DISD official pushed deal for pal
Exclusive: Tech chief, now suspended, sped along deal for firm whose yacht he used
By PETE SLOVER, The Dallas Morning News, October 29, 2005

Suspended Dallas schools technology chief Ruben Bohuchot pushed for and helped secure a speedy $2 million deal this year for the technology firm that gave him the frequent free use of a yacht, records show.

Interviews and records obtained by The Dallas Morning News show that barely five weeks elapsed between Mr. Bohuchot's e-mail first pitching his boss on the computer lease deal with Micro System Enterprises and final approval by the Dallas school board.

The award was approved over objections from district purchasing officials, who complained that the breakneck bidding process  whipped along by Mr. Bohuchot  gave the company an unfair edge.

Micro System, of Houston, was so confident of getting the business that it delivered most of the equipment to DISD well before trustees voted to approve the deal April 28. Some was brought in even before the district asked for bids.

On advice from district lawyers, Dallas Independent School District trustees rescinded the vote Aug. 25 without any discussion, and the equipment was removed in September.

A Micro System spokesman defended the integrity of the deal, which he said left the company with nearly $1 million in used equipment the district agreed to lease but never paid for.

"We don't feel like there was any favoritism or that we were looking for any favoritism at all," spokesman Scott Blankenship said.

Mr. Bohuchot's lawyer said that his client did not exert any improper influence and that his client agreed with Micro System's account of the transaction.

Mr. Blankenship said the district originally began to buy the equipment  and took partial delivery for a test drive  under a previous contract, which Micro System had won through competitive bidding in 2000. It was only after the district opted for a lease  not allowed by that previous contract  that the bidding process was started, he said.

During the bidding, documents show, Mr. Bohuchot worked to keep close track of Micro System's competitors and pushed to chop from a week to two days the time other vendors had to prepare bids.

His actions prompted competing vendors and DISD purchasing officials to complain.

"George, this deal is typically more of the same: MSE and whoever else Ruben has been working with is all in the know and has a quote prepared, etc.," DISD procurement director Gregory Milton wrote in a March 24 e-mail to his boss, Associate Superintendent George Sparks.

Mr. Milton, who declined to comment for this story, complained that Mr. Bohuchot was "prejudicing the playing field and not adhering to the spirit of the law for 'open and fair' competition."

Mr. Sparks referred questions to his lawyer, who did not return calls.

When the district opted to lease the hardware instead of buying it under a previous contract, Mr. Blankenship said, Micro System assumed that it would sell the equipment to whatever company the district found to handle the lease.

"We didn't care who they chose, because they were just going to finance it," he said. "The hardware was going to come from us."

He said Micro System was surprised when DISD purchasing staffers instead requested bids on both leasing services and hardware.

"We were definitely under the impression that they just needed financing," Mr. Blankenship said. "There was a breakdown in communications."

An early edge

Records and interviews show that the early negotiations with Mr. Bohuchot gave Micro System an edge over competitors,

When the time came for the complex bid to be drafted, Micro System already had price quotes from wholesale suppliers.

And, because of the way manufacturers do business, those advance prices were better than those available to other resellers that subsequently requested prices.

Records show that the winning bid, submitted by HP Financial Services and Micro System, was about 3 percent lower than the nearest rival.

However, a number of potential competitors complained that the hurry-up bidding process insisted on by Mr. Bohuchot forced them out.

Of nine eligible vendors contacted by the district, three submitted bids. And, of those three bids, two  including the winner  were from companies proposing to lease gear purchased from Micro System.

Mr. Bohuchot and Mr. Sparks were both suspended with pay after The News reported in July that Micro System had for years given Mr. Bohuchot the regular, free use of two boats.

Most recently, he traveled on a $789,000, 59-foot sport-fishing boat that he helped pick out and name.

Mr. Bohuchot has not commented publicly since then. The district has never said why it suspended Mr. Sparks.

After news of the boat came out, the DISD legal department reviewed the server lease agreement approved in April and recommended in late August that the deal be scrapped.

Lawyers cited "the best interest of the district ... based on severe time constraints which did not allow for optimal evaluation award."

The board agreed, and Micro System has since retrieved its equipment.

The computer gear was intended to improve the district's finance and payroll systems and to beef up the ability to recover from a computer disaster. The district is preparing to rebid the deal, a spokesman said.

