Magazine article District Administration

E-Rate Vendor to Pay $20 Million in Fines

Magazine article District Administration

E-Rate Vendor to Pay $20 Million in Fines

Article excerpt

NEC Business Network Solutions, the Texas company overseeing e-Rate, paid more than $20 million in penalties after it was shown the program was rife with malfeasance. The e-Rate program is a federal initiative that distributes billions of dollars annually to school districts to pay for computer equipment and Internet access.

The House Committee on Energy and Commerce has been conducting hearings on the embattled program, trying to determine what exactly went wrong. The committee, chaired by Rep. Jim Greenwood, R-Penn., is inquiring into allegations of mismanagement. The investigation, prompted by San Francisco school officials, found that contractors routinely overcharge school districts, which do not look for competitive bids. However, in some districts, it was discovered that school officials received kickbacks for steering business to NEC.

"We now know significant sums have been wasted and that the allocation process is rife with abuse. Some of the corporate scofflaws are being called to account, but that process has not as yet effectively deterred the rampant fraud associated with the program," says Rep. John Dingell, D- Mich., ranking minority member of the committee.

While initial probes have been focused on San Francisco, Atlanta and Puerto Rico, investigations could reach timber. "We are not in a position to confirm or deny whether there are any other investigations ongoing," says U.S. Justice Department spokesman Charles Miller.

One company, Lightspeed Systems, gets half of its revenue from e-Rate sales. …

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