Members Welcome IG Audit of EAGLE-Net, Request Additional Information on Controversial $100 Million Stimulus Grant

May 9, 2013

WASHINGTON, DC – Communications and Technology Subcommittee Chairman Greg Walden (R-OR), subcommittee member Rep. Cory Gardner (R-CO), and Rep. Scott Tipton (R-CO) today sent a letter to the Department of Commerce’s Inspector General Todd Zinser to applaud plans to audit the NTIA stimulus grant awarded to EAGLE-Net and request the IG gather additional information to assist the committee’s examination. The committee has been conducting rigorous oversight of the Obama administration’s $7 billion broadband stimulus program to examine allegations of waste and overbuilding. In February, the subcommittee held its fourth hearing on the broadband spending and committee leaders recently requested the Government Accountability Office conduct additional oversight of loans and grants in an effort to protect taxpayer dollars. 

In a letter to the Commerce IG, the members wrote, “The award —at $100.6 million, one of the largest broadband grants under the ARRA — has been a source of controversy. The grant to EAGLE-Net Alliance, originally made to the Colorado Centennial Board of Cooperative Educational Services and subsequently transferred to EAGLE-Net, has been criticized for overbuilding existing infrastructure rather than delivering service to unserved communities.

“In one stark example, EAGLE-Net built a third fiber connection to an 11-student elementary school in Agate, which the school says it did not need or want, according to an article in The New York Times on February 11, 2013. The NTIA placed the grant under a corrective action plan in August 2012 because of a lack of financial internal controls, between $250,000 and $500,000 in questionable costs, questions regarding matching funds, and a failure to track expenditures against the NTIA-approved budget. The NTIA ultimately suspended the grant from December 2012 until May 2013 for material non-compliance with the award terms after EAGLE-Net changed its network design without informing the NTIA or getting required approvals,” the members added.

As part of the audit, the members requested the IG also gather information on the extent of overbuilding, how the planned network design has changed since the original award to the Colorado Centennial Board of Cooperative Educational Services, how much of the funds remain uncommitted, and the schedule for future build out with the unallocated funds.

A copy of the letter can be found here.

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