The U.S. Department of Commerce reportedly terminated an $80.5 million grant made to the Louisiana State Board of Regents because it did not accept changes that Louisiana Governor Bobby Jindal wanted to make to the project. According to a letter from a Commerce Department grants officer to the Board of Regents obtained by StimulatingBroadband.com, the termination occurred because of a “pattern of schedule delays, uncertainties and contingencies” that demonstrated “a lack of management ability and control by Louisiana to get this project built on schedule and on budget.”
The award for construction of a fiber network to interconnect research and education institutions in Louisiana was made back in the first round of stimulus awards, but plans reportedly had stalled. Rather than lay new fiber, Jindal apparently wanted the network to use existing network facilities from established carriers. The Department of Commerce, which administers the broadband stimulus program through National Telecommunications and Information Administration, appears to have made the right call in denying the use of funds for that approach as it was not in keeping with the broadband infrastructure program’s mission of funding new network construction.
Funding for a similar state network project in Wisconsin that would have used leased facilities previously was rejected by the state government. At the time, the state said it was concerned about project risks and liabilities but it is possible that the state made that decision because it believed that the award would have been canceled otherwise.
It’s not clear how big a factor project delays were in the Department of Commerce’s decision to terminate the Louisiana award, but it’s likely that delays played a key role. The Rural Utilities Service, which along with the NTIA is administering the broadband stimulus program, recently advised any stimulus winners that had not yet completed paperwork to obtain their awards to do so quickly. Otherwise funds could be at risk of being rescinded, the RUS said.
If a broadband stimulus award is terminated or rejected by a winner, funds are returned to federal coffers and are not re-awarded. Accordingly, some people in Congress apparently are eyeing unclaimed stimulus awards as a possible way of helping to balance the U.S. budget.
“The tone around the debate is raising red flags,” said Kathleen Merrigan, Deputy Secretary for the Department of Agriculture, the parent organization of the RUS, in a conference call with rural carriers earlier this month. A large portion stimulus awards made by the RUS went to rural carriers.
To date at least $118 million in broadband stimulus awards have been declined by their winners. But until now there have been few cases of awards being terminated by the awarding
