| For three days this week, the SLD held a Train-The-Trainer (“TTT”) session for state E-rate coordinators. Normally, these sessions are used to simply clarify a number of issues and to help prepare the coordinators to organize their own workshops for state applicants. This year, the TTT was used to announce a number of significant new rules, interpretations, and enforcement policies – some of which seem to have been imposed on the SLD only recently. |
| The following is a summary of the key changes. We will be discussing many of them further in subsequent newsletters. They are important, so please read them carefully; please check the SLD Web site frequently for announcements and additional guidance; and please don’t shoot the messenger. |
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| The SLD stressed that it would be paying more attention to technology plans and to the link between these plans and the E-rate services requested. Here are a few important points concerning the SLD’s expectations:
(1) Form 470 requests must be based on a written technology plan. The plan need not be approved before a Form 470 is filed, but it must exist. The Form 470 has long had a certification (Item 20) that an applicant was covered by a technology plan, but this is the first time that the SLD has stressed that it must be a current and formal plan.
(2) The plan must cover all services being requested, including such non-basic telecom services as Centrex. This is the first time the SLD has detailed the degree of specificity required in technology plans. Effectively, the SLD is asking for a highly operational, rather than strategic, plan.
(3) Separately, the SLD indicated that plans approved for the No Child Left Behind program (specifically EETT plans) are deemed valid for E-rate purposes. However, when pushed, the SLD noted that this simply meant that EETT planning requirements included the same basic plan components as required by the E-rate program. It is important to note, therefore, that approved EETT plans, without the Form 470 detail required by the SLD, would not be sufficient.
(4) Budgets incorporated in the plan must show both revenue sources and anticipated expenses sufficient to cover both the E-rate services requested and other resources needed to support these services. This is not a new requirement, but it does reflect added emphasis and does suggest additional application review criteria.
(5) E-rate technology plans have long had a requirement for an “evaluation” component. The SLD is now stressing the need to monitor – and document – the applicant’s progress in meeting its plan objectives.
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| As has been clear in recent Selective Reviews, the SLD is dramatically tightening the procurement requirements for competitive bidding. In particular:
(1) More detail is being sought on Form 470 service requests. The need to list voicemail, a newly eligible service, was cited in the event such a service was needed. The SLD stopped short of requiring similar detail on all items listed on the Eligible Services List, but clearly stressed that more, rather than less, detail was needed.
(2) Full applicant involvement and responsibility in the competitive bidding process was stressed time and again. Applicants were advised to save all bids received and all bid evaluation documentation. If no bids are received for a specific service, the SLD advised the applicant to “log” that fact (e.g., document in a memo-to-file).
(3) Additional information was promised on the use of state master contracts. In the event of state contracts listing multiple vendors, the SLD stressed that an applicant must solicit bids, not simply pick one of the vendors.
(4) For services not provided under tariff or month-to-month arrangements, the SLD stressed that contracts, not simple quotes, were required prior to the submission of Form 471 discount requests. These contracts should be signed by both parties. Applicants may be required to document that such contracts are legally binding under state law. Verbal contracts are not sufficient. The SLD was unwilling to provide guidance or clarification on allowable contract contingencies.
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| A final version of a revised Eligible Services List (“ESL”) should be available soon. (Note: the 10/18/2002 version is no longer available on the SLD Web site.) Based on discussions, the major changes will be as follows:
(1) Newly Ineligible – Two services that had been funded in the past will now be treated as ineligible. The most important one, that could affect millions of dollars of funding, is dark fiber – defined as “fiber optic cable for which the service provider has not provided modulating electronics.” This change compounds an already confused situation on the eligibility of fiber WANs for which the SLD is awaiting additional FCC guidance. At the moment, the SLD is unclear as to whether the new ineligibility interpretation on dark fiber will be applied retroactively or begin in FY 2004. The second change involves the ineligibility of voice/video over IP (“VoIP”) “services” (not “equipment”), which must also be clarified.
(2) Newly Eligible – This is the one bright spot! The biggest change is based on the new FCC definition of “educational purpose” that will eliminate ineligibilities based on various administrative and security functions. This will make alarm lines, cellular and paging service for non-instructional personnel eligible beginning in FY 2004. Firewall service or servers, and Web hosting (but not Web creation) are also now eligible.
(3) Tightened Eligibility and/or Clarifications – The language on Maintenance and Technical Support has been changed to stress that only “[b]asic maintenance services are eligible.” Specifically “[e]nd user support is not eligible. Network management services, such as monitoring of bandwidth, are not eligible.” Although the term “basic” is obviously a relative term, this change is apparently meant to curb an attempt by applicants and vendors to incorporate a growing variety of professional support services under the banner of eligible technical and maintenance support. The updated ESL is also expected to clarify the eligibility of UPS, storage, and file server products. Additional clarification is still being sought on the meaning of the duplicate service prohibition, although the SLD suggested that “redundancy” may be key to the definition.
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| One special area of concern to the SLD, linked tightly with the competitive issues discussed above, is the role of vendors and/or their agents in the E-rate procurement process. Some types of vendor involvement in an applicant’s E-rate application process are now explicitly prohibited; other types are theoretically permitted (if assistance is “vendor neutral”) but are viewed with suspicion and, at a minimum, can lead to long review cycles. Slides used by the SLD included the following specific prohibitions on service providers (“SPs”) or their agents:
- SP or its consultant may not complete a Form 470
- SP or its consultant may not sign a Form 470
- SP or its consultant may not file a Form 470
- SP may not interfere with applicant’s affirmative duty to conduct a fair an open bid process
- SP may not exert undue influence over an applicant
- SP may not provide funding for applicant’s undiscounted portion
- SP may not waive applicant’s undiscounted portion
- SP may not prepare the RFP
- SP may not act as technology plan approver
State Educational Service Agencies (“ESAs”), may run afoul of the same prohibitions. The SLD has specifically declined to make any distinction between commercial vendors and state-sponsored ESAs. This may force some ESAs to make choices between their roles as E-rate vendors and as providers of a broad range of technology services (including E-rate support). |