Caveat Emptor

The New York Times has a prominent story today about an NEC subsidiary (among other companies) paying a $21 mil settlement after defrauding schools out of funds disbursed through E-Rate, a federal program designed to help schools get on that wonderful Information Superhighway we've been hearing so much about. (Regular H&R readers will scarcely be surprised.) Some companies are charged with unambiguously criminal behavior—bribing officials to circumvent competitive bidding, for example. But the bill of particulars against the NEC subsidiary includes this:

According to the complaint, several computer companies, including the NEC subsidiary, persuaded the district to purchase more equipment than it needed, charging rates that yielded twice their normal profit margins…. They sold the district stuff it didn't need, didn't want or didn't know what to do with.

In context, NEC's behavior looks pretty sleazy. But it sure seems like the real story here is: Feds throw millions of dollars at school administrators who haven't got the first clue what kind of setup they need or how much they ought to be paying for it, and waste a lot of other people's money on overpriced systems several orders of magnitude more powerful than they needed anyway.