Republican leaders on the House Energy & Commerce Committee seem to be on the warpath over the broadband stimulus program. This week, the majority committee staff issued a toughly-worded memorandum to members and staff of the Subcommittee on Communications and Technology advising them that the subcommittee might proceed tomorrow with a markup of legislation that would return reclaimed stimulus funds to the U.S. Treasury. According to the memo, the move could happen immediately after a hearing scheduled for tomorrow morning with leaders of the administering agencies—the Rural Utilities Service and the National Telecommunications and Information Administration.
A spokeswoman for the NTIA told Telecompetitor that to date the agency has only had two stimulus awards returned and that the money associated with both awards would be returned to the treasury after appropriate processing. According to the spokeswoman, the return of the funds to the treasury is “consistent with current law.” A spokesman for the RUS also said any funds returned to that agency would be returned to the treasury per existing laws. Assuming these spokespeople are correct, at least one aspect of the proposed legislation would appear to be unneeded.
The proposed broadband stimulus reclaimation legislation, currently in draft form, also is designed to hasten the process of reviewing charges about potentially non-compliant award winners. For example, it would require the NTIA and RUS heads to determine whether cause exists to terminate an award within 30 days of receiving information from the Inspector General or Comptroller General regarding noncompliance with award terms. The agency heads also would be required to advise Congress and the official who provided the information, within three days of their determination, what action they took or why no action was taken.
Meeting those deadlines could be challenging, depending on the volume of charges the administrators are required to review. The Government Accounting Office already has expressed concerns that the NTIA and RUS may not have sufficient resources to handle all of their oversight requirements. In a statement, however, NTIA Administrator Lawrence Strickling pledged “vigorous oversight” of the stimulus program. “NTIA is working closely with grantees as part of our vigorous oversight process to ensure that taxpayer dollars are invested wisely and broadband projects are completed on time, within budget, and deliver the promised benefits to communities,” said Strickling.
Telecompetitor is only aware of one broadband stimulus award that is currently in dispute, though there may be more. But the attitude expressed in the majority committee staff memo suggests that the NTIA and RUS should brace themselves for more complaints. For example, a “background” section included in the memo is quite critical of several aspects of the broadband stimulus program—questioning, for example, why the awards were made before the national broadband map was completed. In addition, the authors note that “some cable and phone companies believe awards have been issued for projects that substantially duplicate their existing service areas.”
According to the memo, the funding that could be clawed back currently totals $77 million that was originally earmarked for 13 separate awards that winners have opted to return. That’s about 1% of the total $7.2 billion allotted for the program.
The returned funding, the memo says, includes 10 awards made by the RUS valued at a total of $38 million and three awards made by the NTIA valued at $39 million. Although the NTIA spokeswoman said only two awards had been returned, the total value of those two awards is $37 million—a bit less than the number provided in the commerce committee memo.
A few reports of returned awards have emerged in the press, including a $22.99 million NTIA award million that went to the State of Wisconsin to expand its BadgerNet network and a $2.4 million RUS award returned by Five Area Telephone Cooperative Inc. Based on the information available to date, there does not appear to be a single overriding reason why certain winners returned their awards. Reasons that have been cited include concerns about tight timelines that recipients must adhere to as well as liability concerns.
UPDATE: Telecompetitor has learned that while two awards were returned to the NTIA, a third was never accepted. The total value of all three awards is $39 million.
SECOND UPDATE: The House Energy and Commerce Subcommittee on Communications and Technology unanimously passed the proposed draft legislation on Friday.
