Erate for Beginners

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E-rate for Beginners

• John Noran
• Schools and Libraries Division
• Universal Service Administrative Company
• Train-the-Trainer Workshop
• September 27-29, 2004

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Overview

• School and Libraries Support Mechanism
• Provides discounts to eligible schools and
  libraries for Telecommunications Services,
  Internet Access, Internal Connections, and Basic
  Maintenance.
• Applicants can be schools, libraries, or
  consortia, but only eligible recipients of
  services can receive discounts.
• Applicants must apply for discounts each year.
• Funding is capped at 2.25 billion annually.
• From January 1, 1998 through September 7, 2004,
  more than 13.7 billion in funding commitments
  have been issued to eligible schools and
  libraries.

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History

• Schools and Libraries Support Mechanism started
  providing discounts as of January 1, 1998
• Telecommunications Act of 1996
• Congress directed the FCC to establish
  competitively neutral rules . . . to enhance, to
  the extent technically feasible and economically
  reasonable, access to advance telecommunications
  and information services for all public and
  non-profit elementary and secondary school
  classrooms . . . and libraries.
• First Report and Order (FCC 97-157)

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Introduction

• Vendor Assistance
• NSI in New Jersey
• Application review Program Integrity Assurance
  (PIA)
• Invoice review (PIA)
• Appeal process
• Program correspondence, including change and
  extension requests
• Pearson Government Solutions in Kansas
• Client Service Bureau (call center)
• Forms processing

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Eligibility
Applicants

• Eligible Entities
• Schools
• Must meet the statutory definition of elementary
  or secondary school found in the No Child Left
  Behind Act of 2001.
• Must be a non-profit institutional day or
  residential school, including a public charter
  school, that provides elementary or secondary
  education, as determined under state law.
• Must not be operating as a for-profit business.
• Must not have an endowment exceeding 50 million.

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Eligibility
Applicants

• Eligible Entities
• Schools (cont.)
• Pre-kindergarten, Adult Education, Juvenile
  Justice
• Must meet state definition of elementary or
  secondary education.
• Students and/or facilities may be eligible.
• SLD requests updated information from state
  departments of education every two years.

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Eligibility
Applicants

• Eligible Entities
• Libraries
• Must meet the statutory definition of library or
  library consortium found in the Library Services
  and Technology Act (LSTA) of 1996.
• Must be eligible for assistance from a state
  library administrative agency under LSTA.
• Budget must be completely separate from any
  schools.
• Must not be operating as a for-profit business.

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Eligibility
Service Providers

• Service Providers
• Must file Form 498, Service Provider Information
  Form
• Request a Service Provider Identification Number
  (SPIN)
• Provide/update contact information.
• Must file Form 473, Service Provider Annual
  Certification Form, on an annual basis
• Required for invoices to be paid.

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Telecommunications Carrier
Service Providers

• Providers of Telecommunications Services
• Must contribute to the Universal Service Fund, if
  applicable.
• Must provide telecommunications services on a
  common carriage basis to be a telecommunications
  carrier.
• To be a telecommunications carrier, the carrier
  must
• (1) allow the customer to transmit information of
  its own design and choosing, without change in
  the form or content of the information, and
• (2) provide that capability for a fee directly to
  the public, or to such classes of users as to be
  effectively available to the public (i.e., hold
  itself out to serve indifferently all potential
  users).

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Telecommunications Carrier
Service Providers

• Telecommunications Carriers
• Must file Form 499A on an annual basis and check
  at least one box on Line 227 and file Forms 499Q,
  if applicable.
• Must revise the Form 498 to reflect Form 499
  Filer. I.D.
• SP must be designated eligible in SLD database.
• SP may not provide telecommunications services if
  it has not been designated as a
  telecommunications carrier.

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Eligibility

• Eligible Services
• Priority 1
• Telecommunications Services
• local and long distance
• wireline and wireless
• voice, data, video
• Internet Access
• Priority 2
• Internal Connections (switches, hubs, routers,
  wiring)
• Basic Maintenance on Internal Connections
• Priority 1 funded first, then Priority 2 funded
  beginning with neediest applicants (90, 89,
  88, etc.)