The FBI, also prompted by the boat revelations, is investigating possible corruption in the awarding of a technology contract  negotiated by Mr. Bohuchot  worth up to $125 million in federal technology funding to a consortium of companies led by Micro System.

Federal authorities also froze payments from the federal E-rate program to vendors under that deal, a ban that was lifted recently, a district spokesman said.

Though the April 28 contract did not involve E-rate money, it could be legally significant in the FBI investigation: Two key elements of a federal corruption case are a thing of value  a gift  given to a public official and a return favor by the public official.

The FBI has been documenting Mr. Bohuchot's use of boats owned by Micro System.

To see whether Mr. Bohuchot did Micro System any favors in return, agents have gathered volumes of records from DISD, including the April contract and related documents. The News obtained the documents under state open-records laws.

The field narrows

Mr. Bohuchot specified that the equipment in the April deal should come from two manufacturers, HP and Xiotech Corp.

That effectively shortened the list of potential bidders to vendors authorized to sell both those brands. That included Micro System.

Mr. Blankenship, of Micro System, said the deal had been under discussion since late last fall. Xiotech executives confirmed that Micro System first notified them of the potential deal  an "opportunity," in business techspeak  on Jan. 20, 2005.

By being the first vendor to notify Xiotech of the potential business, Micro System was given special discount pricing for that deal, not available to vendors who might later join the DISD bidding, a company executive said.

According to records released by the district, the first internal DISD communication about the lease was on March 20, when Mr. Bohuchot e-mailed a Micro System proposal to his boss, the since-resigned deputy superintendent for business, Karen Wilson. He described the district's need for the new equipment.

While he characterized the acquisition as a purchase, he said he would work with senior DISD technology buyer Rose Kohut to get the ball rolling on lease financing.

On March 22, Mr. Bohuchot e-mailed a spreadsheet with a detailed price quote from Micro System  roughly 20 pages of fine print  to Ms. Kohut and other DISD officials, again stating that Ms. Kohut would move ahead with the purchasing process.

Ms. Kohut declined to comment.

Within a day, records show, Ms. Kohut contacted potential suppliers by e-mail, asking how long it would take for them to prepare a bid for what the district wanted  both hardware and software. They responded that it would take a minimum of five to 10 days.

The next day, she complained to her boss, Mr. Milton, that Mr. Bohuchot was insisting on reviewing which firms were solicited for bids, a request she deflected. That prompted the e-mail from Mr. Milton to Mr. Sparks, in which he accused Mr. Bohuchot of keeping the purchasing department in the dark and giving Micro System a leg up on other companies.

"As per usual, my concern is that Ruben's shop doesn't make us aware of these solicitations," which, Mr. Milton wrote, limited competition from other vendors. "They don't really get a fair shot because the vendor who has the inside track gets ample time to plan, assist with design, and prepare for the business."

"Please work with Ruben to get him to let us in on the deals they're working on in the preliminary stages," he pleaded with Mr. Sparks.

Fast turnaround

Meanwhile, Ms. Kohut prepared bid specifications by cutting and pasting the district's shopping list  minus prices  from the Micro System sales proposal.

On April 5, Micro System president Frankie Wong involved himself more directly in wording the bid request, according to documents.

In phone and e-mail exchanges with Ms. Kohut, he worked out and approved a statement  later inserted into the district's solicitation  offering the chance for other vendors to team up on a bid with Micro System.

According to documents, Ms. Kohut told Mr. Sparks she was not comfortable with the special clause inserted in the bid solicitation.

The language was not removed.

The next day, Mr. Sparks and Mr. Bohuchot visited Ms. Kohut. According to her notes, the two men "declined" the seven-day period she proposed for bids to be prepared and returned. Instead, she wrote, they insisted that the process be completed in less than 48 hours so a deal could be approved at that month's board meeting.

Later that afternoon, on April 6, the bid proposal was sent to potential vendors. Some of those bidders dropped out, they said, because they were not licensed by Xiotech or HP to sell their products. Others quit, complaining that they were unable to get timely price quotes from HP, Xiotech or both.

Xiotech officials said they did not deny pricing to anybody who was qualified to sell their gear  and Micro System was the only company that both qualified and asked for prices.

The HP representative on the deal did not return calls, but in e-mail to the district, he similarly explained that the only requests for pricing he got were from companies not authorized to sell his hardware.

