC Form 470 that it
intended to continue its existing multi-year service contract with Sting.12 The record shows that Glendale
posted an FCC Form 470 for funding year 2005 to initiate the competitive bidding process for Internet
access services.13 On Line 13b of the form, however, Glendale indicated that it intended to continue its
existing five-year contract with Sting that had been executed pursuant to a competitive bidding process in
funding year 2004.14 On February 18, 2005, Glendale filed its funding year 2005 FCC Form 471
application requesting E-rate support for these services and referenced its funding year 2005 FCC Form
470 application as the initiating FCC Form 470.15 USAC granted Glendale’s funding request on August
3, 2005, and, subsequently, disbursed funds.16 In funding year 2006, Glendale filed the FCC Form 471
application at issue and, again, referenced its funding year 2005 FCC Form 470 as the initiating FCC
Form 470.17 USAC granted Glendale’s funding request and disbursed funds for the services provided by
Sting.18 However, after a thorough investigation, USAC rescinded Glendale’s funding year 2006 funding
commitment after determining that the initiating FCC Form 470 was tainted by Glendale’s representation
in its funding year 2005 FCC Form 470 that it intended to continue its existing contract with Sting,
thereby failing to conduct a fair and open competitive bidding process in funding year 2005.19 USAC
determined that both Glendale and Sting were responsible for these violations and, accordingly, initiated
recovery actions against both parties for funding disbursed pursuant to Glendale’s FCC Form 471
application for funding year 2006.20
(Continued from previous page)


necessarily required to sign a new contract to satisfy the competitive bidding rules. Instead, the relevant question is
whether, after Kalamazoo posted its service for bidding with a Funding Year 1999 FCC Form 470 and waited the
28-day competitive bidding period, it carefully considered all bids before choosing to continue service under its
existing contract.”); see also, e.g., Request for Review by Middle Peninsula Juvenile Detention Commission
Merrimac Center; Schools and Libraries Universal Service Support Mechanism
, CC Docket No. 02-6, Order, 19
FCC Rcd 4007, 4009, para. 5 (Wireline Comp. Bur. 2004).
12 See Letter from USAC, Schools and Libraries Division, to Jennifer Tobia, Sting (dated Apr. 2, 2012) (Notification
of Commitment Adjustment Letter (Sting COMAD)); FCC Form 470, Glendale School District (posted Aug. 25,
2004) (Glendale FCC Form 470 number 804410000501012) (stating in Block 2, Line 13b of the form that “[w]e
intend to continue the multi-year contract with Sting Communications for Internet access”); 47 C.F.R. §§ 54.503,
54.511 (2011); 47 C.F.R. §§ 54.504, 54.511 (2006). See also Glendale COMAD.
13 See Glendale FCC Form 470 number 804410000501012.
14 Id.
15 See FCC Form 471, Glendale School District (filed Feb. 18, 2005) (regarding FCC Form 471 application number
464846, FRN 1346798); Glendale FCC Form 470 number 804410000501012.
16 See Letter from USAC, Schools and Libraries Division, to Dennis Bruno, Glendale (dated Aug. 3, 2005)
(regarding FY 2005 FCC Form 471 application number 464846, FRN 1346798).
17 See FCC Form 471, Glendale School District (filed Feb. 16, 2006) (regarding FCC Form 471 application number
527677, FRN 1455006); Glendale FCC Form 470 number 804410000501012.
18 See Letter from USAC, Schools and Libraries Division, to Dennis Bruno, Glendale (dated Aug. 1, 2006)
(regarding FY 2006 FCC Form 471 application number 527677, FRN 1455006).
19 See Glendale COMAD; Sting COMAD; Glendale FCC Form 470 number 804410000501012. See also 47 C.F.R.
§§ 54.503, 54.511 (2011); 47 C.F.R. §§ 54.504, 54.511 (2006).
20 See Glendale COMAD, Sting COMAD. See also Letter from USAC, Schools and Libraries Division, to Dennis
Bruno, Glendale (dated June 4, 2012) (regarding FCC Form 471 application number 527677, FRN 1455006); Letter
from USAC, Schools and Libraries Division, to Jennifer Tobias, Sting (dated June 4, 2012) (regarding FCC Form
471 application number 527677, FRN 1455006).
3

