FCDL Comment:
DR1:USAC determined that the applicant did not comply with competitive bidding rules. While we acknowledge the receipt and review of the intent to deny or comad response, the FRNs are being denied since we could not determine a fair and open competitive bidding process for the following reasons below. 1) Missouri Research and Education Network (MOREnet) issued RFP #16-4002-HR-U and conducted a vendor evaluation process for a middle-mile fiber extension to the existing backbone and last mile fiber to MOREnet members in the Southwest portion of Missouri. Sho-Me Technologies, LLC (Sho-Me) (SPIN 143004637) was selected as the winning vendor and the agreement awarded was an amendment to the contract entered into as a result of RFP #14-4006-HR-U rather than a new contract. Documentation reviewed relating to contract #14-4006-HR-U revealed that Sho-Me agreed to contribute no more than $2M toward the replacement of optical equipment no sooner than 10 years from the contract execution date and monies paid by MOREnet under the backbone IRU contract to Sho-Me would be paid back by Sho-Me to MOREnet, which would result in a $0 transaction. Based on these previous arrangements, there is a potential conflict of interest as it appears that MOREnet would be in favor to award RFP #16-4002-HRU to Sho-Me as an amendment to contract #14-4006-HR-U. FCC rules require that the competitive bidding process be fair and open and free from conflict of interest. 47 C.F.R. § 54.503(a).2) Applicants and service providers are prohibited from using Schools and Libraries (E-rate) Program funds to subsidize the procurement of ineligible or unrequested products and services or from participating in arrangements that directly or indirectly reduce the applicant's nondiscount share. Program rules do not restrict applicants from accepting grants from bona fide organizations, nor do they restrict service providers from attempting to help applicants obtain grants from such organizations, so long as the grants and organizations are completely independent of the service provider. FCC rules impose significant restrictions on applicants and consultants regarding the direct or indirect solicitation or acceptance of gifts from service providers or prospective service providers. Gifts are defined as gratuities, favors, entertainment, loans, or any other thing else of value. See 47 C.F.R. §§ 54.503(d), 54.523. The purpose of these restrictions is to ensure a fair and open competitive bidding process that is free from any conflicts of interest. Any offering, acceptance, or request of gifts between involved parties is considered a competitive bidding violation.3) Contract 16-4002-HR-U is in violation of FCC rules because it is an amendment to Contract 14-4006-HR-U, which USAC found to be in violation the of the FCC’s competitive bidding rules, bid evaluation rules, and rules prohibiting acceptance of gifts and free services or rebates.