Waste and Fraud Besiege U.S. Program to Link Poor Schools to Internet

By SAM DILLON

Published: NY Times, June 17, 2004

WASHINGTON, June 16 - When the El Paso school system wanted to upgrade its Internet connections three years ago, it tapped into a federal program that offers assistance for such projects.

The program paid the International Business Machines Corporation $35 million to build a network powerful enough to serve a small city. But the network would be so sophisticated that the 90-school district could not run it without help.

Foreseeing the problem, I.B.M. charged the district an additional $27 million, paid by the federal program, to build a lavish maintenance call-in center to keep the network running. The center operated for nine months. Then, with no more money to support it, I.B.M. dismantled it and left town.

The federal effort to help poor schools connect to the Internet, the E-rate program, which collects a fee from all American phone users to distribute $2.25 billion a year to such schools and libraries, wasted enormous sums as El Paso built its extravagant network in the 2001-2 school year, according to documents and federal lawmakers.

But the problems have not been there alone. In Brevard County, Fla., school officials used E-rate money to install a $1 million network server, a powerful device more suited to the needs of a multinational corporation, in a 650-pupil elementary school. And just three weeks ago in San Francisco, a subsidiary of the computer giant NEC agreed to plead guilty to two federal felony counts related to the program.

Across the nation in recent months - in El Paso and in New York and Pennsylvania, in Puerto Rico and Atlanta, in Milwaukee and Chicago - investigations or audits of the program have turned up not only waste but also bid-rigging and other fraud, according to lawmakers and investigators. A report issued last week by the Federal Communications Commission, which oversees the E-rate program, said 42 criminal investigations were under way.

On Thursday, Congress is to open hearings on all that has gone wrong. The hearings will be held by the House Energy and Commerce Subcommittee on Oversight and Investigations, whose chairman, Representative James C. Greenwood of Pennsylvania, says the F.C.C.'s supervision was weak.

Mr. Greenwood said that since schools often must pay only 10 percent of the cost of equipment and services while E-rate picks up the rest, "contractors have mastered the art of coming into these districts, recommending gold-plated architecture, and school officials, buying at 10 cents on the dollar, take everything they recommend.'

'The F.C.C.'s supervision was weak'? Weak? It wasn't weak, it was non-existent. Michael Powell's FCC never saw a corporate thief without offering to hold the swag-bag for it and shield it from the cops. Once again, corporate greed trumps social need and the US Treasury becomes nothing more than a cash cow for corporate profits at the expense of one of the few remaining programs meant to help less rich schools keep up with technology.

There is simply no shame any more.