NEWS

State of Iowa pays Kentucky firm $730,000 in no-bid broadband contract

But is it a good deal for taxpayers?

Iowa signed a no-bid contract with a Kentucky firm to help with Gov. Terry Branstad’s efforts to expand broadband Internet access across the state.

Connected Nation, a Bowling Green, Ky., not-for-profit, has done broadband mapping and community engagement for Iowa since 2009. But when federal funding ran out in January, Iowa stepped in with a quickie contract to extend the services for eight months with state money.

“People expect those services to continue,” said Bob von Wolffradt, Iowa’s chief information officer. “We would like to have some light shone on those things rather than have them abruptly ended.”

Nearly three-quarters of Iowa households had access to high-speed fixed broadband in October, up from 55 percent in 2013, according to Connected Nation. The not-for-profit, acting as Connect Iowa, has received millions of dollars in economic stimulus money since 2010 to help with this growth.

Telecom-friendly

Connected Nation started in 2001 as the Center for Information Technology Enterprise at Western Kentucky University. The program evolved into ConnectKentucky, a public-private partnership to conduct mapping and planning to spur broadband expansion in that state.

Telecommunications companies were big supporters from the beginning.

“Our companies were trying to voice support for broadband,” said Tom Tauke, a Dubuque native and Republican who represented Iowa in the U.S. House from 1979 to 1991. Tauke was a Verizon executive when he served on the Connected Nation board for several years in the early 2000s.

“I thought getting maps created was a really important role that, at that time, no one else was doing,” Tauke said.

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"People expect those services to continue. We would like to have some light shone on those things rather than have them abruptly ended."

- Bob von Wolffradt

Iowa chief information officer

Connected Nation works with telecom companies and other entities to gather geographic information system (GIS) data about broadband availability and speed to create maps that help agencies decide where to invest in expansion.

The Federal Communications Commission recently started requiring companies to report this data to the government, von Wolffradt said. Before that, groups such as Connected Nation relied on close ties with the industry.

Not everyone agreed with this approach.

“A national broadband data-collection and mapping exercise should be conducted by a government agency, on behalf of the public, with as granular a degree of information as possible and be totally transparent so that underlying information can be evaluated,” according to a 2009 report from openness advocates including Public Knowledge and the Media and Democracy Coalition.

Economic stimulus

Connected Nation hit it big in 2009 when it was chosen to provide broadband mapping to 12 states, including Iowa, under the American Recovery and Reinvestment Act, a federal economic stimulus package.

Since 2010, Connect Iowa has been awarded $5.77 million in federal grants for Iowa’s Broadband Initiative, according to broadbandnow.com.

Connected Nation had $13.7 million in revenue in 2013 and $12.7 million in expenses, according to the most recent Form 990 tax form available. President and Chief Operating Officer Thomas Ferree received $245,300 in compensation in 2013. Seven other employees or officers were paid more than $150,000.

No-bid contract extension

The Request for Proposals that led to the 2009 deal with Connected Nation states the contract would last for five years with no extensions. But when the federal money ran out in January, the Iowa Economic Development Authority did not put it out for competitive bidding, a process used to get the lowest price for state expenditures.

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“If DAS (Department of Administrative Services) was making this contract, we would have bid it out again,” said Caleb Hunter, spokesman for the agency that oversees most state contracts. But Economic Development “has its own procurement authority that allows them to make decisions for the programs they administer.”

Economic Development Spokeswoman Tina Hoffman said the agency wanted to extend the broadband efforts through the 2015 legislative session to see if more funding emerged. “It was a stopgap measure,” she said. “To have someone new come in would not have been a benefit.”

The source of the $730,500 is the IowAccess Revolving Fund, which comes from fees charged to companies to view driver’s license records. Economic Development requested the money for Connected Nation, and von Wolffradt approved it.

“Given the history of Connect Iowa, the services, mapping efforts, connected community engagement program, data mapping and the fact that the federal government funded the programs across the U.S., I believed it was prudent to fund a six-month extension,” von Wolffradt said.

State officials projected in January a deficit for the IowAccess fund, but von Wolffradt said they will delay new projects to stay within budget.

What Iowa gets for the money

Duties outlined in the Connect Iowa contract include maintaining the Connected Community Engagement leadership program for 37 communities and recruiting eight more by June 30. One of those eight is Delaware County, which has started to assess broadband needs, said David Daack, Connect Iowa community technology adviser.

“The broadband needs for the business community are critical,” said Donna Boss, Delaware County economic director, “in some cases, more important than sewer, water or other infrastructure.”

Connect Iowa has been helpful to “start the ball rolling,” Boss added.

"The broadband needs for the business community are critical, in some cases, more important than sewer, water or other infrastructure."

- Donna Boss

Delaware County economic director

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Connect Iowa’s other duties, according to the contract, include providing “executive leadership, policy and staffing support” for the state’s STEM Broadband Committee, forming connections between public technology needs and private sector businesses and serving as the clearinghouse for broadband technology initiatives.

State Rep. Guy VanderLinden, R-Oskaloosa, has had concerns since 2014 about how public money would be used for broadband initiatives. He was one of only a handful of Republicans who voted against the legislation last year.

“The expectations for Connect Iowa have been really vague,” he said. “I remember noticing when we were doing the broadband debate (this year) that money had been spent, and I wasn’t very clear on how it had been spent.”

Future support for broadband

The Iowa House passed a bill in April creating a state grants program to expand high-speed Internet, but the legislation provides no money for the grants. The Iowa Senate hasn’t taken up the bill and with the 2015 session expected to end soon, the broadband initiative could be left in the dust again.

The federal government is planning other ways to increase Internet access. The FCC issued a proposal last week to include Internet in the $1.7 billion Lifeline program to subsidize phone service to low-income residents.

Other programs provide incentives to service providers that expand into rural areas.

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