Taxpayers Gored by Al's E-Rate Program
That great federal program pushed known as "E-Rate," pushed into being by Al Gore, has turned out to be rife with fraud, reports today's Wall Street Journal. Here's the link, but you'll need a subscription to WSJ.com to read it online. So I've taken the liberty of providing excerpts.

A former electrical contractor pleaded guilty to rigging bids under a federal initiative that subsidizes Internet connections for schools and libraries, in the first of what is expected to be many fraud cases brought against companies and individuals trying to illegally cash in on the $2.25 billion program.

"Bid-rigging schemes aimed at the e-rate program rob funds for economically disadvantaged schools and libraries across the nation," said R. Hewitt Pate, the assistant attorney general in charge of the Justice Department's antitrust division. Mr. Pate said the division is continuing to work with the Federal Bureau of Investigation to probe the e-rate program for other instances of fraud.

The e-rate program was created through the 1996 Telecommunications Act, and is funded by fees the Federal Communications Commission imposes on local, wireless and long-distance telephone companies. The government uses that money to reimburse schools and libraries for as much as 90% of the cost of Internet access. An estimated 90% of the nation's public schools and 75% of its libraries have received money from the program.

But the initiative has been dogged by controversy. In 1998, the General Accounting Office issued a blistering report that said the program didn't have sufficient safeguards against waste and fraud. Earlier this year, the Center for Public Integrity issued a report, based on an FCC investigation into the program, that concluded it lacked proper oversight and was "honeycombed with fraud and financial shenanigans."

The story doesn't mention it, but one possible case of E-Rate bid-rigging involves a Tennessee company, Education Networks of America, that got a sweetheart deal to wire Tennessee's schools to the Internet despite not being the low bidder - and having little experience in the business at all. ENA's bid was more than $34 million, while Qwest bid less than $24 million.

Being owned by tywo longtime friends of then-Gov. Don Sundquist appeared to trump those deficiencies, however. ENA was founded in 1996 by Al Gainer and John Stamps, two longtime friends and supporters of Gov. Sundquist. Despite having no experience in provding Internet access services, shortly after it was founded ENA received a $125,000 no-bid contract to design a network to link Tennessee schools to the Internet. Subsequently, it landed Tennessee's $106 million five-year E-Rate contract to wire Tennessee's schools to the Internet and provide related ongoing support services.

The FBI raided ENA a few months ago, and the investigation into possible criminal wrongdoing is ongoing. In March, the federal government froze ENA's federal funding because of the criminal investigation into how contracts were awarded under former Gov. Sundquist. The probe also involves the Tennessee Bureau of Investigation.

None of this would have happened, of course, if Al Gore hadn't pushed for the E-Rate boondoggle. Or created the Internet in the first place. ;-)