PY4 Wave 13 Released
PY3 BEAR deadline:
To begin the process of closing out disbursements for PY3, the SLD set January 31, 2002, as the deadline for submitting BEAR reimbursement forms. This deadline has now passed. However, we recommend that applicants who missed this deadline (for FRNs without specifically extended deadlines) file their BEARs anyway, as soon as possible.
Historically, SLD announcements of BEAR filing deadlines have been "soft." The SLD would continue to accept and process BEARs filed after the "deadline," but would no longer guarantee that they would be processed. This would continue up to an undisclosed date later in the spring after which actual disbursement payments could not be made. It appears that this year's deadline is indeed "final," but there may be some flexibility.
One small exception we expect to see made by the SLD is in response to some misleading information that had been posted on the SLD Web site and given out by the SLD's Client Service Bureau representatives regarding pre-BEAR SPIN changes. Specifically, the Reference Section on the SLD Web site indicated:
For Year 3 and later years, SLD will consider requests to change the SPIN on a non-extended FRN if those requests are received by the due date for the last invoice from the applicant or service provider for that FRN. That deadline for Year 3 is November 20, 2001.
The last sentence is clearly wrong. The BEAR deadline for PY3 had been November 20, but was subsequently extended until January 31. When this occurred, we believe that the SLD simply failed to update its SPIN change guidance. It is likely that the SLD will provide some opportunity for affected applicants, who may have originally been advised otherwise, to belatedly file SPIN changes and the associated BEARs.
BEAR approval process:
Over the past year, the SLD has stepped up its review of BEAR forms, particularly those involving Internal Connections. Increasingly, applicants are being asked to document their reimbursement claims. The requests tend to be for actual copies of invoices and bills, or for signed certifications indicating that services were actually received and/or that the submitted bills accurately reflect payments for services. In a sense, this means that E-rate funding requests are being reviewed a second time; first when the Form 471 requests are being approved, and again when actual discounts are being claimed.
One common problem encountered by SLD reviewers stems from an erroneous perception by some applicants that they are automatically entitled to be reimbursed for the full amount of each E-rate award, even if they used less services and had paid less than the approved pre-discount amounts. It is important to stress that an E-rate award represents the maximum discount that can be received. The actual amount due to an applicant is the lesser of: (i) the funded amount; or (ii) the applicant's discount rate times the actual pre-discount cost of the services received.
Although BEAR instructions do not specify the need to append any attachments, such as is required with Form 471s, applicants may find that it is appropriate to do so. Attached documentation can speed approval of BEARs and/or minimize the number of SLD inquiries. Attached documentation might include actual copies of bills and invoices, or summaries of bills paid. A local telephone service BEAR, for example, might include a simple Excel table listing each account and showing the current charges for each month and subtracting any ineligible charges (such as late fees).
Applicants contacted by BEAR reviewers are subject to the same set of rules used by Form 471 PIA reviewers. Generally, applicants must respond within 7 days (although reviewers will provide extensions if it is clear that applicants are cooperating and need more time to collect information). If applicants do not respond in a timely manner, the BEAR reviewers may make unilateral decisions, including canceling the BEARs.
BEAR approval appeals:
The increased SLD scrutiny of BEARs means that applicants must pay particular attention to BEAR approval notifications. Once a BEAR is processed, the SLD sends the associated vendor a Form 472 Billed Entity Applicant Reimbursement Approval letter. A copy is also sent to the applicant. Applicants should make sure that they actually receive these letters (which the SLD tries to issue within 20 days of the receipt of the BEARs) and that the approved amounts are correct.
In our experience, most BEARs are approved as submitted (or have been adjusted to reflect changes agreed upon with the reviewers). In some cases, however, reimbursement amounts have been reduced unilaterally (to as low as $0.00 for rejected BEARs). Applicants who disagree with these reductions need to either resubmit the BEARs with corrections and/or additional documentation, or appeal. Note that appeals in these cases are governed by the same 60-day window used for appeals of other SLD decisions (see below) based on the date of the BEAR approval letter.
The SLD received over 37,000 Form 471s during the PY5 application window, comparable to last year's application level for PY4 applications. This year over 32,000 applications were received online, up approximately 1,000 from last year's level.
The SLD is now in the process of data entering the manually filed Form 471s, the first stage of which is necessary for the SLD to accurately estimate the funding demand for PY5. We expect that a preliminary demand estimate will be available within 1-2 weeks.
Over 21,000 Form 471 Receipt Acknowledgment Letters ("RALs") have already been mailed to PY5 applicants. The Program Integrity Assurance ("PIA") staff has begun reviewing the applications, focusing first on those that were submitted online (and therefore don't have to be data entered).
Several applicants have reported receiving requests from PIA to fax copies of Form 471 attachments that they had already mailed to the SLD in Lawrence, KS. If you receive such a request, you should not be alarmed. It only means that PIA, which is located in New Jersey , does not yet have copies of all the attachments which were mailed to Kansas . By requesting fax copies of your attachments now, PIA is able to start, and hopefully finish, a review of your application earlier. An early wave funding decision is much more likely.
In December, the FCC announced that it was planning to extend the deadline for filing initial FCC appeals from 30 days to 60 days. The change was made on an emergency basis because of post-9/11 disruptions to mail deliveries. The change was quickly mirrored by the SLD.
Although announced last year, the new FCC appeal rules did not formally become effective until published in the Federal Register. This occurred on January 24, 2002. An updated discussion of the current rules for both SLD and FCC appeals can be found on the SLD web site (see Appeals Procedure).
On January 25, the FCC released a Notice of Proposed Rule Making ("NPRM") seeking comments on a variety of issues that could result in significant changes in program rules. Initial comments are due within 45 days of publication of the NPRM in the Federal Register (probably early next week); reply comments are due 30 days thereafter (see Notice of Proposed Rule Making).
Although responders to the NPRM are free to address any issue, comments are specifically sought on a number of specific topics involving the application process, discount payment and equipment transferability issues, the appeal process, enforcement tools, and treatment of unused funds. Several interesting points include:
- The FCC is considering broadening the definition of eligible Wide Area Network, cellular, and selected other services
- The emergency extension of the 60-day appeal window (discussed above) is likely to be made permanent.
- Several rules are proposed to strengthen the FCC's and the SLD's enforcement tools including banning certain applicants and vendors found to have willfully or repeatedly failed to comply with program rules.
- The NPRM notes that the SLD is authorized and is developing tools to begin basing the "overall amount of committed funds each year on a formula that takes into consideration past levels of disbursement." Recognizing that all funds awarded are not used, this means that the SLD can award funds in excess of the $2.25 billion cap as long as actual disbursements fall within the annual limit. In a related issue, the FCC asks for comments on the carryover of unused funds from one program year to another.
- The current NPRM does not raise the issue, first broached but rejected in a 2000 NPRM, of limiting Internal Connection discounts in any given year to applicants that were not so funded the previous year. More broadly, the NPRM does not address the issues of discount rate bands or priority funding categories.