The recent resignation of USAC CEO Chris Henderson drew a swift and searing response from FCC Commissioner Michael O’Rielly, and we doubt that the Commissioner would have been so openly negative without the blessing of his Chairman, Ajit Pai. The industry should look for a major overhaul of USAC, sooner rather than later.
In his official statement, O’Rielly called the resignation of Henderson an opportunity for USAC “to clean up its act.” He criticized its management as “not sufficiently accountable to the Commission,” and blasted it for “not meeting the needs of its…stakeholders or the public, who pay fees to support” its operations.
O’Reilly continued by saying that without major improvements, “all options should be on the table,” including the possibility of contracting out USAC’s functions, which he pointed out has been “done in other circumstances.” ICORE agrees that USAC has had serious problems, particularly with implementation of its online E-Rate Productivity Center.
Putting USAC’s services out for bid to private entities should be done very carefully, however, to avoid conflicts of interest. A cost study auditor contracted by USAC, for instance, also performs cost studies in competition with ICORE and other consultants. USAC’s auditor is privy to very sensitive individual company information, including what every audited company pays its consultant for its study.
USAC’s contractor cries in righteous indignation that such information would never be shared between its audit group and its competitive cost study group. It claims Its code of ethics prevents the right hand from ever knowing what the left hand is doing.
ICORE and other cost consultants, however, have mysteriously lost – perhaps by some slight of hand — many cost studies to the competitive wing of USAC’s contract auditor. Contracting USF administration to a competitive entity could lead to similar abuses.