11.19.13

Sessions Asks Obamaphone Fund Managers For Info On Program Costs, Expenses

WASHINGTON—U.S. Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee, today released a letter that he sent to the acting chief executive officer of the Universal Service Administrative Company (USAC), which is the organization responsible for managing the Universal Service Fund used to pay for programs such as Obamaphones. An identical letter was also sent to the chairman of USAC’s board, Dr. Brian Talbott.

The full text of Sessions’ letter is below, and a PDF version may be found here:

"Dear Mr. Barash:

The Universal Service Administrative Company (USAC) entered into a Memorandum of Understanding (MOU) with the Federal Communications Commission (FCC) to “facilitate the efficient management and oversight of the Commission’s federal universal service program, also known as the Universal Service Fund (“USF”).” USAC is responsible for the daily administration of USF and is subject to the oversight of the FCC. According to the MOU, “[USAC] will track and retain, and will provide the [FCC] upon request, completely auditable expenditures that the [USAC], its contractors, and its vendors incurred in connection with (i) review, investigation, or any other work associated with USF fraud or alleged fraud against the USF….” USAC is required to carry out its duties “in a manner that ensures the integrity of the USF, and that instills the highest public trust and confidence in the program.” Despite how the funds collected by USAC for the administration of USF might be classified, whether they are a tax or a fee, they come from the taxpayers and, thus, should be used in an appropriate way.

I recently inquired with the FCC about problems associated with the Lifeline program and have additional questions and concerns about how the USF is administered and how USAC works to minimize fraud and improper payments. Therefore, please provide answers and information for the following inquiries:

1. Please provide the three most recent finance reports required by the MOU.

2. Please provide the three most recent programmatic reports required by the MOU.

3. Please provide the three most recent “administrative expenses and Budget activities” data required by the MOU.

4. Please provide the three most recent performance reports as they relate to “customer service standard” according to the MOU.

5. Please provide all “potential loss of service” matters reported to the FCC according to the MOU over the last three years.

6. To the extent that material is not provided in the above requests, please provide the following:

a. a list of all institutions holding USF funds;

b. the balance as of November 14, 2013, for each institution holding all or some of USF revenue. In addition, please provide a statement as of the same date; and

c. all investments made with USF contributions.

7. Please provide the monetary contribution from each telecommunication provider for the last four quarters.

8. According to the USAC by-laws, the board of directors is prohibited from receiving compensation for their service. Please provide a list of all compensation for officers and executives within USAC. Is compensation provided out of USF, FCC, or other resources?

9. Please provide detailed oversight policies and initiatives to ensure USF is administered properly.

10. Please provide the monthly outlays for USF over the past three years. In doing this, please itemize the totals spent on each program funded by the USF.

11. Please provide the total monthly revenue collected for USF over the past three years.

Since contributions to the fund are compulsory to telecommunications providers—and typically amount to fees being pushed on to consumers—it is important that the fund be administered wisely. Right now, serious questions exist about USAC’s performance. I hope they are alleviated through your response.

Please have your staff provide the requested information both in hard copy and electronic formats by December 16, 2013.

Very truly yours,

Jeff Sessions
Ranking Member”