Feds block IEN funding because of lawsuit

BOISE, Idaho (AP) The federal government said Thursday that it's blocked millions in funding to Idaho's public education broadband system since last year because a lawsuit over the project's $60 million contract has thrown the question of who should get the cash into doubt.

The Federal Communications Commission withheld more than $7 million for the Idaho Education Network, a high-speed broadband network that connects Idaho high schools.

Idaho legislative budget writers learned Thursday that telecom giant CenturyLink and Education Networks of America haven't been paid by the federal government since last March.

That's when the Idaho Supreme Court resurrected a lawsuit in which Idaho-based telecom provider Syringa Networks accused the Department of Administration and its then-director Mike Gwartney, of inappropriately awarding the contract to its rivals. Last March, justices concluded that Gwartney inappropriately tinkered with bidding to help CenturyLink win a big share of the IEN deal.

As long as the litigation is ongoing the most recent hearing in Idaho's 4th District Court in Boise was Jan. 14 the FCC says it doesn't want to pay any more money until doubts about the contract's legality have been resolved.

The FCC "is currently reviewing the funding in question in light of the Syringa Idaho Supreme Court case which alleges problems with the procurement process for the Idaho State Education Network," said spokesman Mark Wigfield, in an email, adding the federal agency "is in regular contact with the relevant state officials, and is holding funding while it determines whether... program rules were violated."

Department of Administration Director Teresa Luna acknowledged Idaho has paid its share, but the FCC hasn't. "The next step forward would be to file a complaint or something with the FCC," she said.

The Idaho Education Network is a high-speed broadband network that connects Idaho high schools, allowing for videoconferencing and distance-learning opportunities, in particular in rural areas without access to advanced or college-level courses.

Four years ago, Syringa Networks sued the Department of Administration and Gwartney, an ally of Gov. C. L. "Butch" Otter, on grounds the phone company was improperly denied in the bidding to lay out the project's broadband infrastructure linking it to schools.

Syringa initially lost in state court, but the Idaho Supreme Court resurrected the case last March the same time the FCC payments stopped on grounds Gwartney tinkered with bidding to help the state's biggest phone company win a big share of the IEN deal.

According to the state high court, "Gwartney appears to have been the architect of the state's effort to bend the contracting rules" to CenturyLink's advantage, Justice Jim Jones wrote. "All contracts made in violation of these statutes are void and any money advanced by the state... must be repaid."

Gwartney, who retired from Administration in 2010, has insisted he's done nothing wrong.

With the FCC funding in limbo, the Legislature's budget committee must figure out how to make up a total of about $14.4 million $7 million for money outstanding since March, as well as a similar amount for fiscal year 2015 starting in July in hopes the lawsuit is resolved and the FCC eventually makes the payments.

On Thursday, Otter's budget director Jani Revier asked the budget panel to pay CenturyLink and other contractors on the IEN project out of funds tentatively directed toward a public education rainy day account.

Lawmakers say they're upset it took until now for Luna to tell them of the outstanding FCC payments and about the reason the federal agency wasn't paying up. They said Luna should have been more vigilant.

"Who's paying attention to who is getting paid when?" said Sen. Dan Schmidt, D-Moscow.

Members of both parties are frustrated.

"I'm not satisfied with the answers we've gotten," said Sen. Dean Cameron, R-Rupert and the Senate co-chair of Joint Finance-Appropriations budget writing panel.

Cameron fears this funding glitch, at least in the near term, could have broader effects. For instance, there's a pending proposal in the Legislature to spend another $3.5 million to expand the broadband network from high schools to middle and elementary schools.

But with FCC funding uncertain, that might be put on hold.

"It puts a lot of things in jeopardy," Cameron said. "That's a significant chunk of change."