U.S.’ $7.2-billion broadband stimulus program risks waste and fraud, GAO says

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A.J. Bowen of Schupp’s Line Construction works on fiber-optic installation in Norton, Vt. Credit: Toby Talbot / Associated Press.

Federal programs to bring broadband Internet service to areas without it lack basic information and adequate safeguards to ensure that the money isn’t wasted, a new government report said.

The Commerce and Agriculture departments were given $7.2 billion to expand U.S. broadband availability as part of last February’s federal stimulus package.

But they have been scrambling to review a crush of grant and loan applications while facing tight deadlines to distribute the money, the Government Accountability Office said in a report released Monday.

The first allocation of funds, originally set for Nov. 7, has been delayed until December.

The agencies have had just two months to review 2,200 applications for the first round of funding alone, the report said.

By comparison, the California Public Utilities Commission took four to six months to review just 54 applications in a $100-million broadband program.

Under Congress’ mandate, all $7.2 billion must be distributed by Sept. 30, 2010.

The programs “present risks of waste, fraud and abuse,” the GAO said, due to the compressed timetable for distributing the money and because of inadequate data on what areas actually lack broadband service.

Officials “will be awarding loans and grants before the national broadband plan or broadband mapping is complete,” the report said.

Program funds are intended to be spent on expanding broadband network wiring, developing public computer centers in places such as libraries or schools, and “innovative projects to stimulate demand for, and adoption of, broadband.”

To prevent waste and fraud, the GAO urged the two entities responsible for distributing the money – the Department of Commerce’s National Telecommunications and Information Administration and the Department of Agriculture’s Rural Utilities Service – to develop a way to review and measure the effectiveness of fund recipients beyond the year 2010.

The full report can be viewed here.

-- Scott J. Wilson