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December 2, 2003
The Honorable David M. Walker
Comptroller General
United States General Accounting Office
441 G Street N.W.
Washington, D.C. 20548
Dear Mr. Walker:
The General Accounting Office (GAO) has conducted several reviews of the
Universal Service Fund’s E-rate program that have exposed weaknesses in the
program’s administrative and operational framework. These programmatic flaws
resulted in the commitment of millions of dollars for ineligible products and
services.
As a result of this work, which was conducted between 1998 and 2001, GAO
recommended that the Federal Communications Commission (FCC) and the Universal
Service Administrative Company (USAC), which administers E-rate for the FCC,
undertake several steps to improve the program’s internal controls. These
steps included (1) establishing a quality assurance function to ensure that
funding decisions comport with eligibility rules and procedures, and (2)
developing effective internal controls over the disbursement of funds to ensure
the money is appropriately spent.
Although USAC has taken corrective actions, such as strengthening its
application review process, allegations of waste, fraud, and abuse continue to
be raised since GAO last reviewed the program. Questions have also been raised
about the basic effectiveness of the program’s structure in meeting the goal
of connecting schools and libraries to the Internet.
In light of these ongoing problems and questions, we request that GAO review
the E-rate program’s structure and operations to determine whether federal
funds are being used in accordance with program rules, whether the funds are
being used effectively to achieve program goals, and whether the program needs
fundamental changes to ensure program goals are met.
As you attend to this request, you should know that we anticipate holding a
hearing on the E-rate program in early 2004, at which time we may ask GAO to
testify on its work to date.
Thank you for your prompt attention to this request. If you have any
questions or concerns, please contact Peter Spencer of the Energy and Commerce
Committee Majority Staff at (202) 225-2927.
Sincerely,
W.J. “Billy” Tauzin
Chairman
James C. Greenwood, Chairman
Subcommittee on Oversight & Investigations
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