He did not mention that he would be submitting his own bid, in partnership with Micro System.

On April 11, three bids were opened.

One losing Dallas firm offered to lease equipment purchased from Micro Systems.

Another bid was submitted by a company proposing to provide the hardware themselves. The sales representative for that company confirmed in an interview that he was never able to get prices on the Xiotech gear: He convinced Micro System to surrender its price list, suggesting he might provide leasing services, then plugged those numbers into a solo bid.

The winning bid came from HP Financial Services and Micro System, with HP offering to lease the district the items purchased from Micro System for $2.09 million. It beat the nearest competitor by $53,000.

E-mail pslover@dallasnews.com

DallasNews.com/extra
07/29: DISD suspends tech chief

Inquiry will look into official's use of vendor's boat
By PETE SLOVER and JESSICA LEEDER, The Dallas Morning News, July 29, 2005

The Dallas schools technology boss who regularly took free trips on a major computer vendor's $789,000 sport-fishing boat was placed on administrative leave Wednesday so authorities can look into the details of his activities.

Ruben Bohuchot, a Dallas Independent School District associate superintendent, was suspended as of 5 p.m., which is "customary for investigations that we believe will take more than a few days to complete," district spokesman Donald Claxton said in an e-mail.

Mr. Bohuchot did not return a request for comment left on an answering machine at his home.

The Dallas Morning News reported Sunday that Mr. Bohuchot took years' worth of expense-paid sea voyages on a 59-foot vessel owned by Micro System Enterprises, a company that has secured federally funded E-rate contracts with the school district since 2003 that potentially are worth hundreds of millions of dollars.

Mr. Bohuchot told The News in an interview last week that the boat trips and his use of another vessel did not influence the contract process even though he wrote the specifications for jobs and negotiated the final terms after contracts were awarded.

However, Mr. Bohuchot's bosses, one of whom was present during the interview, said they hadn't heard about the gifts.

On Monday, school district officials launched a preliminary investigation into Mr. Bohuchot's conduct. During his suspension, Mr. Bohuchot, 56, will still collect his $143,492 salary and his $4,000 annual car allowance.

During his six-year career with the school district, Mr. Bohuchot has been the subject of two audits, including an investigation of his personal finances last year by outside consultants from KPMG. Mr. Bohuchot said he volunteered for the audit after he was anonymously accused of taking gifts and trips, including "a cruise," from vendors. The auditors, who were paid nearly $50,000, found no support for the whistle-blower's charges, district officials said.

Ruben Bohuchot Coast guard and boat title records show that the boats Sir Veza and Sir Veza II were purchased by Statewide Marketing LLC, a Delaware company. Although Delaware law allowed the company to keep private the names of its principals, other records obtained by The News showed Statewide Marketing was formed by officers of Micro System Enterprises, including president Frankie Wong.

During an interview last week, Mr. Bohuchot initially characterized his relationship with Mr. Wong as "a beer and lunch occasionally."

Confronted with evidence to the contrary, he conceded that:

"He used the boats "every five or six weeks," including trips with no Micro System executives present, and that he has been consulted by the yacht's skipper on operational questions.

"He and a Micro System vice president entered and won third place in the four-day Key West Marlin Tournament last year. The entry fees, paid by Mr. Wong, were at least $1,500.

"He accompanied Mr. Wong to Fort Lauderdale to pick out the new boat, and that he helped choose the names for both boats.

E-mail jleeder@dallasnews.com and pslover@dallasnews.com

Vendors donated $25,000 to Price
Trustee says contracts not aided; 1 of the 3 let tech chief use boat
By JESSICA LEEDER and PETE SLOVER, The Dallas Morning News, July 27, 2005

Ron Price All of Dallas school trustee Ron Price's $25,000 in political donations last year came from three closely associated computer contractors, including the one who gave the district's top technology boss years' worth of free fishing trips and use of a yacht.

Mr. Price, who has played down the school official's sea trips, reported in a campaign filing that Frankie Wong, president and chief executive of Houston-based Micro System Enterprises, gave him $10,000 in October.

On the same day, Mr. Price got $10,000 from Larry Lehman of Giddings and $5,000 from Frank Trifilio of Houston, according to the filing.

Asked why he believed Mr. Wong and his business partners would make the donations, which are large by local school board standards, Mr. Price said Tuesday: "He's a great guy. I'm a good guy.

