Eyeing Major Shake-Up, FCC Weighs Revamping E-Rate Competitive Bids

Contributing Writer
FCC proposed new rules to govern competitive bidding in the E-Rate program, EdWeek Market Brief

The Federal Communications Commission is proposing a major change to the competitive bidding process for E-rate procurements that would affect all school districts and vendors participating in the multi-billion dollar program — and it’s drawing opposition from state groups and consultants early in the process. 

In a proposed rulemaking, the FCC says it wants to create a national bidding portal for the E-rate program in which all vendors would have to upload bids to a portal managed by the federal government, instead of submitting them directly to school districts. 

Additionally, the proposed rules ask for comments on whether the FCC should require a specific timeframe — up to 28 days — before school districts would be allowed to access bids submitted to the portal.

Overseen by the FCC, the E-rate program gives discounts to K-12 schools and libraries for internet services provided on campus. It generated about $3 billion of funding requests in 2021. 

The FCC says its proposed changes to the E-rate competitive bidding rules would streamline document submissions and provide stronger fraud protections. 

Goal Is to Reduce Risks of Fraud

A 2017 report from the FCC’s inspector general and 2020 report from the federal government’s watchdog agency, the Government Accountability Office, both recommended that the agency take steps to create a bidding portal for E-rate procurements to minimize fraud risks. 

FCC chairwoman Jessica Rosenworcel said the agency is proposing a centralized document repository for E-rate procurements in response to the watchdog reports. 

“I look forward to the record that develops,” she said in a statement. “I also look forward to continuing to take steps to strengthen this program—and expanding the good it can do.”

In it’s proposal, the FCC says the bidding portal would need to be in place by July of 2023 in order for school districts to use it for the 2024 E-rate application process. 

School districts applying for E-rate funds already have to complete a competitive bidding process and comply with FCC bidding requirements. 

As part of that, districts fill out and submit a form with a description of services requested. That document is posted online for vendors to review.

Vendors then respond directly to districts with bids. School systems must wait 28 days from when their requests are posted online before signing a contract with a vendor but submitted bids can be reviewed by districts as they are received. 

(In its 2017 report, the FCC’s inspector general recommend the E-rate program administrator hold vendor bids in a bid repository throughout the “28-day bidding window” to ensure that vendors were competing on a “level playing field,” which is why the agency is now asking for comments on a potential timeframe for when districts could see submitted bids). 

Throughout the process, districts “must select the most cost-effective service offering, with the price of E-rate eligible services being the single most heavily weighted factor in determining cost-effectiveness,” according to the FCC. 

But in the course of doing that, districts manage the entire bidding process locally or with a third-party bidding platform of their choice, as opposed to the central repository being proposed by the FCC. 

Funds for Learning CEO John Harrington called the FCC’s proposed rule “the most radical change to the program since its inception,” describing it as an expansion of federal power at the expense of local decision-makers.

“With so much oversight and management for K-12 spending overall, why should schools not be trusted to manage the procurement of their internet access?” Harrington wrote in a recent blog post. With so many contracts being successfully bid out, surely schools can effectively manage their internet procurement themselves.”

State Objections

A coalition of groups — including the State E-Rate Coordinators’ Alliance, the National School Boards Association and CoSNwrote to the FCC last month asking the agency to seek comments “on other alternatives and revisions to the competitive bidding procedures that may be more beneficial, less onerous and more cost effective” than the proposed rules.

And groups representing K-12 schools in two states — California and Utah — have written to the FCC to say its proposed bidding portal would violate local procurement laws. 

In a letter, the Utah Education and Telehealth Network, which is responsible for providing internet access to all public schools throughout the state, said its participation in the bidding portal would “be a direct violation of Utah state law and University of Utah’s procurement policy.” 

“We respectfully ask the Federal Communications Commission (FCC) to abandon this proposal,” the group wrote. 

Likewise, the K-12 High Speed Network, a program funded by the California Department of Education to provide high-speed Internet to schools, said the proposed portal would interfere with state bidding laws. The group also said the bidding repository could create inefficiencies and scheduling delays for applicants, along with potentially hindering the number of vendors willing to participate in the E-rate program. 

“The totality of these drawbacks far outweighs the potential benefits of the proposal,” the group wrote. It argued that there are “alternative options” to a centralized bidding portal that could help the FCC achieve its goal of minimizing fraud in the E-rate program. 

The FCC plans to accept public comment on the proposed rule for 60 days following its publication in the Federal Register.

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