C!Congregg of tbe Wntteb ~tateg mlaS'btngton, J]Bqt 20510 Tom Wheeler Chairman Federal Communications Commission 445 lih Street Southwest Washington, DC 20554 Dear Chairman Wheeler, June 29, 2015 We write to express serious concerns about the Universal Service Administrative Company's (USAC) intent to deny funding for 45 school districts in the State of Tennessee that participate in the E-rate program through the Sweetwater City School District Consortium. On May 21, 2015, USAC sent a letter to the Sweetwater City School District Consortium stating that they intend to deny E-Rate funding that has been withheld for over two and a half years. This decision has put funding for the upcoming school year in jeopardy as well. The total impact to these 45 schools districts is more than $50 million. A copy ofUSAC's letter is enclosed for your review. We find this situation particularly troubling. Congress, the administration, and the Federal Communications Commission (FCC) have all made the delivery of adequate broadband services to schools a priority. USAC's proposed actions could force these school districts to pay millions for services they have already received, and could interrupt critical future broadband services for more than 240,000 students at a time when districts are set to begin online testing associated with Tennessee's Race to the Top initiatives. We have also enclosed a letter from the Tennessee Department of Education which outlines the consequences ofthis proposed action on Tennessee's students. According to USAC's letter, the Sweetwater City School District Consortium failed to demonstrate that a valid contract exists between the Consortium and Education Networks of America Services, LLC (ENA), and the Consortium did not choose the most cost-effective bid offering. It is our understanding that the Consortium followed USAC's advice throughout this process, that the request for proposals was approved in advance by the State Comptroller, and that the evaluation of proposals received was fully compliant with established precedent and earlier-published guidance by the FCC. It is also our understanding that the contract was fully compliant with state law and FCC rules. Specifically, we would like to know what has changed since this procurement was completed. We would also like to know why it has taken USAC over two and a half years to come to this conclusion. Chairman Tom Wheeler Page 2 of2 We urge you look into this issue as soon as possible so that broadband access for 240,000 students is not disrupted. Lamar Alexander United States Senator Member of Congress Sincerely, ~rk-~ Member of Congress --=S::.__tev_e_C_o_h_e_n----~------~ _ __.__.--­ Member of Congress Diane Black Member of Congress Member of Congress Jim ooper Member of Congress -~-\\1-------H--'~---::=-~~--- unca:n ember of Congress Dr. Scott DesJarlais Member of Congress USAC Universal Service Administrative Company Schools and Libraries Division E-rate Application Information Request Date: 5/21/2015 Larry Stein/ Diana Howard Sweetwater City School District Phone: 423-337-7051 Fax: 423-337-6773 E-mail: larry.stein@scstn.net; Diana.howard@scstn.net Response Due Date: 5/28/2015 Dear Applicant, We have completed our review of FY2013 FCC Form 471917099 FRN 2500725 and FCC Form 471 919406 FRNs 2508370 & 2508549. Based on the documentation you provided, you failed to demonstrate that a valid contract exists between Sweetwater City School District Consortium and ENA Services, LLC (ENA). In response, you provided a contract between Metropolitan Nashville Public Schools (MNPS) and ENA (Contract Number 2-225071-00). That contract was signed an executed March 7, 2011. In your response, you also stated "the cost proposals [from AT&T and ENA] to the Sweetwater bid were lower than the cost proposed in the previous consortium procurement with MNPS." You selected MNPS pricing instead of executing a contract with ENA based on the lower pricing offered to Sweetwater. Thus, there was not a contract between Sweetwater City School District Consortium and ENA to provide to USAC demonstrating you selected the most cost effective solution. In addition, the FCC Form 470 issued by Sweetwater City School District Consortium, FCC Form 470# 283390001111946, was issued 1/29/13 and has an Allowable Contract Date (ACD) of 2/26/13. There is no provision in the Metropolitan Nashville Public Schools contract with ENA, or in the underlying RFP and ENA bid proposal, that allows for the Sweetwater City School District Consortium to piggy-back onto that contract. This contract was established prior to the ACD of the Form 470 issued by the