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Eligibility

• Eligible Services
• Eligible Services List
• Lists services by category (Telecommunications
  Services, Internet Access, Internal Connections,
  and Miscellaneous)
• Services which are conditionally eligible
• Ineligible services
• Available on SLD web site

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Calculating Discounts
Applicants

• Discount Calculation
• National School Lunch Program (NSLP)
• Individual schools start with the percentage of
  students eligible for NSLP for their school
• School districts start with the NSLP
  percentages of individual schools in the
  district, calculate weighted average of all
  schools
• Libraries start with the percentage of students
  eligible for NSLP for the school district in
  which the library is located
• Consortia calculate simple average of
  discounts of members
• Urban or rural status of county in which school
  or library is located (from web site)

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Calculating Discounts
Applicants

• Points to Remember
• All discount calculations will involve
• percentage of students eligible for NSLP in a
  school or school district
• determination of Urban/Rural status
• discount from Discount Matrix.
• Applicant with members or subunits must calculate
  an average of those members
• School district individual schools
• Library system library outlets/branches
• Consortium eligible member entities

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Application Process
Applicants

• Technology Plan What is my plan?
• Form 470 What services do I want?
• Form 471 What services did I order?
• Form 486 When did services start?
• Form 472 or Form 474 How do I receive
  reimbursements or discounts?
• Online filing/certification available for most
  forms

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Application Process
Service Providers

• Form 498 What is my SPIN?
• Form 499A for Telecom Carriers What is my
  responsibility to the Universal Service Fund?
• Form 473 What am I required to do before
  receiving payment on an invoice?
• Form 472 or Form 474 How do I submit invoices
  to USAC?
• Online filing available for most forms
• Online service provider certification under
  consideration

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Technology Planning
Applicants

• Technology Plans
• Not required for basic local, cellular, PCS,
  and/or long distance phone service and/or voice
  mail
• Must be written before Form 470 filing
• Must be approved by an SLD-certified approver
  before Form 486 filing or start of services,
  whichever is earlier
• Must cover five areas
• Goals / Strategies for using technology
• Professional development
• Needs assessment
• Sufficient budget
• Evaluation process

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Technology Planning
Service Providers

• Service providers may offer NEUTRAL technical
  assistance.
• Service providers may not act as technology plan
  approvers.

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Form 470
Applicants

• Form 470
• Opens a competitive bidding process
• Applicant responsible for ensuring an open, fair
  process and selecting the most cost-effective
  provider of the desired services
• Must wait 28 days after POSTING of Form 470 to
  select service provider, sign contract, and sign
  and submit Form 471
• Can be filed once for multi-year contracts, but
  470 and RFP must indicate intent to sign
  multi-year contract with extensions
• Make RFP available or list specific
  service/function and quantity/capacity

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Form 470
Applicants

• Competitive Bidding
• Request for Proposal (RFP)
• Not required under the FCC Rules, but a good idea
• Must comply with local and state procurement laws
• Describes your project scope, location, other
  requirements in detail
• Competition
• Goal is to have as many bidders as possible
• Promotes better service and lower prices
• Fair and open process
• All bidders treated the same, no advance
  knowledge of RFP information
• No secrets in the process, all bidders know what
  is required of them

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Competitive Bidding Process
Service Providers

• Service providers must remain NEUTRAL at all
  times.
• Service providers may not interfere with
  applicants affirmative duty to conduct a fair
  and open bid process.
• Service providers may not exert undue influence
  over an applicant.

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Competitive Bidding Process
Both

• Obligation to Pay Non-discount Share
• Applicants are required to pay their share of the
  cost (the non-discount portion or share)
  cannot be donated, forgiven or ignored.
• Service providers cannot waive or credit the
  applicants share.
• Offers to reduce price must be incorporated into
  the total pre-discount amount.
• Service provider must bill the applicant for
  non-discount share of services.

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Competitive Bidding Process
Service Providers

• FORM 470
• Service providers may offer basic information,
  such as timelines and deadlines.
• Service provider or its consultant may not
  complete the 470.
• Service provider or its consultant may not sign
  the Form 470.
• Service provider or its consultant may not file
  the Form 470.
• Service providers may not prepare the RFP.
• Service providers may contribute information on
  technical issues.