"I think Frankie Wong is a hell of a person," said Mr. Price, who was not up for re-election last year.

State corporation records show the three donors, in various combinations, run a web of interrelated computer companies.

Tech chief tells staff boat was no yacht

Micro System is the head company in a consortium that is designated to receive more than 96 percent of federal technology grants DISD has applied for  $369 million in all. Mr. Trifilio also runs a member company in that group.

The donors did not return calls seeking comment Tuesday.

Among DISD trustees, Mr. Price has been outspoken in playing down revelations in The Dallas Morning News that Ruben Bohuchot, the district's associate superintendent over technology services, had regular use of a 59-foot yacht owned by Micro System.

In a TV interview last weekend, Mr. Price chalked the issue up to dirt being dispensed by vendors who competed with Micro System.

"This is a case of another vendor upset because they did not win the award," Mr. Price said. "They're upset about it and want to strike back at individuals by putting stuff out in the media."

District spokesman Donald Claxton said officials have started a preliminary investigation into Mr. Bohuchot's activities. Mr. Bohuchot has acknowledged taking trips on the boat but denies wrongdoing.

Price's chairmanship

Until May, Mr. Price was chairman of the trustees' business briefing panel, which considers technology and other contracts before they are reviewed and voted upon by the entire school board.

Mr. Price said he could not recall whether his committee ever discussed contracts for Mr. Wong's company. And, he said, the committee he led did not have final control over who was awarded tech deals under the federal E-rate program, under which districts submit proposed contracts to be funded mainly with federal money.

"All you do is chair the meetings," Mr. Price said, adding that Mr. Wong's contributions had "zero" effect on the multimillion-dollar contracts Micro System has been awarded by the district.

Mr. Price said friends at the Houston Independent School District, including trustees, told him that individuals wanted to give to his campaign and that "people in Houston like what you're doing."

He declined to identify individuals in Houston but said: "You've gotta check out the Houston school board members. We get nothing compared to those guys."

Mr. Price said when the campaign money came to him last fall, he had scant knowledge of the men who provided the bankroll.

"I never met them," he said.

Mr. Price said he has since been introduced to Mr. Wong  at a fundraiser thrown for him by a Houston school trustee.

"I wanted to meet whoever helped my campaign," he said.

However, nine months after getting the money, Mr. Price said he still knows nothing about Mr. Trifilio or Mr. Lehman, nor of their business links to Mr. Wong.

Mr. Price said that before accepting the donations, he consulted a lawyer in Austin and the Texas Ethics Commission. He said he was told that as long as the donations were from individuals rather than companies, he could take them.

The largest recipient

The three donations put Mr. Price easily at the top of the list for trustee campaign contributions in 2004. Hollis Brashear pulled in the second-largest total, just over $18,000. No other trustee reported donations from Mr. Wong or his associates last year, according to documents on file at DISD.

Campaign reports show Mr. Price spent $7,500 that the men gave him on officeholder expenses, keeping $17,500 as cash on hand.

Trustee Jack Lowe said he has received campaign donations from people he didn't know in the past but mainly for small amounts: "Never anything near $25,000."

Mr. Lowe, the current business panel chairman, said he believed it would be difficult for a committee member to influence contracts.

"I'd be very disappointed. I don't believe that board members are swaying contracts."

E-mail jleeder@dallasnews.com and pslover@dallasnews.com

07/24: Something fishy: DISD official, vendor share yacht
Exclusive: DISD official, vendor went fishing, yacht-buying together
By PETE SLOVER and JESSICA LEEDER, The Dallas Morning News, July 23, 2005

EXCLUSIVE: Dallas schools' chief technology boss has for years accepted the free, regular use of luxurious sport-fishing yachts owned by a top provider of computer hardware to DISD, records and interviews show.

Ruben Bohuchot, a Dallas Independent School District associate superintendent, told The Dallas Morning News that the sea voyages grew out of his relationship with Frankie Wong, president of Houston-based Micro System Enterprises. Micro System has secured federally funded Dallas school district contracts potentially worth hundreds of millions of dollars since 2003.

He and Mr. Wong both said that Mr. Bohuchot's use of the 59-foot Sir Veza II  purchased for $789,000  and a predecessor vessel in no way influenced the contracting process. They also said Mr. Bohuchot did not help Micro System win district business even though he wrote the specifications for jobs and negotiated the final terms of contracts after they were awarded.

