AT&T Technical Services: E-Rate Noncompetitive Bids and Ineligible Equipment

AT&T Technical Services Corp. agreed to pay $8,266,414 to settle allegations involving E-Rate noncompetitive bids and ineligible equipment in Indiana. The government also alleged overbilling for services and a payment or profit to the program applicant. If you know how a school technology bid was prepared, what the vendor supplied or why a service charge changed, we can help turn that knowledge into a specific account of what the program was asked to fund.

The Justice Department announced the civil settlement on February 13, 2009. This E-Rate procurement fraud case reached from the competition for the contract through the goods, services and money charged to the program.

What the Government Alleged

The government alleged that AT&T Technical Services compromised E-Rate bidding and claimed funding for purchases and charges the program should not have paid.

Noncompetitive Bidding for E-Rate Contracts

The government alleged that the company undermined competition for E-Rate contracts.

For an insider, the useful detail is how the offers came into being: who prepared them, who communicated about the price and whether the companies were actually trying to win. Someone involved in preparing those offers may know who supplied the numbers and what the losing bidder was expected to do. We examine those decisions alongside the written bids.

Ineligible Equipment and Services

The government alleged that AT&T Technical Services claimed and received E-Rate funds for goods and services that were ineligible for the program’s discounts.

This is where product and project knowledge matters. We connect the equipment or service described in the funding request to the purchase order, the items supplied and the eligibility requirements for that funding period. Someone who knows the equipment may be able to explain a product description that looks ordinary on an invoice. Someone who knows the work may be able to explain what a service line actually purchased.

Overbilling for Services Provided

The government also alleged that the company overbilled E-Rate for services it provided. The amount charged therefore belongs beside the scope and price of the work, with the supporting performance records.

Our billing evidence review follows the agreement that set the price. The useful comparison is between what the purchase authorized, what the provider performed and what it charged. That gives a person who knows the work a place in the inquiry even if they never handled the funding application.

A Payment or Profit to the Applicant

The government further alleged that AT&T Technical Services facilitated a payment or profit to the applicant from E-Rate funds. This allegation follows the money beyond the provider’s charge and back toward the party applying for support.

We see the absurdity: the applicant was seeking help to pay for connectivity, while the government alleged that the arrangement generated a payment or profit for the applicant. School connectivity as a profit opportunity. The applicant’s own financial interest belongs beside its purchasing decision. The accounting records and communications explaining a transfer can show a part of the transaction that the equipment description leaves out.

How E-Rate Funding Reached the Bill

E-Rate provides funding for schools and libraries that need help connecting to and using the Internet. In its settlement announcement, the Justice Department described schools applying for funds to pay for hardware and monthly connectivity service fees. The Federal Communications Commission oversees the program.

Telephone users fund that help. We see alleged overbilling and ineligible purchases as taking money from the connections those schools and libraries need.

What an Insider Can Show

An insider can connect the representations in an E-Rate transaction to the records of what was purchased, performed and paid. The practical value is in linking the pieces: a bid to the people who prepared it, an equipment description to the goods supplied, a service charge to the work and a payment to its recipient.

We work through those records with the person who understands the business, so that an unexplained entry becomes a specific account of what the company asked the program to fund.

Whether you know the work or the invoice, we examine how the two fit together. You may understand a service charge because you performed the work, or an equipment description because you supplied the product. We build on that knowledge with you.

The Losing Bid Can Matter

The losing bids can help explain whether the bidders seriously competed for the work. That question travels beyond school technology: how do suppliers behave when they face more competition? A 2013 Higher School of Economics working paper, Collusion Detection in Procurement Auctions, examined highway construction auctions in a Russian region. In the higher-price group, it found bidding behavior that did not respond to competition as the lower-price group’s behavior did:

Collusion Detection in Procurement Auctions, Higher School of Economics, 2013

The paper treated that behavior as a way to focus further investigation. We would examine an E-Rate bidding allegation through the offers, communications and decisions behind them. Someone who knows why a company submitted a losing offer may explain what the bid prices alone cannot.

Who Investigated AT&T Technical Services’ E-Rate Billing?

The Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Indiana and the FCC Office of Inspector General jointly investigated fraud and anticompetitive conduct in Indiana’s E-Rate program. The department said the AT&T Technical Services settlement resulted from that investigation.

Hewlett-Packard and Benefits During E-Rate Bidding

In a larger E-Rate settlement, Hewlett-Packard agreed to pay $16.25 million in separate Dallas and Houston E-Rate whistleblower cases. In its November 10, 2010 announcement, the Justice Department described allegations that yachts, sporting tickets and other inducements compromised competitive bidding.

That comparison adds a concrete question about the selection decision: what benefits accompanied the bid? The Texas allegations concerned inducements during vendor selection. In each setting, knowledge of the relationships and money surrounding the purchase can explain something the winning proposal leaves out.

How Much Money Can a Whistleblower Get From a Qui Tam Lawsuit?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. When we assess a potential government procurement whistleblower reward, we look at what your information can prove and what the government can recover with it.

You Know the Bid and the Work Behind It

If you saw how an E-Rate offer was arranged, a service charge was inflated or money reached the applicant, speak to one of our whistleblower experts about what happened. We develop the case with you and bring in government procurement whistleblower lawyers who understand school technology purchases and false billing. From the first conversation through the pursuit of the recovery, we stay beside you to build your strongest E-Rate whistleblower case.