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$50m evaporates

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Chicago schools looking to capitalize on a federally-funded program for bridging the digital divide have suffered through a string of bureaucratic blunders, politically tainted contracts and overall incompetence, according to the Chicago Tribune. These failures have led to the loss of at least $50m in funds and left hundreds of schools without adequate internet access.

Chicago's main paper dug through thousands of documents concerning the E-rate program, which was launched under the Clinton administration. The program added a tax to consumers' phone bills and then earmarked the funds for technology needs at schools and libraries. Chicago has received a stunning total of $389m from E-rate but may have to give up $50m of that total as a result of failing to meet federal deadlines to spend the cash.

"Chicago school officials say that the program has been a success locally, and that 85 percent of schools have 'every classroom, lab and library fully connected to the Internet,'" writes the Tribune. "But the district's records for 544 schools show that only 274, just over half, have Internet access in every one of those rooms."

More troubling is the amount of deals that seem to be politically motivated.

The Barrett Group, for example, was hired on a consulting basis to aid the city in receiving E-rate extensions. The company's MD Andrew Barrett once served as commissioner for the Illinois Commerce Commission and the FCC. The firm received $240,000 for its work, facing no competition for the contract. Barrett, however, told the paper that he was doing the city a favor by charging $300 an hour instead of his typical $400 per hour. What a guy.

A second no-bid deal went the way of JDL Technologies for research into wireless networks. JDL was picked after School Board President Michael Scott followed the advice of his friend Dwain Kyles - owner of the tragic E2 nightclub. JDL then went on to hire subcontractor Phoenix Co., which is headed up by Donna Gaines - a chum of Kyles, the Tribune discovered.

In addition to the friendly no-bid contracts, Chicago's E-rate program has been struck by incompetence.

One contractor LS International charged area schools $1.3m for work that was "was never legally authorized" and "was never completed," according to docs unearthed by the paper. The company later returned the money to the US government and has been banned from district work for three years. A second contractor Solai & Cameron received a double payment for work due to a paperwork error. After the mistake was discovered, the firm was given more work to make up for the extra cash. Not bad.

Chicago also has $8m in computer equipment sitting unused in a warehouse, according to federal investigators.

In total, Chicago ranks last among the five cities that received the most federal funds with regard to the amount of money it has spent thus far. Chicago's failures could see it be forced to rebid for $50m in funds that will go back into a federal pool.

More crucially, many of the city's poorest schools remains without Internet access - the very problem E-rate was meant to solve. Federal investigators have been looking into problems nationwide, hoping to stem corruption and incompetence in numerous cities.

The entire report, registration required, is available here. It took up most of the Chicago Tribune front page this morning. ®

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