[Vision2020] Judge rules state of Idaho broke law with broadband contract

[Tom Hansen]

Courtesy of the Idaho Statesman at:

http://www.idahostatesman.com/2014/11/11/3480464_judge-rules-state-broke-law-with.html?sp=/99/1687/&rh=1
 
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Judge rules state of Idaho broke law with broadband contract

BOISE — The state’s $60 million broadband contract is illegal and deemed void, according to a decision issued Monday by Fourth District Court Judge Patrick Owen.

The judge's ruling could mean any money the state has paid out under the contract must be repaid and the state may have to reimburse the federal government money it received to help pay for the Idaho Education Network, which is a statewide broadband network to link public schools, universities, libraries, state agencies and other locations. 

Owen said the state broke the law in 2009 when it changed the Idaho Education Network broadband service contract after awarding it to Education Networks of America, its partner Syringa Networks, and Qwest. One month after awarding the contract, the state carved out Syringa and gave all the project’s technical work to Qwest. Syringa sued the state alleging it awarded the contract illegally.

The state erred when it amended the contract to carve out Syringa, Owen said Monday.

In July 2014, the Department of Administration, which issued the contract, added new amendments to the contract to replace the initial amendment carving out Syringa. The state said these new amendments fixed the contract, and therefore Syringa had no case and asked the judge to dismiss the case.

Owen disagreed.

“An agreement made in violation of the state’s procurement law cannot be fixed or cured,” Owen wrote. The state’s "efforts to salvage these void contracts were futile and of no effect.”

Owen disagreed.

“An agreement made in violation of the state’s procurement law cannot be fixed or cured,” Owen wrote. The state’s "efforts to salvage these void contracts were futile and of no effect.”

The judge also chastised the Department of Administration, saying it “refuses to acknowledge that its bid process in this case was and remains fatally flawed. … DOA continues to fund these contracts. DOA even tries to fix what cannot be fixed,” Owens wrote.

Once a contract is deemed void, it does not have any legal existence or effect, Owen stated. Under state law, if a contract violates state law, any money paid by the state shall be repaid.

“Because these contract awards are void, the provision of Idaho Code 67-5727 now apply,” Owen stated.

In addition to paying millions to Qwest and ENA since 2009, the state has received nearly $15 million from the Federal Communications Commission, which subsidizes about 75 percent of the Idaho Education Network’s costs.

The state would have received an additional $10 million in federal money, but the company managing the E-rate program stopped making payments, totaling about $500,000 monthly, to the state in March 2013 because of concerns about the pending lawsuit against the state.

The FCC has been conducting its own inquiry into the broadband contract.

Earlier this year, the state’s attorney told the Idaho Education Network board that if the contract was found to be invalid, the FCC could demand the state return the money it received from the federal E-rate program.

State attorneys will reviewing the court's ruling on Tuesday, according to a memo Dept. of Administration Director Teresa Luna sent to memo Idaho Education Network board members Monday evening notifying them judge ruled against the state.

The state's options include asking Judge Owen to reconsider his decision or appealing to the Idaho Supreme Court.

Details on the Idaho Education Network program and lawsuit

Why did Syringa sue the state? 

In 2009, the Department of Administration put out to bid the 20-year, $60 million Idaho Education Network project, a statewide broadband network to link public schools, universities, libraries, state agencies and other locations. Once implemented, the IEN will provide high-speed Internet service, two-way video, streaming video courses and other benefits to all Idaho classrooms.

Education Networks of America and Syringa Networks submitted a joint proposal. An independent review panel found the Syringa group was the least expensive and most technically proficient bidder, scoring the group's proposal above that of fellow bidder Qwest (now CenturyLink) in six of seven categories, according to court and other documents.

The state awarded the contract to ENA/Syringa and to Qwest. After the contract's appeal period had passed, the state later cut Syringa out the project.

In December 2009, Syringa Networks sued the state and Mike Gwartney, then director of the Department of Administration. In the lawsuit, Syringa alleges Gwartney bullied company CEO Greg Lowe and blackballed his company from state contracts. The Fourth District Court dismissed the case in 2011. The Idaho Supreme Court in March 2013 reversed the lower court and ruled part of the case could go forward.

The Supreme Court's decision prompted a Federal Communications Commission contractor to stop the federal payments of about $500,000 per month to Idaho Education Network.

Why does the state get FCC money?

The FCC provides about 75 percent of IEN's funding through its e-rate program, a monthly fee on cellphone and landline bills to pay to expand broadband programs nationwide. The FCC contracts with Universal Service Administrative Co. to administer the program.

In March 2013, Universal Service stopped the federal payments, because the legality of the IEN contract is the subject of a lawsuit.

Idaho legislators did not learn of the loss of FCC money until January. Legislators also were not informed last year that the state extended its contract with Education Networks of America through 2019, even though the contract was not up for renewal.

Superintendent Tom Luna sent letters to the FCC in May, July and August urging the funding be restored. Neither the FCC nor Universal Service has said when or if that will happen. 

Over the past year, Universal Service has asked the state for several documents related to the contract and the lawsuit. The state says it has provided those documents, but it's now being asked to provide those documents by a subpoena.

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State schools chief Tom Luna and Gov. Butch Otter showed off the Idaho Education Network technology in 2011 by holding a press conference in Boise and using the IEN network to enable reporters in Moscow and Coeur d'Alene to participate and ask questions.



Read more here: http://www.idahostatesman.com/2014/11/11/3480464_judge-rules-state-broke-law-with.html?sp=/99/1687/&rh=1#storylink=cpy
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Seeya 'round town, Moscow, because . . .

"Moscow Cares" (the most fun you can have with your pants on)
http://www.MoscowCares.com
  
Tom Hansen
Moscow, Idaho
 
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