Judge tosses state broadband contract

In a ruling that could have major implications for broadband service in schools — and a multimillion-dollar price tag for  Idaho taxpayers — a District Court judge has tossed out Idaho’s $60 million school broadband contract.

The disputed Idaho Education Network contract was declared void late Monday afternoon by 4th District Court judge Patrick Owen.

Owen sharply criticized the state Department of Administration for continuing to try to salvage the 2009 contract, after carving Syringa Networks out of the deal to provide broadband to 219 high schools across the state.

“An agreement made in violation of the state’s procurement law cannot be fixed or cured,” Owen wrote in his ruling.

Throughout the fall campaign, culminating a week ago in his election to a third term in office, Gov. Butch Otter touted the broadband system as a way of providing enhanced curriculum and dual-credit courses to rural Idaho. Even in the wake of Monday’s ruling, Otter remained true to this theme Tuesday . “There has never been a question about the opportunities the Idaho Education Network provides to our students and teachers,” Otter said in a prepared statement.

Outgoing state superintendent Tom Luna predicts the network will remain online and intact “without any interruption” as the legal battle continue. But Owen’s ruling raises a host of questions about the broadband contract — and the mechanics of a system that now serves about 87,000 students:

Ultimately, who pays for broadband service? Based on Monday’s ruling, the entire cost of broadband could fall to the state, and its taxpayers.

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For several years, the state used “e-rate” dollars — a surcharge from cell phone and landline bills — to cover three-fourths of the Idaho Education Network’s costs.

But a Federal Communications Commission contractor put Idaho’s payments on hold in March 2013, because of the contract dispute. State officials have expressed confidence that they would prevail in court, which would convince the FCC contractor, the Universal Service Administrative Company, to free up Idaho’s e-rate payments.

In light of Monday’s ruling, that appears unlikely, at least in the short run. And it means, in essence, that Idahoans are paying twice for school broadband — through service charges, and through a continuing state bailout of the Idaho Education Network.

What has been the cost to taxpayers? For starters, $11.4 million. That’s how much the 2014 Legislature shelled out — after the Department of Administration finally disclosed the e-rate payment mess last January.

The $11.4 million was designed to cover the network’s 2013-14 costs and keep the network online through February 2015. That timing was deliberate, and designed to allow the 2015 Legislature to revisit the issue.

But now, more unpaid bills are likely to be waiting for the 2015 Legislature’s review.

It is expected to take another $2.19 million to keep the network online from March through June 30.

And then, for 2015-16, the costs could rise yet again. The 2015-16 network costs are projected at $9.46 million. However, the Administration Department is hoping to collect $6.72 million in e-rate dollars, a prospect that now seems uncertain at best.

Tallying up the figures, that means Idaho taxpayers could face broadband costs of slightly more than $23 million, for a three-year period stretching from July 1, 2013 to June 30, 2016.

Is that the extent of it? Not necessarily.

If the feds decide the Idaho Education Network contract is void, the state could be prohibited from seeking e-rate dollars in the future, said Merlyn Clark, an attorney representing the Administration Department, in a Senate Education Committee hearing in March.

Luna downplays this possibility. The feds only blackball e-rate recipients in cases involving fraud and deceit, “and nobody’s even claiming that,” he said Tuesday.

The state could also be forced to return more than $13 million in past e-rate payments to the feds. Teresa Luna — the director of the Administration Department and Tom Luna’ sister — raised this possibility during a Senate Education Committee hearing in February.

In an interview with Betsy Russell of the Spokane Spokesman-Review, Senate Finance Committee Chairman Dean Cameron offers another read on the situation. He says the winning contractors, CenturyLink and Education Networks of America, may be forced to pay money back, since their contracts are void.

Ultimately, who provides the broadband service? With the Idaho Education Network contract now declared null and void, does the state reopen the bidding process, and set aside its contract with CenturyLink and ENA?

CenturyLink had no immediate comment Tuesday. Garry Lough, ENA’s Idaho director of customer service, declined comment on the ruling, but said the contractor “will focus on continuing to provide stellar service as we allow time for the process to run its course.”

Does the state appeal? Owen’s ruling can be appealed to the state Supreme Court. In a statement Tuesday, the Administration Department says it is reviewing the ruling. “A decision about how to proceed will be forthcoming.”

Bottom line, what does this mean for broadband in the schools? Certainly, this puts continued funding for the high school broadband network in limbo. But even critics of the Idaho Education Network contract have taken pains to say that their problems are with the contract, and not with the idea of installing broadband in the schools.

But the ongoing contract mess comes at a time when education leaders are looking to expand technology in all schools — and allow the entire K-12 system to collaborate and share curriculum, as high schools do through the Idaho Education Network.

Gov. Butch Otter’s education reform task force recommends a service expansion that would  “ensure every school (high school, middle school, and elementary school) has the bandwidth and wireless infrastructure necessary to create equal access and opportunity for all students.”

That recommendation was made in August 2013 — five months after the feds had cut off Idaho Education Network payments, in a move that would not become public knowledge for several more months.

With the current Idaho Education Network in legal limbo, Tom Luna doesn’t expect to see a major expansion of school broadband systems any time soon. “I suspect the prudent thing to do is just wait for this case to be resolved.”

More reading: Here’s what the state had to say about Owen’s ruling. And here’s more on the ruling from Cynthia Sewell of the Idaho Statesman and Russell.