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Thursday, September 8, 2011

Gaming the FCC E-Rate/USF program

In my days working for a school district, I got to see some crazy things. Not all of them were bizarre misconfigurations or basic failures to monitor environmental conditions. Some of them involved gaming government programs.

Think back to the late '90s. If you paid a phone bill anywhere in the US, chances are you had some kind of "Universal Service fee" tacked on for a couple of cents each month. You might have heard that it was used to pay for technology for schools and kids. This is a tale about the other side of that -- where the money went, and what they did with it.

The way it worked was that the percentage of kids on the federal free or reduced price lunch also set the percentage the FCC E-Rate stuff would cover. That is, if you had 90% of your kids on the free/reduced price lunch, then the program would cover 90% of the cost of qualifying equipment. A $1000 server would now only cost the district $100, with the feds picking up the rest.

There was a "catch", though: it was per-school. One elementary school in the district was at the 90% level. Every other school was at some lower level. The people who made the purchasing decisions knew this and made the most of it. They started the "Stratton Meadows shuffle" (my term for it).

It worked like this: they would buy something like a server and would "install" it at Stratton Meadows (the 90% school) for a year. Then they'd move it to some other location and repeat the process. Every year, that school received a brand new set of machines for some number of years. I'm not sure exactly how long this went on.

I say "install" because it's not clear any of them were unboxed. I think a lot of stuff was just warehoused at that location for a time, but I can't prove it. I worked (very) remotely in those days, so there was never a chance to go out to those sites to see for myself.

So you might wonder how they could justify buying so much junk for one school at a time. Apparently, you could figure out whether things were covered or not based on what kind of roles they would fill. As a result, they'd have a single machine doing nothing but DHCP serving, another one doing nothing but "DNS caching" (supposedly), and two more that weren't explained to me.

That's four machines running either NT or Windows 2000 to do tasks that could reasonably fit on a single system (and did prior to this scheme starting up). This was a relatively small school - maybe a few dozen faculty and staff, and a couple hundred kids at most. It all fit into a single /24 -- fewer than 255 computers on the network.

I also heard that the universal service fund administrators noticed some of this happening and asked about it. The official answer seems to have been "show us where it says we can't do this". How bold is that?

I heard about this towards the end of my final contract there, so I never found out how it wrapped up. Maybe they closed the loophole, or maybe they're still blowing tons of money on equipment that nobody needs. It's hard to say for sure.