"I have not been involved on a procurement decision on these contracts," Mr. Bohuchet said.

Said Mr. Wong: "I don't think it's wrong, but I know a lot of people would think it's wrong. ... At one point we became friends. I can't control that."

On Friday, a day after The News raised questions, DISD officials said they had opened an investigation of Mr. Bohuchot, 56, who earns $143,492 in addition to a $4,000 annual car allowance. District policies prohibit employees from taking gifts or favors from vendors other than novelties such as key chains and coffee mugs.

There are a number of state and federal laws prohibiting the exchange of benefits between public officials and vendors.

DISD rules, state law turn on influence in contracts

Official's faced tough questioning in past

Mr. Wong is one of three Micro System executives who are principals in a Delaware corporation that purchased the Houston-based boats Sir Veza and Sir Veza II. He said his seagoing with Mr. Bohuchot is strictly social, though he acknowledged his friendship arose from their professional contact.

"When Ruben comes down, he's my friend; we don't ever talk business," Mr. Wong said. "When you work with someone 10 hours a day over three to four years, you kind of develop that relationship. I know it's probably not right, but we always separate the business side from the personal side."

Said Mr. Bohuchot: "He'd call me and say, look, if you want to use the boat to go fishing, help yourself."

Relationship with Wong

In an interview with The News on Thursday that was attended by his boss and a district press officer, Mr. Bohuchot initially described his relationship with Mr. Wong as "a beer and lunch occasionally."

But, when pressed, Mr. Bohuchot confirmed:

"Since Mr. Wong first purchased a 46-foot boat in October 2002, Mr. Bohuchot has used the vessels "every five or six weeks," including an outing with his family this month to Key West, Fla.

"He has taken the boat on voyages with no Micro System executives present, and he has been consulted by the yacht's skipper on operational questions, such as whether to ride out Hurricane Dennis during the recent trip.

"He and a Micro System vice president entered and won third place in the four-day Key West Marlin Tournament last year. The entry fees, paid by Mr. Wong, were at least $1,500.

"Mr. Wong or his company provided Mr. Bohuchot some meals and covered all expenses of the boats' operation, including wharf fees, purchase payments, insurance, fuel, repairs, and a full-time skipper and part-time crew.

"He helped choose the name Sir Veza for the two boats. Mr. Bohuchot said he recommended the name after it was suggested by "a friend of mine." Mr. Wong said the two decided the name together, drawing their selection from 10 finalists placed in a hat.

"He accompanied Mr. Wong to Fort Lauderdale, Fla., last year to help select the 59-foot Viking yacht that would be purchased and rechristened Sir Veza II. Mr. Wong said he paid expenses other than airfare for the trip; Mr. Bohuchot said he got his ticket through a frequent-flyer award.

Mr. Wong said he wanted to buy a bigger boat to replace the original but didn't know much about such matters. Mr. Bohuchot stepped up.

"He volunteered," Mr. Wong said. "He said, 'I know a lot about boats.' "

Mr. Bohuchot said Mr. Wong appreciated his expertise in things maritime.

"I was involved in boating for years. I've got friends that own boats in Hawaii, the Bay Area, Michigan and in Florida."

The 59-foot Sir Veza II is owned by a Delaware corporation headed by three Micro System executives. Mr. Bohuchot said he paid his own travel and lodging expenses during the yacht trips, mainly along the Texas Gulf Coast, but he didn't respond to requests that he provide documentation of those payments.

Consortium

Since 2003, Micro System has been designated as the recipient of more than 96 percent of all funding DISD has applied for  $369 million in all  through the federal E-rate program for school technology. The E-rate program has been beset by allegations of waste, fraud and bid-rigging nationwide. ( See below, Editor)

District officials said the company is the lead partner in a consortium of vendors who split E-rate funding. Spokesman Donald Claxton said Friday that the consortium is "paid as a whole, and we are not aware of the percentage breakdown."

Mr. Bohuchot said Micro System won its E-rate contracts and other deals with DISD without his influence, based on low price and good service. He also noted that vendors on all computer contracts over $50,000 are chosen by a committee and that he has no contact with or influence over the committee.

He said his role in the process included:

"Preparing the bid specifications.

