Funding Status
The FY 2012 Form 471 application filing window opened on January 9, 2012, and will close at 11:59 pm EDT on Tuesday, March 20, 2012.
Wave 30 for FY 2011 will be released on Wednesday, January 18th. Cumulative funding for FY 2011 is currently $1.49 billion — $600 million below the comparable FY 2010 level at this time last year. The delay in FY 2011 funding is due in part to the additional effort needed to review FY 2010 Priority 2 applications at and below the 80% discount level. Priority 2 for FY 2011 is currently being provided only at the 90% level.
Wave 82 for FY 2010 will be released on Thursday, January 19th. Cumulative funding for FY 2010 is $2.94 billion. Priority 2 funding is being provided at all discount levels.
Updated Trade-In Guidance
The SLD updated the Reference Section of its Web site last week to reflect the latest FCC guidance on the Disposal or Trade-in of Equipment. The trade-in portion of the guidance is simpler, but far less flexible, than had been the case in the past. The new rule is that equipment may be traded-in, but no sooner than five years after the equipment was installed, and, notably, that the full value of the trade-in accrues to the applicant. This rule is consistent with the more general treatment of equipment disposal under the FCC's Sixth Report and Order (FCC 10-175) even though that Order did not specifically address the trade-in of equipment.
Prior to the Sixth Report and Order, equipment could be traded in for more modern equipment at any time, but only if the trade-in value was applied against the pre-discount cost of the new equipment on which an applicant sought discounts. Although the change in trade-in policy had been discussed in the SLD's 2011 fall training sessions, until last week the SLD's Web site had provided the earlier guidance, namely:
E-Rate-funded equipment can be traded-in within three years of the date of purchase, but if it is traded in, it can only be used to reduce the pre-discount cost of new equipment; it cannot be used to "pay" the applicant's non-discount share on other eligible equipment.
The updated Reference Section sets forth the current rule for the disposal of obsolete equipment, now allowable after five years, and adds:
Equipment purchased with Schools and Libraries program discounts can also be traded in, but no sooner than five years after the equipment is installed.
- Trade-ins are not allowed before this five-year period has elapsed.
- The value of a trade-in does not have to be deducted from the pre-discount amount of a new funding request.
Applicants are not required to notify USAC of the disposal or trade-in of equipment. However, an applicant disposing of or trading in equipment should make an appropriate entry in its asset register or inventory.
To understand how this change affects the economics of trade-ins, consider the example of a 90% discount applicant planning to purchase upgraded equipment at a cost of $10,000 before trade-in. Under the new trade-in rule, assuming the value of the five-year old equipment being replaced is $1,000, the net cost to the applicant would be as follows:
Cost of new equipment $10,000
less 90% E-rate discount (9,000)
Applicant share 1,000
less trade-in value (1,000)
Net cost to applicant $0
Under the old trade-in rule, assuming the old equipment was only three years old with a trade-in value of $2,000, the net cost to the applicant would be as follows:
Cost of new equipment $10,000
less trade-in value (2,000)
Pre-discount E-rate cost 8,000
less 90% E-rate discount (7,200)
Net cost to applicant $800
In purely net dollar terms, the new trade-in rule is advantageous to applicants. In operational terms, however, the old rule provided more flexibility to upgrade equipment as technology and applicant needs changed.
E-Rate Updates and Reminders
Lost E-Rate "Poster Child" Found:
Last August, the State E-Rate Coordinators' Alliance ("SECA") submitted a white paper to the FCC dealing with black hole and COMAD issues. As noted in the filing:
"Black holes" refers to those situations in which no decisions are made on individual or related groups of E-rate applications and/or invoices for extended periods of time with little or no recent communication from SLD. The problems may be related to an applicant, vendor, or consultant, but it is often difficult to know. Affected applicants and service providers often receive no — or even misleading — information on the reasons for the delays when they initiate status inquiries with SLD. There are no established procedures to seek useful information, and more importantly, to address and resolve perceived problems. There also is no established time frame for SLD to address and resolve these situations.
An appendix to SECA's white paper included a list of 24 applicants that, having applied every year, had not had a single FRN funded since at least FY 2008. It characterized Atlanta Public Schools, which had not been funded since 2001, as the "poster child" for this black hole group.
But 2012 is truly a New Year for Atlanta. Wave 80 for FY 2010, released January 5th, included over $2 million in Priority 1 and 2 funding for Atlanta Public Schools. Although Atlanta has millions of dollars of FRNs still pending from funding years 2002, 2004-2009, and 2011, perhaps it's time to retire the milk carton bearing the Atlanta School's picture.
Non-Recurring Services Invoice Deadline:
The deadline for submitting SPI or BEAR invoices for non-recurring services is Monday, January 30, 2012 (i.e., 120 days, plus the weekend, after September 30, 2011, the last day to receive services). Specifically, this deadline applies to FRNs for installation services for either:
- FY 2010, unless the normal service delivery deadline has been extended (typically until September 30, 2012).
- Earlier funding years for which the service delivery deadline had been extended until September 30, 2011.
New Look and Feel of the DRT:
Updates have been made to the SLD's Data Retrieval Tool ("DRT"). The initial search screen looks similar, except at the bottom. Previously, there was one button to create a standard report and another to select specific data fields. The button to select fields is no longer there, but the function is.
To create a non-standard report, you need to check the box above the standard report button that reads: "Select additional data points that will be available in the final report." Once this box is checked, the search screen is expanded to include the familiar data-point information with a new button at the bottom labeled "Build Data File!"
FCC Appeal Orders for 54 Applicants:
Consistent with past precedent, the FCC issued three Orders last week which: (a) granted 15 and denied 16 appeals for late-filed Form 471s and/or Item 21 attachments (DA 12-27), (b) granted 22 appeals for late-filed Form 486s (DA 12-28), and (c) granted one appeal of an incorrect Form 486 (DA 12-29).
Schools and Libraries News Brief dated January 13 – Competitive Bidding Reminders
Last week's SLD News Brief for January 13, 2012, discusses the following issues in competitive bidding:
- State or local requirements and E-rate requirements: An applicant's bidding process must comply with both E-rate rules and any state or local requirements. When these differ, the applicant must comply with the more stringent requirements of each. For example, if the state requires a public entity to issue a formal RFP for services over a given dollar amount, an affected applicant must not only issue such an RFP, but must file a corresponding Form 470, and meet the procedural requirements of both.
- FCC Form 470 posting date, RFP availability date, and allowable vendor selection/contract date: RFPs must remain open for at least 28 days, even if a state permits a shorter bidding period. If an RFP and associated Form 470 are filed on different days, the 28-day waiting period is determined by the latter date. If the RFP is filed later, this means that the real allowable contract date will be later than the nominal allowable date shown in the SLD's Form 470 database.
- Service provider requests for information: An applicant must provide service providers with sufficient information to be able to formulate a bid. If such information is not readily apparent in the RFP or Form 470 — and the Form 470 is not conducive to providing detailed specifications — the applicant must provide such information as requested without discriminating between potential bidders.
- No bids received: If no bids are received, an applicant may reach out to suppliers to solicit bids and/or treat existing service provider terms and pricing as a bid.
- One bid received: If only one bid is received, that fact should be memorialized in an e-mail or memo to file. Note that a single bid cannot be automatically characterized as cost-effective. An applicant has the responsibility of assuring that any bid accepted is not priced significantly higher than costs generally available in the market.