BOISE – Idaho lawmakers who agreed under pressure this week to pay $6.6 million to a broadband contractor say they were dismayed and alarmed to learn that the state last year extended the contract through 2019 – without informing lawmakers.
The contract extension with Nashville, Tenn.-based Education Networks of America to operate the Idaho Education Network through 2019 is worth $10 million. The original five-year contract wasn’t up for renewal until January of this year, but last year, in January of 2013, the state Department of Administration opted to renew it early.
The Idaho Education Network is a broadband network that connects every Idaho high school; the state signed a $60 million contract with ENA in 2009 to launch the service, which also includes video tele-conferencing equipment at every high school.
“We saw opportunities for less expensive, higher capacity technology and worked with our vendor partners to take advantage of those savings now,” said Jennifer Pike, department spokeswoman. She said ENA was willing to invest in pricey upgrades for higher bandwidth at schools that would save the state money in the long term, if it got the early contract renewal.
Three months after the renewal was granted, federal e-rate funds that paid for three-quarters of the IEN’s costs stopped arriving from the federal government. The Federal Communications Commission said a March 2013 Idaho Supreme Court decision raised questions about the whether the state’s original award of the contract to ENA and its partners, including CenturyLink, complied with procurement rules, and the money has been held up ever since, while the agency investigates.
Now, the state has been asked to pay $14.45 million to ENA to make up for the missing e-rate payments, which come from a federal telephone tax. If the federal investigation finds the contract faulty, Idaho could also have to pay back another $13 million in past e-rate payments.
“We’ve got something terribly wrong – we’re on the hook for millions of dollars,” said Sen. Shawn Keough, R-Sandpoint, vice-chair of the Legislature’s joint budget committee. “It’s really a mess.”
State law puts an advisory council that includes four members of the Legislature’s Joint Finance-Appropriations Committee in charge of procurement of telecommunications services and equipment for the IEN. But minutes of that council for the past year and a half show it was never consulted about the contract extension or informed of the missing federal funds.
Keough, who serves on the council, said, “We’re supposed to have oversight, and the first I had heard about it was in January.”
Pike said a technical advisory committee that’s a subset of the council discussed the contract extension on two occasions; it doesn’t include any legislators.
Sen. Dean Cameron, R-Rupert, co-chairman of JFAC, said lawmakers were informed at a meeting last week that if they didn’t approve a payment to ENA and get it to the governor’s desk by the end of this week, the school network would “go black” and service would be cut off.
“There was significant pressure that we have something passed for 2014 by this week,” Cameron said.
So he and Rep. Maxine Bell, R-Jerome, the House co-chair of the joint budget committee, led a move to approve a $6.6 million payment right away for the current year, which runs through July 1. Cameron said they wanted to “take that worry off of school districts.”
However, lawmakers didn’t take action on the rest of the request from the state Department of Administration, which included $550,000 to make up state funds that department Director Teresa Luna tapped into to “front” money to the contractors while the federal funds were missing.
“We have essentially said, ‘Look, you made that decision, you have to live with it,’” Cameron said.
Legislative budget writers also haven’t taken up the additional $7.3 million that the Otter Administration requested to make up for the missing e-rate funds for the next fiscal year, which starts July 1. “I’ve got real pushback from my committee members,” Cameron said. “I’ve had several of my committee members that have said to me, ‘I can’t vote for 2015 under the current system, under the current arrangement.”
Rep. Jeff Thompson, R-Idaho Falls, who serves on the budget panel, said, “There’s a lot of questions from the Senate and from the House as to this entire contract the way it was, before they got the five-year extension.”
Cameron called the contract extension “inappropriate and unfortunate.”
Asked if the state might want to re-bid the disputed contract before the coming year, Cameron said, “That’s something that’s being discussed,” though he said he doubted a full re-bid could be completed by July 1.
Senate Education Chairman John Goedde, R-Coeur d’Alene, who serves on the IEN council, said he wasn’t advised of the contract extension or the missing funds until lawmakers were informed in January. “I feel concerned that we were not apprised of the situation,” he said.
Asked if the contract extension makes it harder for the state to get out of the deal and re-bid it, Goedde said, “There are legal minds working on that.”
Luna wasn’t available for comment. Pike said in an email, “Any speculation by the department about if the contract could/should be re-bid is premature.” If the feds ruled against the state on the contract, she said, “The state would then have an appeal avenue it would follow through the FCC. A successful appeal would release the funds currently being held.”
Luna told lawmakers last month that she never informed them of the missing federal funds – three-quarters of the cost of the service – because holdups on such payments are common, and she expects them eventually to be paid.
Keough said, “We’re being told as legislators that this is business as usual, but it seems it isn’t.”