The program, often called E-Rate, was created by Congress in 1996. It provides money for schools and libraries to connect to the Internet, and it’s funded by fees added to consumers’ phone bills.

AT&T Missouri, the St. Louis-based subsidiary once known as Southwestern Bell Telephone, is accused of entering into an illegal contract with the Kansas City, Mo., School District. According to the government, school district and company officials colluded to provide false information to the E-Rate program and freeze out another company bidding on the contract.

The company that lost the contract — American Fiber Systems — filed a False Claims Act suit against the school district and the phone company in 2006. The district had already settled the suit.

The False Claims Act allows private parties to bring fraud claims on behalf of the United States and to share in the proceeds of any recovery.  American Fiber Systems Inc.’s share of the settlement will be $195,000.