Funding Status
Last week's SLD News Brief provided no information on funding waves to be released this week. The FY 2012 Form 471 application filing window will open at noon on Monday, January 9, 2012, and will close at 11:59 pm EDT on Tuesday, March 20, 2012.
SLD Training: The Road to Success – Contracts
This is the eighth and last article in a series covering the major topics presented in the SLD's fall applicant training workshops. The SLD's PowerPoint slides for this training are available online.
The SLD's "Road to Success" presentation covers a variety of topics, all designed to keep applicants, service providers, and consultants out of trouble. This article covers the information provided by the SLD on contracts — as well as our own more detailed interpretations (particularly on state master contracts).
General:
Contracts are required for most E-rate services. The only exceptions are certain services provided under tariff or otherwise generally available commercially on a month-to-month ("MTM") basis (for which a Form 470 is required every year). The basic rules on contracts are that:
- An applicant cannot sign a contract before the Allowable Contract Date ("ACD") of the associated Form 470 (or before the equivalent 28-day waiting period for an associated RFP issued later than the Form 470).
- A service provider can sign a contract before the ACD. The contract execution date is determined by the applicant's signature.
- The contract must be signed and dated prior to the filing of the Form 471.
- USAC may accept unsigned or dated contracts only if permitted by state and/or local contract law (which an applicant would be given the opportunity to confirm). Similarly, a purchase order may be considered a contract only if considered so by the state.
Note that many public-sector applicants may have difficulties signing detailed contracts early in the calendar year for services to be received in the following fiscal year. In such cases, USAC has historically accepted a less formal "contingent" contract that depend upon future board approval, budget approval, E-rate funding, or other conditions. Such an agreement must be considered an actual "contract" under state law and must be signed by an authorized person. A draft vendor contract letter (considered valid at least in New York) is available on the E-Rate Central Website. (The vendor signature and date on this sample contract is not required in New York, but adds to the formality of the agreement.)
Multi-year and Extendable Contracts:
A multi-year contract or a contract with voluntary extensions is permissible if the multi-year and/or extension terms were set forth in the original contract, RFP, or Form 470. If not, an applicant must file a new Form 470 to extend a contract into the new funding year. (Note that the version of the Form 470 used before October 2010 included specific checkboxes for multi-year or extendable contracts; the current version does not, but such information can be placed in the Item 13 textbox.)
If a contract is extended beyond the expiration date shown in USAC's database for a particular FRN, the applicant must notify USAC of the extension by filing a Form 500. It is important to note that the Form 500 is merely a notification of a contract extension. The Form 500 does not, in and of itself, extend the contract (which must be done with the vendor), nor, in the case of non-recurring services, does it extend the last date to receive services (which USAC does automatically in some situations or upon approved requests in other cases).
State Master Contracts:
Many states bid and/or negotiate master contracts for services for use by various public and state agencies, typically including schools and libraries. From an E-rate perspective, it is important to distinguish between a "contract" and a "competitive bid." These are two separate concepts.
The easiest concept is "contract." A state master contract can serve as an E-rate contract as long as the applicant is eligible to use the state's contract and has followed all the state's rules for use of that contract. As an example, in the case of a state multi-vendor award contract, the user is often required to do a mini-bid or to request best and final offers. If the applicant doesn't follow the state rules, then it doesn't have a valid state contract.
The "competitive bid" aspect is more complicated because any of the following situations may apply:
- If the state contract was not covered by a state Form 470, the resulting contract is deemed not to have been competitively bid for E-rate purposes. The fact that it is a state master contract may, under state procurement laws, relieve the applicant of having to issue a formal RFP. But the applicant must still issue its own Form 470 and do its own competitive bid, selecting among all respondents (although it may give higher weight to the holder(s) of the state contract).
- If the state issues its own Form 470, typically in conjunction with its own RFP, then either of two situations occurs. In the first instance, the state does a true competitive bid (with price as the primary factor) and selects a single winner (at least within a given geographic area or for a selected subgroup of services). In this case, an applicant can choose the winning vendor and cite the state's Form 470 on its Form 471 application.
- On the other hand, if the state issues a Form 470, but awards contracts to multiple vendors — often deemed "terms and conditions" contracts — then the applicant must justify why one vendor was chosen over the others. There are two options.
