| The SLD has posted new guidelines and recommendations concerning the Form 470 and competitive procurement process for FY 2004. Here are highlights and clarifications:
Competitive Bidding Process:
It is critically important that the vendor selection process for all E-rate eligible services, from basic telephone service to complex internal connections networking services, be based on fair and open competitive bids. The Form 470 is the key instrument in this competitive bidding process. In particular:
(1) The 28-day Form 470 posting period is critical. No vendor can be selected, no contract can be signed, and no Form 471 can be filed for services listed on a Form 470 until the 28-day posting period has expired. The 28 days is a minimum; state and local procurement rules may require longer periods.
(2) If a formal Request for Proposal (“RFP”) is to be used, its issuance and bid deadline must be carefully coordinated with the Form 470 filing. Consideration of RFP bids should not be made until after the 28-day posting period. If a RFP is planned, but is not available at the time a Form 470 is filed, Item 12 of the Form 470 should carefully note how the RFP process will proceed. If a decision is made to utilize a RFP after a Form 470 has been filed, a second Form 470 should be filed referencing the RFP.
(3) A vendor of E-rate eligible services — particularly one that plans to bid on an applicant’s services — should not be involved in the Form 470 process. Last year’s E-rate rule was that such a vendor could not be listed as the contact on the Form 470, but current SLD guidelines also prohibit any vendor involvement in the Form’s preparation or filing. If, after consideration of this guidance, an applicant believes that a vendor has been improperly involved in its Form 470 submission, the SLD indicates that the improper Form 470 should be cancelled and a new Form 470 be filed.
(4) Copies of all bid specifications, bids received, bid assessments, and resulting contracts must be documented and retained. We recently saw a SLD reviewer request an applicant to complete a spreadsheet listing every FRN on an application, to note the number of bids (0, 1, 2, 3,…) received for each FRN, and to provide copies of all winning and losing bids. Applicant documentation should support such a request.
(5) Sometimes it is difficult to determine whether a vendor’s response to a Form 470 is just a general marketing presentation (which an applicant can safely ignore) or is a first step towards an actual bid (which an applicant must treat seriously). In our experience, many vendors collect e-mail addresses from the SLD’s Form 470 database simply to expand their general prospect lists. It may be useful, therefore, to specify telephone or facsimile, rather than e-mail, as the preferred mode of contact on the Form 470 to help weed out mass e-mailing promotions.
(6) In many cases, no bids or only one bid may be received for a given service. The SLD recommends documenting such situations with a simple “memo to file” when selecting an existing provider (who may not have formally bid) or the sole bidder.
(7) If two or more bids are received, the SLD expects fair consideration to be given to each bid. The applicant need not select the lowest bidder, but price must be the most important factor in the assessment process. A number of applications have been denied when the SLD determined that, although a formal, multi-factor, competitive procurement process was used, price was not the primary factor considered. Conceptually, the SLD assumes that bids will be evaluated on the basis of a number of factors, but that price must be the most heavily weighted. A sample bid assessment worksheet supporting a multi-factor weighting system, and providing a means to document the process, is available on the E-Rate Central Web site.
Service Descriptions:
For FY 2004, much more so than in earlier years when broadly-defined services was the norm, the SLD is requiring that the “Form 470 or RFP MUST define the specific services or functions (and quantity and/or capacity) for which funding will be sought.” As a practical matter, the service descriptions should not be any broader than the examples provided in the SLD’s Form 470 Instructions that include “video conferencing…for three buildings,” “monthly Internet service…for 500 student users,” and “Private Branch Exchange [PBX] equipment…for each of 10 outlets in a library system.”
If services for FY 2004 are to be expanded to take advantage of newly eligible items (voicemail, firewalls, Web hosting, etc.), the Form 470 should specifically reference these new services.
Do NOT include services that clearly will not be needed or simply adopt a list of service requirements used by other applicants or suggested by a vendor. Specifically, a number of applications have recently been denied for the stated reason that: “Similarities in service descriptions on Forms 470 and in Request for Proposal (RFP) amongst applicants associated with this vendor indicate that vendor was improperly involved in the competitive bidding and vendor selection process.”
It should also be noted that the SLD expects all services listed on a Form 470 to be reflected in that applicant’s technology plan. This expectation goes well beyond the five basic components required for a technology plan approved for E-rate (or similarly for NCLB) purposes. As a result of this new emphasis, technology plan approval letters from New York State, for example, now stress: “Although the basic structure of your technology plan has been approved, you are reminded that E-rate rules require a level of consistency between technology plans and E-rate funding requests that was not subject to review under our approval process.” Technology plan and Form 470 consistency is the applicant’s responsibility. If the existing plan is not consistent with the E-rate services to be requested, we recommend an addendum be added to correct the problem.
Related Issues:
The SLD’s new Form 470 guidance notes two other points.
(1) All services, not covered by telecommunications tariffs or available on a month-to-month basis (mobile and Internet services only), must be provided under legally binding contracts that are in place at the time the Form 471 is filed.
(2) While there has been little broad discussion of the change, a FCC Order adopted earlier this year will give the applicant the final choice of whether a vendor discounts bills, or whether the applicant pays bills in full and files BEARs for reimbursement, for FY 2004 services. The SLD recommends that an applicant discuss its preferred method for receiving discounts with its potential vendors during the bidding process.
Both of these topics will be discussed in more detail in a future newsletter.
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