Principles for Treating Entities Under Investigation Relating to Their Participation in the Schools and Libraries Universal Service Support Mechanism

1.

The question of how to treat entities under investigation is complex and requires careful maintenance of program integrity, USAC’s duty to prevent waste, fraud and abuse, due process concerns, fundamental fairness toward applicants and service provider participants in the program, and respect for the integrity of law enforcement investigations.

2.

USAC’s approach, to date, has been generally to defer action on funding commitments to any applicant where USAC is aware of an active law enforcement investigation relating to the E-rate related activities of the applicant, or any of the service providers utilized by that applicant, for each funding year until the investigation is resolved. Moreover, upon becoming aware of an investigation involving a particular service provider, USAC’s approach to date has been to defer action on funding commitments from any applicant that proposes to utilize that service provider.

3.

USAC’s approach also has been to deny all Funding Request Numbers (FRNs) that it determines are inconsistent with program rules, regardless of the pendency of a law enforcement investigation.

4.

On a going forward basis, USAC will continue to deny all FRNs that it determines are inconsistent with program rules. With respect to the remaining FRNs – that is, ones that do not on their face appear to present program violations – USAC will act as follows in situations in which there is a pending law enforcement investigation:

5.

USAC will defer action on funding commitments for any FRN where USAC is aware of an active law enforcement investigation directly related to that FRN (namely, an investigation relating to either the applicant or the service provider for activities arising out of that particular FRN, in that funding year). If USAC is aware that a law enforcement investigation is examining the conduct of a particular service provider with respect to multiple applicants, it will defer action on funding commitments for all FRNs involving that service provider for all applicants known to be within the scope of the investigation.

6.

For FRNs involving service providers other than the one under investigation, USAC will issue positive funding commitments if it determines, after subjecting those requests to more intensive review, tailored to the nature of the allegations, that the service providers for those FRNs are not implicated in the issues under investigation, and the applicant and those service providers have fully complied with all program rules for those FRNs.

7.

When a service provider under investigation for conduct related to a particular applicant also is the service provider for an unrelated applicant, USAC will issue a positive funding commitment to the unrelated applicant (subject to the exceptions set forth in bullet 9) if it determines, after subjecting the application to more intensive review, tailored to the nature of the allegations, that the issues under investigation are not present with respect to the unrelated applicant.

8.

In subsequent funding years, USAC will issue positive funding commitments (subject to the exceptions set forth in bullet 9) if it determines, after subjecting the application to heightened scrutiny, tailored to the nature of the allegations, that the issues under investigation are not implicated in the subsequent funding years.

9.

If FRNs associated with a entity that is known to be under an active law enforcement investigation pass all review procedures (bullets 7 and 8 above), USAC will issue funding commitments for those funding requests, despite the law enforcement investigation, subject to the following exceptions:

10.

As noted, in all cases, USAC will subject the applications in question to a more intensive review, tailored to the nature of the allegations that it understands are under investigation.