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Tuesday, April 12, 2005

Ind. Gov't. - Intelenet problems apparently not limited to Indiana

On March 19th Michelle McNeil of the Indianapolis Star had a story headlined "State allegedly broke rules for Web service: Indiana violated U.S. regulations by not seeking competitive bids and by fixing prices, report says." Some quotes from that story:

Indiana broke federal regulations by failing to seek competitive bids on school and library Internet service and then fixing prices at "considerably" high rates, a report obtained by The Indianapolis Star reveals. * * *

Criminal investigators are scrutinizing Indiana's compliance with the "E-rate" program, which has provided about $23 million in federal grants to the state since 1998 for computer technology in schools and libraries. * * *

The U.S. attorney's office, which is overseeing the criminal investigation, won't talk about its investigation.

The Federal Communications Commission, which administers E-rate, wouldn't comment Friday.

Intelenet barely exists now; four employees are working to shutter the office. Gov. Mitch Daniels has ordered it combined with other technology offices.

The report, written by lawyers from Bose McKinney & Evans, reveals that Intelenet repeatedly did not meet the competitive bidding rules for E-rate when it arranged for technology services through one company, ATT-TSCO.

Because prices weren't set by competitive bids, the result was "seriously outdated" prices that were "considerably higher" than retail, the report states. Instead, prices were set by officials from Intelenet and the Indiana Higher Education Telecommunication System, a state group that serves as the equipment and systems manager, according to the report.

The prices were then approved by state technology officials from Intelenet, the Department of Education, the State Library and other technology offices. * * *

On Kernan's last business day in office in January, he warned that the lawyers had reported to his office that federal laws might have been broken regarding E-rate. His office refused to release the law firm's report under the Public Records Act, but he provided a copy of the report to the Intelenet Commission.

Only after repeated requests from The Star did the Daniels administration release the report.

Late last week an AP story dateline San Franscisco reported:
Six companies and individuals involved in a federal program to subsidize Internet access in the nation's schools and libraries have been indicted on allegations of defrauding the program, known as E-Rate.

Some of the companies and individuals are accused of submitting fraudulent documents to the government and being overcompensated for equipment headed to school districts in Arkansas, California, Michigan, New York, Pennsylvania, South Carolina and Wisconsin. Others are accused of rigging bids and conspiring toward that goal, and of charging the government for goods, such as video equipment, that are not covered by the program. * * *

The indictments stem from a federal grand jury probing the nationwide Internet-access funding program the Federal Communications Commission inspector general has said is beset by poor design and is susceptible to abuse by those selling the equipment to the schools.

Thursday's indictments come on top of similar allegations levied last year against Inter-Tel Technologies Inc. of Arizona and NEC Business Network Solutions Inc., part of Japanese electronics maker NEC Corp.

Financed through phone charges, the $2.25 billion-a-year program provides discounted Internet access and internal connection gear such as wiring and adaptors - all obtained from the private sector through a bidding process. The Federal Communications Commission inspector general said last year that, of 122 audits of the E-Rate program performed that year, about a third revealed substantial violations.

The case is United States v. Video Network Communications, 05-0208.

Posted by Marcia Oddi on April 12, 2005 01:22 PM
Posted to Indiana Government