In a recent Order, the Commission upheld a Wireline Competition Bureau Order denying review of an audit letter issued by USAC. The Commission found that USAC had followed established procedures in issuing the audit letter, requiring a service provider to provide a plan to ensure future E-rate compliance, suspending pending funding requests involving the service provider pending review and approval of the plan, and sending a copy of the audit letter to applicants using the service provider.

USAC issued the audit letter to the service provider in 2007, after finding that the service provider had violated the E-rate rules in connection with the billing of a school district that had specifically indicated in its request for proposals (“RFP”) that progress and/or advance payments were prohibited under the contract. USAC found that while the school had only paid a lump sum payment on the final invoice submitted by the service provider, the service provider had requested payment from USAC for five invoices pre-dating the final invoice paid by the school. USAC sent the service provider an audit letter indicating that it had violated the Commission’s E-rate rules by billing USAC prior to completion of the project in violation of the terms of the district’s RFP. The audit letter required the service provider to file a plan within six months of the date of the letter ensuring that for any future reimbursements from USAC all services will have been completed and that any progress or advance payments made by the district would be valid under the contract. In addition to requiring the plan, USAC stopped all pending funding requests involving the service provider pending review and approval of the plan and sent a copy of the audit letter to all applicants using the service provider.