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Form 470
Applicants

• Points to Remember
• Competitive bidding process must be open and
  fair.
• List services sought in correct category of
  service (Form 471 must match).
• Retain worksheets, bid evaluation criteria,
  winning AND LOSING bids.
• Form 470 must be certified by close of Form 471
  application filing window.
• Filing online speeds processing and reduces
  errors.

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Form 470
Applicants

• Form 470 Receipt Notification Letter (RNL)
• Cover page of important reminders and deadlines
• Notifies applicant that Form 470 has been posted
  to the SLD web site
• System will generate RNL for Forms 470 filed
  online after form is submitted but before it is
  certified.
• Form MUST be certified before close of Form 471
  application filing window.
• Contains Allowable Vendor Selection / Contract
  Award Date

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Form 471
Applicants

• Form 471
• Provides specific information on services,
  service providers selected, and contracts
• Provides discount calculation information
• Must be filed for each funding year
• Must be postmarked on or before the last day of
  the Form 471 application filing window
• Applicant certifies compliance with rules, which
  include securing access to resources to make
  effective use of discounts.

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Form 471
Applicants

• Points to Remember
• WAIT AT LEAST 28 DAYS from the posting of the
  Form 470 before
• selecting a service provider
• signing a contract
• signing and submitting a completed Form 471.
• File separate Forms 471 for Priority 1 and
  Priority 2 services.
• Remove ineligible costs and document or estimate
  eligible costs carefully (30 Rule).
• Filing online speeds processing and reduces
  errors.

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Form 471
Service Providers

• Points to Remember

• Service providers should always provide correct
  SPINs and contact information.
• Service providers are encouraged to provide
  guidance to the applicant on its services and
  functionality during the application process.

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Form 471
Service Providers

• Service providers are encouraged to assist with
  providing information for the Item 21 attachment
  for their services.
• Clear level of detail on the Item 21 attachment
  may advance the processing of the invoice.
• An example of such detail would be the inclusion
  of the item (model ), quantity, and unit cost.

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Form 471
Service Providers

• Applicants will not receive support for contracts
  that provide only a single price for a package
  that bundles both eligible and ineligible
  services together.
• Service provider and applicant should work
  together to create pricing terms in the contract
  that separate eligible services from ineligible
  services.
• Service providers are also encouraged to assist
  in providing applicant with billing account
  numbers and contract numbers.

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Form 471
Applicants

• Form 471 Receipt Acknowledgment Letter (RAL)
• Cover page of important reminders and deadlines
• Provides confirmation of certain information
  entered from Form 471
• Data entry errors may be corrected by submitting
  a copy of the RAL with the specific errors lined
  out and the correct information supplied
  three-week deadline.
• Funding request reductions may also be submitted
  before funding commitment.

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Contract Requirements
Both

• FCC Rules require applicant to sign a contract
  prior to the filing of a completed Form 471. 47
  C.F.R. 54.504(c).
• Fifth Report and Order requires both the
  applicant and service provider to sign the
  contract prior to the filing of a Form 471.
• This rule does not apply to tariffed or
  month-to-month services.
• Verbal agreements are not acceptable.
• Quotes are not acceptable.

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Contract Requirements
Both

• Service provider and applicant must comply with
  state contract law.
• Service provider and applicant must comply with
  state and local procurement laws.

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Contract Requirements
Both

• Applicant must provide signed and dated contracts
  for reviews and audits.
• Applicant must be prepared to prove its contract
  meets the requirements of state contract law.
• Applicant certifies that it has signed a contract
  on its Form 486.

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Contract Requirements
Both

• Service provider is required to permit the
  applicant prior to the submission of the Form 471
  to choose the Method of Payment BEAR v. SPI
  for discounted services.
• FCC Second Report and Order encourages the
  applicant and service provider to work together
  to determine the method of payment.
• FCC Second Report and Order encourages including
  the method of payment in the contract.

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Contract Issues
Both

• Know your legal rights.
• SLD does not intervene in disputes that are
  contract-based rather than program-rule based.
• Contract disputes should be brought before local
  and state courts, not the SLD or the FCC.