Sweetwater City School District Consortium. You have not established that a valid contract exists between Sweetwater City School District Consortium and ENA and all FRNs are denied. Consequently, FY2014 FCC Form 471 945733 FRN 2574934, FY2014 FCC Form 471 947375 FRN 2579179 and FY2015 FCC Form 4711012581 FRNs 2752206 and 2755911 are denied. Sweetwater Consortium did not choose the most cost-effective bid offering. ENA Services, Inc. (ENA) and AT&T submitted bids to provide E-rate services. Sweetwater selected ENA to provide its E-rate services. ENA's bid proposal was $9,336,396, $ 3 million more than AT&T's $6,053,804.04 bid. USAC evaluated Sweetwater's competitive bidding process and the services requested and determined that the applicant did not select the most-cost effective offering. Sweetwater awarded maximum points or near maximum points to ENA in all categories besides eligible cost. Sweetwater scored AT&T lower in the categories that are not eligible cost of goods and services. Sweetwater was also afforded an opportunity to explain if special circumstances existed that influenced its selection decision. Sweetwater Schools and Libraries Division- Correspondence Unit 30 Lanidex Plaza West, PO Box 685, Parsippany, NJ 07054-0685 \/ic:it 11<: nnlinP ;~t· www 11c;:nr nrn/c;:/ Special Compliance Review Information Request Page 2 of 3 Response due: 5/28/2015 stated AT&T's bid had "defects" and provided "incomplete and/or inadequate responses" which "had the cumulative effect of offsetting the value of a lower sticker price." Sweetwater also stated they had a "lack of confidence in ATI's ability to deliver the services requested by the RFP" and indicated "the bid team clearly determined that ATI's bid was deficient and therefore, scored the RFP consistent with that determination." Sweetwater acknowledged that the price differential is "significant." Lastly, Sweetwater indicated that ENA's service offering was unique and was not comparable to AT&T services. A thorough review of the bids provided by ENA and AT&T shows that the bids are similar in the services offered. The Managed Internet Access service, Managed VoiP, and Managed Video Conferencing services offered by both of the services providers in their bids contain similar Network infrastructure, similar Network Support, similar On Premise Network Equipment, similar Monitoring Service, both have similar experience and operate in Tennessee, both have extensive experience with thee-rate program, and both service providers provided references from past customers who were satisfied with the service providers. The circumstances presented by Sweetwater do not justify the selection of a bid over $3 million more than a competing bid and it has been determined that Sweetwater failed to adhere to the requirements that applicant's select the most cost-effective bid offering; therefore, FY2013 FCC Form 471 917099 FRN 2500725 and FCC Form 471 919406 FRNs 2508370 & 2508549 are denied. Consequently, FY2014 FCC Form 471 945733 FRN 2574934, FY2014 FCC Form 471947375 FRN 2579179 and FY2015 FCC Form 4711012581 FRNs 2752206 and 2755911 are denied. We are providing you with an opportunity to submit further documentation and/or any special circumstances that we should consider during the review. Lastly, please complete, sign, and date the attached certification and return with your response . Response Reminders Please fax or email the requested information to my attention. If you have any questions or you do not understand what we are requesting, please feel free to contact me. It is important that we receive all of the information requested within 7 calendar days so we can complete our review. Failure to respond may result in a reduction, denial, or rescinding of funding. If you need additional time to prepare your response, please let me know as soon as possible. Thank you for your cooperation and continued support ofthe Universal Service Program. Fabio Nieto Associate Manager, Special Compliance 30 Lanidex Plaza West I Parsippany, NJ 07054 T: 973.581.5045 I F: 973.599.6552 Fabio.Nieto@sl.universalservice.org Schools and Libraries Division- Correspondence Unit 30 Lanidex Plaza West, PO Box 685, Parsippany, NJ 07054-0685 \/ic;it 11c; nnlin~ ::~t· lA/lAilA/ uc;nr nrnlc::l Special Compliance Review Information Request Page 3 of 3 Response due: 5/28/2015 Special Compliance Information Request Certification Complete and return the enclosed Certification to the Schools and Libraries Division (SLD). If the applicant's authorized representative completed the information in this document, please attach a copy of the letter of agency or other agreement