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Friday, December 12, 2008

Why we fail

The FCC's Inspector General (OIG) has released its analysis of Round 2 audits. And the picture is not pretty.

The bottom line is that the E-Rate program is nowhere near making the 2.5% threshold for improper payments, so we're getting more audits. But we already knew that.

I dumped the results into a spreadsheet, just to see what jumped out at me. Here's what jumped out:

Two of the audits accounted for 50% of the total amount of improper payments from the 260 audits. A curse on those two applicants for making us all look bad! Oh, wait, they've already been cursed with multi-million-dollar COMADs.

Of the 260 audits, only 93 did not result in recovery. Over 64% of applicants made some kind of error. How can we change that? Simplify, simplify, simplify. I came up with a couple thousand pages of rules without even trying.

OIG came up with 21 causes for improper payments. Among those causes that the auditors found resulted no errors:
  • USAC error
  • Solix error
  • NECA error
"NECA error"? What error could NECA make? Something about the way they formed USAC? And the audits don'texamine the actions of Solix and USAC, so there's no way for them to find their errors.

There were four causes associated with FCC rules:
  1. Imprecise FCC Rule/s
  2. Contradictory FCC Rule/s
  3. Overly Complex FCC Rule/s
  4. Disregarded FCC Rule/s
The Auditors found that the first 3 caused 0.2% of the improper payments made, while #4 caused 44% of the improper payments. So almost every applicant who broke an FCC rule told the auditors that they had disregarded FCC rules? I'm guessing the auditors made a judgment call that the rules were not imprecise, contradictory or overly complex. It would be more instructive if the auditors asked applicants: "Here is a rule you didn't follow. Do you find this rule precise, unequivocal and simple? Why didn't you follow the rule?"

Because as it is, the results make it appear that applicants understood the rules and chose to violate them. I'm sure that happens, but not anywhere near 44% of the time.

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