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State Master Contracts
Both

• If the state filed a Form 470, then the applicant
  may cite the states Form 470 on its Form 471.
• The applicant is required to follow the
  applicable provisions of the state master
  contract and local and state procurement laws.
• No separate bidding documents or contracts are
  required by the applicant citing the states Form
  470, other than what is required by the state
  master contract and local and state procurement
  laws.
• The signed state master contract between the
  state and service providers meets the FCC signed
  contract requirement.

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State Master Contracts
Both

• If the applicant files a Form 470 and considers a
  state master contract as one of the bids
• The applicant is required to comply with all
  competitive bidding requirements.
• If the applicant selects the state master
  contract
• The applicant is required to follow the
  applicable provisions of the state master
  contract and local and state procurement laws.
• The signed state master contract between the
  state and vendors meets the FCC signed contract
  requirement.

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State Master Contracts
Both

• Purchase orders or other state master contract
  requirements for applicants
• If a state master contract requires the issuance
  of purchase orders or contains other binding
  requirements for applicants, the applicants must
  follow the applicable dates set forth in the
  state master contract.
• For example, if a state master contract requires
  the applicant to issue a purchase order by July
  1, then the applicant is required to meet that
  deadline.

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Application Review
Applicants

• Review of Applications
• Review by PIA, which may include
• Competitive bidding process
• Contracts
• Discount calculation
• Sufficient budget
• Establishing Form 470
• Technology Plan

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Application Review
Applicants

• Points to Remember
• Provide information requested by reviewers (PIA)
  promptly.
• If desirable, work with your state coordinator to
  comply with information requests.
• Ask for more time if you need it.
• Retain documentation.
• Review Request for Selective Review Information
  fax to understand what information might be
  requested.

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Funding Commitments

• Commitments vs. Disbursements
• 2.25 billion cap for each funding year.
• SLD may commit more that 2.25 billion for a
  funding year if unused funds from previous
  funding years have been rolled over to that year.

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Funding Commitments
Both

• Funding Commitment Decision Letter
• Cover page of important reminders and deadlines
• FCDL reports status of individual funding
  requests
• Funded
• Not Funded
• As Yet Unfunded (Internal Connections)
• Service provider does not receive this status
• Canceled
• May receive more than one FCDL

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Funding Commitments
Both

• Points to Remember
• Check all entries on the FCDL carefully to make
  sure there are no data entry errors.
• Applicants use the information on the FCDL to
  prepare the Form 486.

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Form 486
Applicants

• Form 486
• Notification that services have started and the
  SLD can pay invoices
• Certifies that Tech Plan (if required) has been
  approved.
• If Tech Plan has not been approved by
  SLD-certified approver, the application is
  subject to denial and invoices will not be paid.
• Certifies status under Childrens Internet
  Protection Act (CIPA).
• Lead members of consortia may be required to
  collect CIPA certifications from consortium
  members on a separate form (Form 479).

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Form 486
Both

• Form 486 Deadline
• Form 486 must be postmarked no later than
• 120 days after the Service Start Date featured on
  the Form 486 OR
• 120 days after the date of the Funding Commitment
  Decision Letter
• whichever is later.
• If Form 486 is postmarked later than the above
  deadline, the date 120 days before the Form 486
  postmark date will become the start date for
  discounted services and funding may be reduced.

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Form 486
Both

• Form 486 Notification Letter
• Cover page of important reminders and deadlines.
• Provides confirmation that a Form 486 has been
  successfully data entered.
• SLD will accept invoices from applicants and
  service providers once the Form 486 is
  successfully processed.

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Service Delivery Deadlines
Both

• Recurring Services
• June 30 of funding year
• Non-recurring Services
• September 30 following the close of the funding
  year
• Deadline automatically extended to September 30
  of the following year for FCDLs, service
  substitution approvals, and SPIN change approvals
  dated on or after March 1 of the funding year.
• Applicants can also request extension for
  specific reasons involving difficulties with
  delivery of services by service provider.
• See web site for further information.

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Form 473
Service Providers

• Form 473 Service Provider Annual Certification
  (SPAC) Form
• Service providers are required to file on an
  annual basis.
• SLD will only pay invoices for a funding year if
  a SPAC is on file for that funding year.
• SPACs are required for both BEARs and SPIs.
• SPIN Search Tool on SLD web site lists funding
  years for which a SPAC is on file.

