GAO Urges FCC, USAC to Better Coordinate Against E-rate Fraud

Committee Chairman Mike Enzi, R-Wyo. The FCC Office of Inspector General reported to Congress in 2017 that the commission’s ability to detect and deter E-rate fraud was limited because of lack of oversight controls. GAO said Wednesday it found E-rate’s program design allows participants to “self-certify” and lacks sufficient FCC oversight to “identify potential fraud risks. For example, an applicant could receive payments for services they've claimed to have provided, but don't have the documentation.” Reliance on self-certification “is an inherent overarching key fraud risk affecting the E-rate program application and funding phases,” the auditor said. “This key fraud risk presents opportunities for applicants, service providers, or consultants to misrepresent dozens of self-certification statements on various application and funding FCC forms.” Other key fraud risks include “opportunities to misrepresent compliance with competitive-bidding requirements,” instances where “various E-rate program participants” can “collude” and potential conflicts of interest “when an E-rate consultant or Educational Service Agency represents both the applicant and service provider in the same transaction.” The proposed coordinated FCC-USAC assessments of E-rate fraud risks should include “implementing their respective plans for developing periodic fraud risk assessments, examining suitability of existing fraud controls, and compiling fraud risk profiles, GAO recommended. The FCC chairman should ensure the commission and USAC “follow the leading practices in GAO’s Fraud Risk Framework when designing and implementing data-analytics activities to prevent and detect fraud as part of their respective antifraud strategies for the E-rate program.” The FCC should direct USAC “to clearly define and fully document the data fields in all relevant E-rate program computer systems to help improve FCC’s ability to understand and use data to manage fraud risks,” GAO said. The FCC agreed about the recommendations. Coordination with USAC on E-rate assessments “complements” the regulator’s “existing efforts and will help the Commission and USAC to build on those efforts to mitigate fraud risk,” said FCC Managing Director Mark Stephens and Wireline Bureau Chief Kris Monteith in an attached letter. The FCC and USAC “have been working collaboratively to incorporate the use of data-analytics activities into our fraud risk management plans and starting last year, began using data analytics in the context of investigation and enforcement.” The FCC plans to “direct USAC to better document and define the data fields in its E-Rate systems, with an initial focus on the key data fields that USAC relies on most to administer” the program, Monteith and Stephens said. USAC declined to comment.