between the applicant and consultant authorizing them to act on the school or library's behalf. Please note that if an authorized representative signs this form, an authorized school or library official is also required to sign in the space provided below. Note: If a consultant was used, a school official MUST sign below. CERTIFICATION I certify that I am authorized to make the representations set forth in the responses to the inquiry on behalf of Sweetwater City School District the entity represented on and responding to the inquiry, and am the most knowledgeable person with regard to the information set forth therein. I certify that the responses and supporting documentation to the inquiry are true and correct to the best of my knowledge, information and belief. I acknowledge that FCC rules provide that persons who have been convicted of criminal violations or held civilly liable for certain acts arising from their participation in the schools and libraries support mechanism are subject to suspension and debarment from the program. I acknowledge that false statements can be punished by fine or forfeiture under the Communications Act, 47 U.S.C. §§ 502, 503(b), or fine or imprisonment under Title 18 of the United States Code, 18 U.S.C. § 1001 and civil violations of the False Claims Act. I declare under penalty of perjury that the foregoing is true and correct. Executed on _day of , 2015 at [city], [state] . Signature I Date Print Name I Title Employer Telephone Number I Fax Number Email Address Address Authorized School or Library Official's Date Signature and Title Print Name of Authorized School or Library Official Named Above Schools and Libraries Division- Correspondence Unit 30 Lanidex Plaza West, PO Box 685, Parsippany, NJ 07054-0685 \lie: it 11<: nnlinP ::~t· IMIMIM u<:nr nrn /c;:l BILL HASLAM GOVERNOR June 18, 2015 The Honorable Lamar Alexander United States Senator 455 Dirksen Senate Office Building Washington, DC 20510 STATE OF TENNESSEE DEPARTMENT OF EDUCATION NINTH FLOOR, ANDREW JOHNSON TOWER 710 JAMES ROBERTSON PARKWAY NASHVILLE, TN 37243-0375 RE: The Federal Communications Commission I Sweetwater E-rate Consortium Dear Senator Alexander: ~ . CANDICE MCQUEEN COMMISSIONER The Tennessee Department of Education is in the unique position to support school districts across our state in an appeal to the Universal Services Administrative Company (USAC), the entity that reviews applications forE-rate for the Federal Communications Commission (FCC). In Tennessee, 45 districts are part of a district-led consortium, which provides them with technology services and associated E-rate reimbursement. Last month, USAC indicated that it would deny an E-rate application for this district-led consortium. As a result, these districts face two deeply concerning consequences: 1. Districts are at risk of losing E-rate funds for 2015-16, severely impacting their ability to maintain internet connectivity for 12 months. Without theE-rate benefits these districts will collectively need to pay $12 million for service during the 2015-16 school year. The loss of internet connectivity would be detrimental to the instruction of students in the affected districts as well as the day-to-day operations of districts. Additionally, in the next school year, the state is moving to an online testing environment for all high-stakes assessments. The impact of this change requires that all districts have sustainable connectivity to administer both the assessment and practice tools to students. 2. Districts are at risk of having to reimburse amounts subsidized by the vendor over the past two and half years of this agreement. The total exposure of this obligation is in excess of $50 million. Our desire is to find an immediate solution for the 2015-16 school year for these districts regardless of the vendor provider. Our ask of your office is to bring to the attention of the FCC the dire consequences of this pending decision to districts, families, and students in Tennessee. We ask that your office seek the FCC's assistance in finding a solution to ensure that our districts are held harmless while this process is concluded. Our goal, as stated, is to support our districts, and in turn, provide the resources necessary to support the nearly one million students in Tennessee. We appreciate your attention to this important matter. Sincerely, '' ~~ i_)L, ,;;( l( ;' Dr. Candice McQueen Commissioner of Education cc: Sen. Bob Corker, Rep. Chuck Fleischmann, Rep. Diane Black, Rep. Jim Cooper, Rep. Joe Duncan, Jr., Rep. Phil Roe, Rep. Marsha Blackburn, Rep. Scott DesJarlais, Rep. Stephen Fincher, and Rep. Steve Cohen.