The FCC Inspector Gen.’s Office said it had ‘numerous concerns’ a...

been enough audits to come to definite conclusions about program improvements but: “The results of audits that have been performed and the allegations under investigation lead us to believe the program may be subject to [an] unacceptably high risk of fraud, waste and abuse through noncompliance and program weaknesses.” As it has in past reports, the IG said it was supporting investigations by law enforcement agencies in malfeasance by service providers and others. The report said law enforcement agencies asked the IG to help with one service provider in particular and on Feb. 3 the IG sent a memo to law enforcement officials that “identified monetary findings in the amount of $584,605 related to missing equipment and overbillings for recurring services.” The report didn’t identify the service provider. The IG said from July 1998 through June 2001 “the service provider received more than $9 million in E-rate funds for goods and services provided to approximately 36 schools.” The IG said it had established “a formal working relationship with the Governmental Fraud Unit of the FBI” and also worked with DoJ’s Antitrust Div. on a variety of cases. Allegations being investigated in those cases include: (1) Procurement irregularities such as lack of competitive bidding. (2) Service providers’ billing for goods and services not provided. (3) Funding of ineligible items. (4) “Misappropriation of assets.” (5) Beneficiaries’ not paying the local portion of the costs, “resulting in inflated cost for goods and services to the program and potential kickback issues.” The IG’s office said it was concerned “with the pace at which identifiable program improvements -- such as enhanced requirements for competitive procurement -- are being addressed.” It said it couldn’t give the FCC assurance that the program was protected from fraud, waste and abuse until there were enough resources and funding to provide better oversight. One of the oversight problems is that the FCC doesn’t have the authority to use USF funds to pay for its cost of administering the fund, including providing oversight, the report said. The IG recommended, among other things, improving management of the e-rate and the overall universal service fund: “Numerous functions, particularly in the area of financial management and oversight, are performed voluntarily by USAC [the Universal Service Administrative Co.] under undocumented, oral agreements… Formalizing certain administrative functions will strengthen the relationship between the Commission and USAC and result in more efficient and effective management of the fund.” In addition, fund management “would benefit from the additional control it would be afforded if it were maintained in an account managed by the Department of the Treasury,” the report said.