"Making initial contact with potential vendors.

"And negotiating final contract terms.

Documents show Mr. Bohuchot also signed the forms submitted by the Dallas district to secure E-rate dollars.

Before the subject of boat use and travel came up in his interview with The News, Mr. Bohuchot volunteered that in 2003 he had been anonymously and wrongfully accused of taking gifts and trips, including "a cruise" from vendors. Later, he said, he was cleared.

In November 2003, Superintendent Mike Moses disclosed the accusations to DISD trustees in a memo without giving specifics.

Dr. Moses said both he and Larry Groppel, the deputy superintendent who would serve as interim superintendent after Dr. Moses' departure last year, met with Mr. Bohuchot "several times ... about the allegations."

"Obviously, I believe these allegations are false, or the individual would bring them forward by name, rather than do so anonymously," Dr. Moses wrote.

Both Dr. Moses and Dr. Groppel declined interview requests through DISD Friday.

By all accounts, Mr. Bohuchot volunteered for an audit of his personal finances by outside consultants from KPMG. He said he provided auditors access to his bank and credit card records, income tax papers and anything else they wanted.

The auditors, who were paid $50,000, told the district in about March 2004 that they had found no support for the anonymous whistleblower's charges, Mr. Bohuchot and school district officials said. They declined to release the written results from that audit, saying they concerned a private personnel matter.

DISD trustee Ron Price said he talked by phone to Mr. Bohuchot Friday morning.

"He told me he hasn't violated any rules or policies," Mr. Price said. "He's been thoroughly investigated just a year ago. The guy came out squeaky clean."

Records suggest that the trips on Micro System's yachts were well in progress by the time of DISD's internal questioning and the KPMG audit; according to Coast Guard documents, Sir Veza was named in March 2003, a rechristening in which Mr. Bohuchot said he participated.

History

Mr. Bohuchot, who joined DISD in September 1999, said Micro System began doing business with the district after a sales representative's cold call in about 2000.

In October 2002, Statewide Marketing LLC, a company whose management is confidential under Delaware corporation laws, purchased the 47-foot fishing yacht Shadana, which was renamed Sir Veza.

Mr. Wong signed a $260,000 promissory note for the boat, listing himself as the company's managing member.

About three months later, DISD notified federal E-rate officials they were seeking funds for deals with Micro System totaling more than $157 million. In late March 2004, federal officials authorized expenditures of up to $125 million of that amount. Of that, DISD's responsibility under the E-rate deal is estimated to be more than $15 million.

The money is to cover technology upgrades, such as Internet cables and other equipment, at dozens of Dallas schools.

Within 12 weeks of the federal approval, Mr. Wong and Mr. Bohuchot had picked out a new boat. On June 11, Statewide Marketing traded in the Sir Veza to a Galveston yacht broker. Two weeks after that, the company spent $789,000 on the 59-foot Viking yacht, Therapy.

"They were in a hurry," said Tony Dinos, the Fort Lauderdale yacht broker who handled the sale, about a month before the Key West Marlin Tournament. "They wanted to do that tournament."

On July 21, 2004, Therapy was rechristened Sir Veza II, just in time for the opening day of the fishing contest. Over three days, Mr. Bohuchot and Micro System executive Bill Froechtenicht each caught a sailfish, netting the $5,000 third-place prize among 76 boats.

Last December, Micro System got the first of nearly $30 million in federal funds it has collected so far through E-rate, according to Funds for Learning, a for-profit consulting firm that collects data on the program and advises vendors and districts seeking federal funds.

Mr. Wong said he didn't know how much his company has earned on Dallas school contracts, even in ballpark figures, or what percentage of the E-rate consortium funds go to his firm. He also couldn't say if DISD is the biggest customer for Micro System, which does business with school districts in eight states.

The company Web page says the firm earns about $150 million a year, but it's unclear if that represents profits or total sales.

E-mail pslover@dallasnews.com and jleeder@dallasnews.com

About E-rate
What is it? The E-rate program was created in 1996 by the Federal Communications Commission. Its mandate is to help schools and libraries across the country pay for improved Internet access, networking and technology.

Where does the money come from? Most Americans pay into the fund through a 9 percent tax on their phone bills. The result is $2.25 billion available each year to districts and vendors that install telecommunications and computer technology.

