Ed-Tech Policy

E-rate Plans Involving IBM Draw Scrutiny

By Andrew Trotter — December 11, 2002 4 min read

Officials in charge of the federal E-rate program, which awards discounts to help school districts afford telecommunications services and infrastructure, say they have identified a disturbing pattern in E-rate applications involving the International Business Machines Corp., one of the largest vendors under the program.

The officials in the Universal Services Administrative Co. in Washington sent a letter last week to the Ysleta school district in Texas rejecting its bid for more than $18 million in E-rate money. IBM was the sole vendor in the 46,000- student district’s major telecommunications project for the 2002 funding year, which runs from last July through June 2003.

In the 12-page letter, the agency says it has concluded that the district made errors that deprived other companies of a chance to compete fairly against IBM for the project.

On Dec. 3, the day that it informed Ysleta of its decision, USAC splashed a notice across its Web site, warning that “a sizable number of funding year 2002 applications associated with a particular service provider are not consistent with” the regulations of the Federal Communications Commission, which oversees the E-rate.

George McDonald, the vice president in charge of USAC’s schools and libraries division, confirmed in an interview last week that IBM is the service provider referred to in the warning—an unusual disclosure for an agency normally reticent about identifying vendors in school district’s applications.

He said other applications involving IBM are currently under review and may also be denied funding. Yet he also underscored that some large projects involving IBM have been provided funding for the same application cycle. Mr. McDonald said that USAC wanted to alert other applicants quickly about the potential problems because districts are in the midst of applying for the 2003 funding year, and may yet avoid the same problems in those applications.

IBM spokesman Andy Kendzie said last week that the company had committed no wrongdoing regarding any E-rate applications.

“All our dealings with school systems, as in our dealings with any of our customers, are absolutely and fully consistent with FCC and SLD regulations,” he said, referring to the schools and libraries division headed by Mr. McDonald. “As for any intimations that we are being uncompetitive, that’s not our approach.”

Mr. Kendzie would not discuss the specifics of the Ysleta application or of USAC’s criticisms, but said, “We have contacted the FCC and are in discussions with them. I’m optimistic we can reach a resolution in short order.” The FCC can overrule USAC’s funding decisions.

Questions About Proposal

IBM, which is based in Armonk, N.Y., has assumed a major role as a vendor in the $2.25 billion-a-year E-rate program.

For the 2002 funding year, the company is the vendor in E-rate applications that cumulatively request more than $1 billion in funding from the program, according to an analysis of USAC data prepared last summer by the E-rate consulting firm Funds for Learning, based in Alexandria, Va.

IBM offers school districts a single- source option for their E-rate projects. The company will help districts complete technology plans, prepare E-rate applications, and manage the entirety of a large and complex technology project.

The company also tells districts how they can maximize the E-rate funds they receive by focusing on schools that serve the largest proportions of needy students and therefore qualify for the highest discount rate. “The IBM E-rate team only applies for internal connections funding at the 90 percent discount level to assure maximum funding,” states one of the company’s sales documents.

In the El Paso-area Ysleta district, IBM was to have been “the system integrator” responsible for wiring some of the district’s 60 schools. The computer giant was to provide Internet and network-management services, with most of the costs to be covered by the E-rate.

In its letter, USAC faults Ysleta school officials for first declaring that they did not intend to issue a “request for proposals” for the project, but then later issuing such a request for a “technology partner,” on largely unspecified projects financed through the E-rate application. Ysleta later signed a contract with IBM to be that technology partner.

The E-rate rules require applicants to choose service providers to offer specific, clearly defined services, according to USAC.

Ysleta school officials blame IBM for the mistakes leading to the application’s denial. “We got slammed, we got slammed badly; it was because we followed IBM’s advice,” said interim Superintendent Roger Parks. “We went with them as our sole resource, for consulting.”

Mr. Parks said the district would appeal to federal officials to reverse the decision. But the district has dropped IBM from its consulting role for its E-rate applications for 2003.

Related Tags:

A version of this article appeared in the December 11, 2002 edition of Education Week as E-rate Plans Involving IBM Draw Scrutiny

Let us know what you think!

We’re looking for feedback on our new site to make sure we continue to provide you the best experience.


This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Future of Work Webinar
Digital Literacy Strategies to Promote Equity
Our new world has only increased our students’ dependence on technology. This makes digital literacy no longer a “nice to have” but a “need to have.” How do we ensure that every student can navigate
Content provided by Learning.com
Mathematics Online Summit Teaching Math in a Pandemic
Attend this online summit to ask questions about how COVID-19 has affected achievement, instruction, assessment, and engagement in math.
School & District Management Webinar Examining the Evidence: Catching Kids Up at a Distance
As districts, schools, and families navigate a new normal following the abrupt end of in-person schooling this spring, students’ learning opportunities vary enormously across the nation. Access to devices and broadband internet and a secure

EdWeek Top School Jobs

Data Analyst
New York, NY, US
New Visions for Public Schools
Project Manager
United States
K12 Inc.
High School Permanent Substitute Teacher
Woolwich Township, NJ, US
Kingsway Regional School District
MS STEM Teacher
Woolwich Township, NJ, US
Kingsway Regional School District

Read Next

Ed-Tech Policy Dawn of an Education-Friendly FCC? Chairman Ajit Pai Moving On
The FCC chairman plans to step down from his role at the end of President Donald Trump's term on Jan. 20.
3 min read
Federal Communications Chairman Ajit Pai arrives for an FCC meeting to vote on net neutrality.
Federal Communications Chairman Ajit Pai arrives for an FCC meeting to vote on net neutrality. 
Associated Press
Ed-Tech Policy Many Students Still Lack Home Internet. Here's How Big the Problem Is.
Only 11 percent of school district leaders and principals said all their students have the home internet access they need to fully participate in virtual instruction.
3 min read
Ed-Tech Policy Districts: Here's How to Get Some Help With the E-Rate
Ed tech officials: Confused about the E-Rate? The State Educational Technology Directors Association is on the case.
1 min read
Ed-Tech Policy Districts Get Second Shot at E-Rate Funds to Bolster Campus Connectivity
School districts now have until Oct. 16 to get their applications in for this new round of funding, thanks to a recent FCC order.
2 min read