In the Illinois School decision, the FCC waived its rule that a contract must be signed before the 471 submitted. The Illinois School for the Visually Impaired apparently conducted a competitive bid and selected a vendor before submitting a 471 in February 2004, but was prevented by state law from signing a contract. Apparently the school is funded by the state of Illinois and the state said they couldn't actually sign the contract until the E-Rate funding was available.
I know that the FCC thinks this is an isolated case, but it isn't. I believe all applicants face the same problem. I have heard this complaint from people in other states, but the only state where I have confirmation is NJ. I talked to the person in the Department of Community Affairs who is responsible for school purchasing law. When I told him that the E-Rate required school districts to sign contracts in February for service that could not start until the following fiscal year, he said that was not legal. In February, districts have no budget for the following fiscal year, so they cannot obligate funds.
So what do schools do? They sign contracts that are contingent on E-Rate funding and contingent on budget approval and contingent on board approval. E-Rate Central has a sample contract cover letter with the contingencies in it.
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