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Invoices
Both

• Invoices Form 472 or Form 474
• BEAR (Billed Entity Applicant Reimbursement) Form
  472 is filed by the applicant and certified by
  the service provider after the applicant receives
  services and pays for the services in full.
• OR
• SPI (Service Provider Invoice) Form 474 is filed
  by the service provider after providing services
  and billing the applicant for its non-discount
  share.

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Invoices
Both

• Points to Remember
• Invoices cannot be used to request SPIN changes
  or service substitutions.
• Invoices are reviewed for program compliance
  respond promptly to requests for information.
• Service providers are required to reimburse the
  applicant within 20 days after RECEIPT of the
  funds from SLD.

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Invoices
Both

• Invoice Deadlines
• Invoices must be postmarked no later than
• 120 days after the last date to receive service
  OR
• 120 days after the date of the Form 486
  Notification Letter
• whichever is later.
• If an invoice is postmarked later than the above
  deadline, payment will be denied.
• Extensions of invoice deadlines may be requested
  under certain conditions.
• See web site for details.

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Invoices
Both

• BEAR Notification Letter
• Cover page of important reminders and deadlines
• Provides confirmation that a Form 472 (BEAR) has
  been successfully data entered.
• Indicates what amounts are being paid and reason
  for reductions/denials.
• SPI Electronic Notification Invoice Status
  Report
• Service provider can receive an electronic
  notification.

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SPIN Changes
Both

• Corrective SPIN Change to correct data entry
  errors or where the applicant used the wrong SPIN
  for the service provider selected
• Global SPIN Changes mergers or acquisitions in
  whole or in part
• Considered a Corrective SPIN change
• Operational SPIN Change only available after
  receipt of FCDL
• See web site for more guidance.

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Operational SPIN Changes
Both

• For changes to a new service provider
• Applicant must make three certifications
• Change allowed under local procurement laws
• Change allowed under terms of contract
• Original service provider notified of intent to
  change
• Can NOT be used for telecommunications services
  if new SPIN is not a telecommunications carrier

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Document Retention
Both

• Remember 5-year retention requirement for all
  documents.
• Good recordkeeping is ESSENTIAL.
• Keep copies of EVERYTHING.
• Keep these documents with E-rate files, or
  copies, if accounting department keeps its own
  files.

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Document Retention
Both

• Types of records to retain include
• Competitive bid documents
• RFPs, bids, quotes, proposals, etc.
• Signed contracts
• Service provider bills to customers
• Detail of services/products and locations
• Indicate entity(ies) receiving service/products
• Delivery/installation dates
• Applicant payments
• Cancelled checks
• Service credits for any reason

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Appeals
Both

• Decisions of the SLD can be appealed to the SLD
  or to the FCC.
• Generally, appeal first to the SLD.
• Can appeal to the FCC if SLD does not grant the
  appeal.
• Can be filed electronically or on paper.
• Must be received or postmarked within 60 days of
  the SLD decision.
• See Appeals Procedure in Reference Area for
  specific guidance.
• Requests for waivers of rules must be filed with
  the FCC.

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Audits
Both

• Why do we do audits?
• To provide data regarding program rule
  compliance.
• To identify areas needing education and outreach.
• To clarify program rules that must be
  strengthened to prevent waste, fraud and abuse.
• To enforce accountability for program rule
  compliance.
• To deter noncompliance.

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Audits
Both

• Who performs audits?
• USAC Internal Audit
• Independent auditors engaged by either USAC or
  the FCC
• FCC Office of Inspector General
• Other agencies

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Audits
Both

• What documents do auditors need?
• Budget / financial statements
• Technology Plan and approval letter
• Documentation of competitive bidding process
• Documentation of discount level claimed
• Copies of contracts and contract extensions
• Copies of service provider bills, cancelled
  checks, BEAR Forms, BEAR checks, and other
  supporting documentation
• Asset inventories or registers

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Assistance
Both

• SLD main page of USAC web site
• www.sl.universalservice.org
• Client Service Bureau
• Use the Submit a Question link on the web site
• Fax toll-free at 1-888-276-8736
• Telephone toll-free at 1-888-203-8100
• Read the form instructions

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http//www.sl.universalservice.org
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http//universalservice.webex.com