How are grants obtained? First, school districts form service agreements with vendors. According to E-rate policy, vendors are chosen through a competitive bidding process. Next, the districts apply for E-rate grants on behalf of the vendor. Grants normally cover between 20 and 90 percent of the total service agreement, depending on the percentage of poor students in a district. In DISD's case, E-rate has usually paid 80 to 90 percent of the cost. Districts pay the rest.

SOURCE: Dallas Morning News research

CONTRACTS IN QUESTION
The Dallas Morning News asked DISD nearly two weeks ago for a complete list of contracts with Micro System Enterprises, but the district has not responded.

However, The News was able to compile a partial list of contracts between DISD and the company through public documents obtained from the agency that administers the federal E-rate technology grant program and from Funds for Learning, a for-profit consulting firm that gathers data on E-rate grants.

The documents show that:

" In 2003, DISD's application for E-rate funding helped Micro System secure a $110 million federal funding commitment. The company has until Sept. 30, 2005, to draw down on this commitment. Under E-rate policy, DISD is subject to paying Micro System an estimated additional $15.2 million. DISD officials said Micro System is the lead partner in a consortium of vendors who split E-rate funding, but they did not respond to requests for details about that split.

" In 2004, DISD applied for $161 million in E-rate funds for Micro System. The application was denied because of administrative reasons involving a missed deadline.

" This year, DISD applied for $57.7 million in E-rate funds for Micro System. The application is pending. If approved in full, DISD will be required to pay the company an estimated additional $10.2 million.

" From 2003 to 2005, more than 96 percent of all E-rate funding applied for by DISD  more than $369 million in all  was to be spent with Micro System.

SOURCES: Universal Service Administrative Co.; Funds for Learning

DISD rules, state law turn on influence in contracts
Also, things of value are often required to be reported on tax returns
By PETE SLOVER, The Dallas Morning News, July 23, 2005

Under Dallas schools' policy, the outcome of an internal investigation of computer chief Ruben Bohuchot could turn on two questions: Did he influence contracts with Micro System Enterprises? And, were the fishing and boat-shopping trips he took worth more than $25?

Under state law, the questions of whether the activities were criminal could turn on similar factors.

Dallas Independent School District policies restrict the acceptance of gifts from vendors but only for employees who are buyers or in a position to influence buyers. Mr. Bohuchot has denied having any influence over the awarding of millions of dollars in contracts to Micro System, so that might not apply to him.

But a related provision that bans free meals, evening and weekend entertainment from vendors refers to "employees," not just those who influence purchasing.

Two areas of Texas law prohibit gifts from vendors to public officials. Texas bribery statutes impose punishments of up to 20 years in prison and a $10,000 fine for taking or giving "any benefit" as payment for a decision or exercise of discretion by the official.

A conviction under that law requires a finding that the gift influenced the public official's actions.

Even if no special favors can be shown, gifts are still banned from vendors to public officials who "exercise discretion" over contracts that could favor the vendor. Such gifts without resulting favors are punishable by up to a year in jail and a $4,000 fine for either party.

Various federal laws also prohibit improper influence over the awarding of contracts paid with federal money, which would include the majority of Micro System's work for DISD.

And, things of value given to an individual are often required to be reported on income tax returns.

Mr. Bohuchot did not respond to questions about whether he reported the fishing trips to the Internal Revenue Service.

The value of the fishing trips, hotels and meals could not be precisely determined.

Frankie Wong, president of Micro System Enterprises, said he once charged Mr. Bohuchot $1,100 for a day of fishing, a discount from a rate he said he could not recall.

Theoretically, such a discount could itself be construed as a thing of value  a gift. And, the days given to Mr. Bohuchot for free clearly have some monetary worth.

It currently costs about $1,600 a day to charter a boat like the smaller of the two used by Mr. Bohuchot, said Deena Davis, spokeswoman for Freeport Charter Boats.

Her company at one time briefly listed the Sir Veza for charter at $1,400 a day. She said fuel costs for a trip have gone up $200 since then.

Ms. Davis said she doesn't know Mr. Bohuchot or Mr. Wong, never booked a charter on the boat, and doesn't remember who arranged the listing.

Internet listings for rentals of boats in the class of the 59-foot Sir Veza II show daily rates from $1,800 to $3,500 and up.

Double-Dipping in Texas May End, a Legacy of Mike Moses


E-mail pslover@dallasnews.com