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FCC says it’s holding IEN e-rate funds because of March Idaho Supreme Court decision

An FCC spokesman told Eye on Boise this afternoon that the federal agency has been holding up millions in federal “e-rate” funds for the Idaho Education Network since March in light of last spring’s Idaho Supreme Court decision in the Syringa case, while the agency investigates whether the IEN contract followed federal procurement rules, and there’s no telling how long that review might take. In that case, Syringa Networks sued over the state’s contract award for IEN.

The 2009 lawsuit contended that then-Idaho Department of Administration Director Mike Gwartney improperly cut Syringa Networks out of $60 million in business when he awarded the IEN contract to Qwest, now known as CenturyLink. Syringa had partnered with Education Networks of America to try to win the big contract; Gwartney awarded it to Qwest and ENA. Though Syringa was mostly unsuccessful at the lower court level, on March 29, 2013, the Idaho Supreme Court resurrected the case on a key claim: That the bidding process violated state law regarding purchases by the state Division of Purchasing. The high court, in a unanimous decision authored by Justice Dan Eismann, remanded the case back to district court for further proceedings on that question; it’s still in progress there.

“All contracts made in violation of these statutes are void and any money advanced by the State in consideration of such contracts must be repaid,” Eismann wrote in the ruling, citing Idaho Code.

Originally, Syringa and ENA submitted the highest-scoring bid for the IEN contract, scoring 856 out of 1,000 points on six specific criteria. Qwest partnered with Verizon and submitted the second-highest-scoring bid at 635 points. The state awarded the contract to both bidders, saying no one firm could serve the full geography of the state. Then, it issued change orders, amending the contract to divide the work not geographically but by function, with Qwest to provide the technical network, or “backbone” – which is what Syringa had proposed to do for ENA – and ENA to be e-rate contractor. That was what Verizon was proposed to do in the original Qwest bid.

“Qwest became the exclusive provider of what Syringa was to provide as a subcontractor of ENA,” Eismann wrote. “The amendments to the purchase orders issued to ENA and Qwest were, in effect, changing the RFP after the bids were opened.” You can read the full Idaho Supreme Court decision here.

Here’s the odd thing: State Department of Administration Director Teresa Luna told the Joint Finance-Appropriations Committee this morning that she wasn’t sure why the FCC was withholding the funds, and could only speculate on the reason, based on the questions the federal agency had asked the state over the past months. The agency responded reasonably promptly to reporters this afternoon, pointing to the Idaho Supreme Court decision and saying it “is in regular contact with the relevant state officials, and is holding funding while it determines whether the E-rate program rules were violated.” Luna told JFAC an earlier email from the FCC to her department misstated the Supreme Court’s ruling.


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Betsy Z. Russell covers Idaho news from The Spokesman-Review's bureau in Boise.

Named best state-based political blog in Idaho for 2013 by The Fix

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