The critics have an obvious self-interest, of course: They didn't get the contract. But they also appear to have a point.

In February, Science Applications International Corp. (SAIC) landed a $28 million IT-administration contract from the Universal Service Administrative Company (USAC), a non-profit organization that runs e-Rate, a controversial $2.25-billion a year program that subsidizes school and library networks. The e-Rate program is funded by consumers of telecommunications services through fees paid by carriers to the perpetually debated Universal Service Fund: In other words, we all pay for this, which is why it matters.

According to a terrific story on the brouhaha in eSchoolNews, those complaining about the contract are miffed that SAIC was awarded the internal USAC administration contract despite also being a provider of outside e-Rate services, most prominently a $51 million pact with the Los Angeles school system. Access to the entire story requires free registration, so I've pulled a few of the choicer passages here. From the article:

Critics note that, as the information systems administrator for the program, SAIC will have unfettered access to electronic information about all E-rate applicants and other service providers -- inside information that could help the company land even more E-rate business with schools. SAIC will not be able to see the bids submitted for E-rate services during the application filing window, because service providers send their bids directly to applicants. However, as the systems administrator for E-rate, the company will have access to electronically stored information on the winning bids once applicants file their Item 21 attachments, which explain the services to be provided and the cost of those services in great detail. In theory, the company could use this information to submit a lower bid for the same services the next time an applicant requests these services through the E-rate program.

SAIC declined a number of requests to comment on these criticisms, accord to eSchoolNews.

As for USAC, the organization responsible for creating this arrangement, its spokesman says there's no fire beneath all the smoke.

Eric Iverson, director of external relations for USAC, said the corporation anticipated such concerns when it awarded the contract to SAIC in February but was confident that SAIC has taken appropriate steps to deflect them. "We've looked very carefully at the possible conflicts of interest and have put in place some specific measures" to prevent abuse, Iverson said. He noted that all SAIC employees who are working on the systems administration project have signed non-disclosure forms that legally prevent them from discussing any of the information related to their work. This would prevent them from sharing information with their SAIC colleagues who submit bids for E-rate projects, Iverson said.

Not only are the doubters not satisfied by such assurances, they see a double standard in how USAC runs its own shop and what it expects from e-Rate service providers.

Critics of SAIC's dual role as both systems administrator and E-rate service provider say it's especially troubling in light of the intense scrutiny that E-rate applicants and service providers now must undergo as part of the Program Integrity Assurance (PIA) review process. Responding to concerns about instances of E-rate waste, fraud, and abuse, USAC and its Schools and Libraries Division have implemented a number of measures in the last few years to protect the integrity of the program. But some applicants and service providers say the corporation has, at times, carried these efforts to the extreme.

Here's the only circumstance under which I could see USAC's awarding of the job to SAIC passing the smell test: Is it possible -- I'm asking here -- that a decision on USAC's part to bar any and all e-Rate service providers, or would-be e-Rate service providers, from bidding on USAC's internal work leave USAC with a pool of applicants so shallow as to be detrimental to its own IT operations?

Perhaps someone with knowledge of those waters can offer insight here.

Absent such cover, however, USAC appears to be left with little to counter this type of complaint:

"There's a lot of talk about the 'appearance' of impropriety [as a reason for denying E-rate funding]," an anonymous source concluded. "If this doesn't give the appearance of impropriety, I don't know what does."

SAIC's a huge $9-billion company. Tell them they can have the USAC network contract or be an e-Rate service provider. Not both.