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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, DC 20554 In the Matter of ) ) Request for Review of the ) Decision of the ) Universal Service Administrator by ) ) McAllen Independent School District ) File No. SLD-137424 McAllen, Texas ) ) Federal-State Joint Board on ) CC Docket No. 96-45 Universal Service ) ) Changes to the Board of Directors of the ) CC Docket No. 97-21 National Exchange Carrier Association, Inc. ) order Adopted: February 7, 2000 Released: February 8, 2000 By the Common Carrier Bureau: 1. The Common Carrier Bureau has under consideration a Letter of Appeal filed by McAllen Independent School District (McAllen), McAllen, Texas, on October 12, 1999, seeking review of a decision issued by the Schools and Libraries Division (SLD) of the Universal Service Administrative Company (USAC or Administrator). McAllen seeks review of the SLD's denial of a funding request for discounted services under the schools and libraries universal service support mechanism. For the reasons set forth below, we deny the Letter of Appeal and affirm the SLD's denial of McAllen's request for discounts. 2. By letter dated September 16, 1999, the SLD rejected a funding request made by McAllen for Funding Year 2 for failure to meet the SLD's minimum processing standards. The SLD stated that the funding request was being rejected because contracts awarded between July 11, 1997 and February 27, 1998 were required to be rebid for Funding Year 2. In response, McAllen filed the instant Letter of Appeal, arguing that its contract with Southwestern Bell Telephone Company qualifies as an existing contract for tariffed services and could not be re-bid. Moreover, McAllen asserts that it consulted the SLD Help Desk for assistance in filing its FCC Forms 470 and 471, and that SLD staff indicated that McAllen's contract qualified as an existing, binding contract. Because of the assurances made by SLD staff, McAllen argues, its application for discounts should be reconsidered. 3. Under the schools and libraries universal service support mechanism, eligible schools, libraries, and consortia that include eligible schools and libraries, may apply for discounts for eligible telecommunications services, Internet access, and internal connections. The Commission's rules provide that, with one limited exception for existing, binding contracts, an eligible school, library or consortium must seek competitive bids for all services eligible for support. In accordance with the Commission's rules, the SLD posts an applicant's FCC Form 470 specifying requested services on its web page for 28 days prior to the applicant's signing a contract for eligible services and submitting FCC Form 471. 4. As noted, the Commission's rules provide that eligible schools and libraries with existing contracts are exempt from the competitive bidding requirement under certain circumstances. Section 54.511(c)(1) exempts contracts entered into on, or prior to, July 10, 1997 from competitive bidding requirements for the duration of the contract and also provides that contracts signed after July 10, 1997 and before January 30, 1998 (the date on which the Schools and Libraries website was fully operational) would be exempt from the competitive bidding requirement for services provided through December 31, 1998. The Commission set out these exemptions because it did not wish to penalize schools and libraries that had to negotiate contracts prior to the date that the universal service competitive bidding system became fully operational. In addition, once an applicant submits an FCC Form 470 and complies with the 28- day posting period, the applicant is permitted to sign a long-term contract at that time and, having complied with the competitive bidding requirement prior to signing the contract, the applicant need not submit any additional FCC Form 470s for the duration of that contract. 5. The Commission has repeatedly emphasized the importance of the competitive bidding requirement, stating that it helps to ensure that schools and libraries will receive the lowest possible pre-discount price. The Commission has concluded that competitive bidding is the most efficient means for ensuring both that eligible schools and libraries are informed about the choices available to them and that prices are not unnecessarily high. In order to ensure that schools and libraries contracting for services between July 10, 1997 and January 30, 1998 did not negotiate long-term contracts and thereby avoid the competitive bidding requirement altogether, the Commission limited the exemption of the competitive bidding requirement for contracts signed between July 10, 1997 and January 30, 1998 to services provided through December 31, 1998, regardless of the duration of the contract as a whole. 6. A review of the record reflects that, on September 3, 1997, McAllen signed a five-year contract for the period beginning November 13, 1997 through November 12, 2002. Pursuant to section 54.511(c)(1)(ii), McAllen was exempt from the competitive bidding requirement for Funding Year 1. However, as was the case with all schools and libraries entering into contracts between July 10, 1997 and January 30, 1998, McAllen was required to seek competitive bids for all services eligible for support for Funding Year 2. Because McAllen did not seek competitive bids for Funding Year 2, we find that the SLD correctly denied McAllen's request for discounts. 7. Moreover, we are not persuaded by McAllen's argument that SLD staff statements that its agreement with Southwestern Bell constituted an existing, binding contract is sufficient to warrant reconsideration of SLD's denial of McAllen's application. As noted, contracts signed between July 10, 1997 and January 30, 1998 are considered pre-existing contracts but such contracts were exempt from the competitive bidding requirement only through December 31, 1998. While it is unfortunate that McAllen may have understood the SLD staff statements to mean that it would be exempt from the competitive bidding requirement for the duration of its contract, this is not a basis to grant relief that would be contrary to our rules. Applicants themselves have the burden of complying with applicable statutes and rules. Here, it was incumbent upon McAllen to be aware of and comply with the Commission's rules regarding the competitive bidding requirement. 8. ACCORDINGLY, IT IS ORDERED, pursuant to authority delegated under sections 0.91, 0.291, and 54.722(a) of the Commission's rules, 47 C.F.R.  0.91, 0.291, and 54.722(a), that the Letter of Appeal filed by McAllen Independent School District, McAllen, Texas on October 12, 1999, IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Carol E. Mattey Deputy Chief, Common Carrier Bureau