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Pallone Releases GAO Report Calling on FCC to Combat Fraud in the High-Cost Program

Nov 18, 2019
Press Release
Report Recommends Five Actions Chairman Pai Should Take

Washington, D.C. – Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) released a Government Accountability Office (GAO) report today recommending that the Federal Communications Commission (FCC) take additional action to prevent fraud and implement an antifraud strategy for the Universal Service Fund’s (USF) high-cost program, which provides $4.5 billion annually to support broadband service in high-cost areas. 

Pallone requested the report over two years ago after conducting his own investigation following several high-profile abuses of the program, specifically with regard to rate-of-return carriers.

“I requested this report because it was clear FCC was failing to adequately protect the high-cost program against flagrant waste, fraud and abuse of federal funds by some rate-of-return carriers.  After more than a year of investigating, GAO agrees,” Pallone said.  “The high-cost program provides federal funding that is integral to promoting broadband buildout in rural America.  Chairman Pai must heed GAO’s recommendations and implement an antifraud strategy for the program.”

The GAO report recommends that Chairman Pai should:

  • Ensure that FCC’s Office of Managing Director follows the leading practices in GAO’s fraud risk framework related to a dedicated entity’s management of its antifraud activities, such as serving as the repository of knowledge on fraud risks and coordinating antifraud initiatives.
  • Plan regular fraud-risk assessments tailored to the high-cost program and assess these risks to determine the program’s fraud risk profile, as provided in GAO’s fraud risk framework.
  • Design and implement an antifraud strategy for the high-cost program with specific control activities, based upon the results of fraud-risk assessments and a corresponding fraud risk profile, as provided in GAO’s fraud risk framework.
  • Assess the model-based support mechanism to determine the extent to which it produces reliable cost estimates.
  • Consider whether to make use of the model-based support mechanism mandatory depending on the results of the assessment.

Click HERE to read GAO’s report.