Feds tardy on millions to IEN amid lawsuit

BOISE, Idaho — The federal government hasn’t paid millions to an Idaho public education broadband network and may be withholding the cash because of an unresolved lawsuit, a state official said Thursday.

Department of Administration Director Teresa Luna said Idaho has paid its share, but the Federal Communications Commission hasn’t provided millions it pledged to private telecommunication companies running the Idaho Education Network since March.

In a budget committee hearing, Luna speculated the FCC isn’t paying because of an ongoing state-court lawsuit filed by a phone company, Syringa Networks, shut out of the contract to help run the network. The federal agency might be waiting to see how the Idaho case is resolved, rather than pay the money up front to a company awarded a contract in error.

“That’s what we think,” Luna said. “The next step forward would be to file a complaint or something with the FCC.”

The 2009 lawsuit targets Idaho and former Department of Administration Director Mike Gwartney, accusing him of inappropriately awarding the multi-year $60 million IEN contract to the company that became CenturyLink. Gwartney has said he’s done nothing wrong.

So far, Luna hasn’t gotten definitive confirmation for why the money is outstanding.

“I think it’s time for a sit-down, even if you have to go sit on their desk,” offered Sen. Dean Mortimer, R-Idaho Falls and a member of the Joint Finance-Appropriations Committee member, after learning of the problem.

FCC officials in Washington, D.C., didn’t immediately return a phone call Thursday.

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.

Now, the Legislature’s budget committee must figure out how to make up a total of about $14.4 million for the current fiscal year as well as fiscal year 2015 starting in July, in hopes the FCC eventually makes the payments.

“We’ve got to figure out a bridge,” said Rep. Jeff Thompson, R-Idaho Falls.

On Thursday, Gov. C.L. “Butch” 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.

Still, Sen. Dean Cameron, R-Rupert and the Senate co-chair of the panel, said this late-breaking development — he learned from Luna’s office last Friday that CenturyLink was still out its federal cash — 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 Idaho’s high schools to the state’s middle and elementary schools.

“It puts a lot of things in jeopardy,” Cameron said, adding he’s not yet satisfied with answers from Luna’s agency explaining why the federal government’s share — and its nonpayment — went for so long beneath lawmakers’ radar.

Four years ago, Syringa Networks sued the Department of Administration and Gwartney, an ally of Otter, on grounds the phone company was improperly denied in the bidding to lay out the broadband infrastructure for a public education project.

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 retired from Administration in 2010.

The case’s last hearing was earlier this month in Idaho’s 4th District Court in Boise, according to the Idaho court system’s litigation database.

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