Federal Communications Commission

DA 14-372

4.
As an initial matter, we agree with USAC’s determination that Glendale failed to conduct a
fair and open competitive bidding process.21 Specifically, we find that the establishing FCC Form 470,
posted in funding year 2005, was tainted by Glendale’s statement on Line 13b of the form that it intended
to continue services under its existing multi-year contract with Sting.22 Statements such as these are
likely to deter other entities from making bids on eligible products or services.23 We are deeply
concerned about practices that undermine the framework of the competitive bidding process. When an
applicant discourages prospective service providers from participating in a competitive bidding process,
the applicant suppresses fair and open competitive bidding and ultimately damages the integrity of the
program.24 We therefore find that Glendale’s funding year 2005 FCC Form 470 for Internet access
services was tainted and that all funding requests related to Sting referencing this form must be denied.25
5.
Notwithstanding this determination, we grant Sting’s request for review of USAC's
decision to seek recovery of funds from Sting. The Commission has held that USAC should recover
funds from the party or parties that have violated the Commission's rules26 and, in this case, we find no
evidence in the record demonstrating that Sting violated the Commission’s competitive bidding rules. We
therefore find that USAC erroneously sought recovery from Sting for violations committed by Glendale
and that USAC shall discontinue its recovery actions against Sting.
6.
We also deny Glendale's request for a waiver of our deadline to file an appeal. Our rules
require parties to file requests for review of decisions made by USAC within 60 days of the issuance of
the decision.27 In this instance, 60 days after USAC's COMAD letter, Glendale sought a 60-day extension
of the filing deadline with the Commission in order to determine whether it has a legitimate basis to
appeal USAC's commitment adjustment decision.28 Glendale has not demonstrated that special
circumstances exist to warrant a waiver of sections 54.720 and 54.721 of the Commission’s rules29
Consequently, we deny Glendale’s request and direct USAC to issue a revised COMAD letter to
Glendale, the party at fault, for any monies disbursed to Glendale and Sting under FCC Form 471
application number 527677, FRN 1455006.30 In addition, we direct USAC to apply this ruling to all other


21 The Bureau must conduct a de novo review of requests for review of decisions issued by USAC. 47 C.F.R. §
54.723.
22 See Glendale FCC Form 470 number 804410000501012.
23 By contrast, in the Kalamazoo Order, the Commission found that an applicant under a multi-year contract may
issue an FCC Form 470 during the term of that contract, and may elect to continue to receive service from its
existing service provider after carefully considering any other proposals it receives. See Kalamazoo Order, 17 FCC
Rcd at 22157, para. 6.
24 See, e.g., Universal Service Order, 12 FCC Rcd at 9029, para. 480 (observing that competitive bidding is the most
efficient means for ensuring that eligible schools and libraries are informed about all of the choices available to
them); supra n.1; 47 C.F.R. §§ 54.503, 54.511 (2011); 47 C.F.R. §§ 54.504, 54.511 (2006).
25 See Glendale FCC Form 470 number 804410000501012. This finding applies to all monies disbursed under FCC
Form 471 application number 527677, FRN 1455006, and FCC Form 471 application number 464846, FRN
1346798.
26 See Schools and Libraries Fourth Report and Order, 19 FCC Rcd at 15255-57, paras. 10-15; Bell South Order.
27 See 47 C.F.R. §§ 54.720, 54.721.
28 See Glendale Waiver Request.
29 See 47 C.F.R. §§ 54.720, 54.721 (requiring requests for review to be filed within 60 days of the issuance of the
decision, and requiring such requests to contain a statement of relevant facts with supporting documentation, the
question presented for review, and the specific relief sought).
30 See Schools and Libraries Fourth Report and Order, 19 FCC Rcd at 15255-57, paras. 10-15.
4

Federal Communications Commission

DA 14-372

Sting FRNs that reference Glendale’s FCC Form 470 number 804410000501012 as the establishing FCC
Form 470.
7.
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, and 54.722(a) of the Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, and 54.722(a), that the
Request for Review filed by Last Mile, Inc., d/b/a Sting Communications, IS GRANTED.
8.
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 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 Waiver filed by Glendale School District IS DENIED.
9.
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 sections 0.91 and
0.291 of the Commission’s rules, 47 C.F.R. §§ 0.91 and 0.291, that USAC SHALL DISCONTINUE its
recovery actions against Last Mile, Inc., d/b/a Sting Communications, and SHALL SEEK recovery for
any monies disbursed under FCC Form 471 application number 527677, FRN 1455006, and FCC Form
471 application number 464846, FRN 1346798, against Glendale School District no later than 60
calendar days from the release date of this Order.
10.
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 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
APPLY this ruling to all pending applications concerning the underlying issue addressed herein.
FEDERAL COMMUNICATIONS COMMISSION
Kimberly A. Scardino
Chief
Telecommunications Access Policy Division
Wireline Competition Bureau
5

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