- If the applicant cites the state's Form 470, then it must do a mini-bid which, to quote the SLD's slides, "evaluates the multiple winners' services and compares them using your own evaluation factors with price of the eligible goods and services being the primary factor." Note that the SLD indicates that the evaluation must include bids from "multiple winners." Historically, although not mentioned in this year's training, this has meant soliciting mini-bids from all contract holders. If there are 25 contract awards, mini-bids from all 25 vendors must be solicited (even if, for example, the state contract only requires 3 mini-bids).
- Alternatively, and the approach we prefer, the applicant can post its own Form 470 and, as in the first bullet, select among all respondents (although it may give higher weight to state contract holders).
In addition to state master contracts, issued by a state governmental agency, there are a number of other regional and/or cooperative bidding organizations that offer access to E-rate eligible contracts. The same rules as discussed above apply.
When using any of these contracts, the Contract Award Date shown on an applicant's Form 471 should be the date that the applicant decides to use that vendor and contract. It is a good idea to document that selection date with a simple letter to the vendor (see vendor selection letter example). The Contract Expiration Date shown on the applicant's Form 471 should be the actual expiration of the master contract.
One unique aspect of a state master contract is that it allows an applicant to deal with a mid-year contract expiration. Any other type of contract, expiring within the year, limits the applicant to discounts on services received only up until that expiration date. For state master contracts, there is a State Replacement Contract procedure that allows an applicant to file one FRN for the existing state contract through the expiration date, and another dummy FRN covering the remainder of the year.
E-Rate Updates and Reminders
Kindness and Cruelty on Social Networking Sites:
In light of the new CIPA requirements on educating children on the dangers of online behavior, including cyberbullying, it is worth reading a report issued last month by the Pew Research Center entitled "Teens, Kindness and Cruelty on Social Networking Sites." The report found that most teens have witnessed "meanness and cruelty" online, though the majority indicate that they can ignore the mean behavior and that their peers are "mostly kind to each other."
An article on the report in USA Today included comments of a longtime volunteer for a national cyberbullying prevention program who indicated that "the biggest challenge may be teaching kids to confront the few peers who misbehave." She noted that "most kids are acutely aware of who the school cyberbullies are." As an example, she said that whenever she visits a high school to talk about the problem, she prepares by scanning Facebook looking for local examples of hostile comments. According to the USA Today article:
In an auditorium packed with 2,000 young people, she'll quote anonymously – no names attached – from bullies' postings, then look out at the audience.
"Immediately, everyone turns and looks at those people," she says. "This whole ‘Nobody knows who it is,' that's very rare. People know who they are."
Holiday Gifts from Service Providers:
This is the time of the year when a service provider may show up at a school bearing a basket of goodies for a favorite customer or customer-to-be. Under the FCC's E-rate gift rules, such a visit should set off a loud warning bell. Gifts in excess of a $20 value to any one individual responsible for E-rate, procurement, and/or technology planning are strictly prohibited. With approval from the recipient's supervisor, however, a gift basket may be shared by an office (assuming individual gifts in the basket don't exceed $20 per person). Or, as another example provided by the SLD, a floral gift arrangement may be placed in the office's reception area.
The poster child for such distributed gift giving is AT&T. As a holiday tradition, AT&T has long sent cupcakes to hundreds of FCC staffers. According to Public Knowledge, a digital rights advocacy group, AT&T sent 133 boxes of cupcakes to the FCC last year. The distribution included 216 cupcakes to the Wireline Competition Bureau, 150 to the Enforcement Bureau, 144 to Wireless Telecommunications Bureau, 66 to the Commissioners and staff — but, perhaps not surprisingly, precisely zero to the Office of Inspector General. Assuming each cupcake cost less than $20, and that no staffer consumed more than $20 worth, the FCC was in full compliance with the federal employee gift rules — basically the same rules adopted for E-rate purposes.
Although we're treating the E-rate gift rules lightly here, all applicants should know by now that violations of these rules can lead to serious financial consequences. The safest course of action remains to take no gifts at all from E-rate service providers.
Schools and Libraries News Brief dated December 16 – Form 470 Reminders
As summarized below, last week's SLD News Brief for December 16, 2011, provides several important reminders on filing a Form 470.
Last Filing Date for FY 2012:
Although technically there is no deadline for filing a Form 470, there is a 28-day posting requirement before vendors can be selected, contracts signed, and Form 471s submitted. As such, the last possible date to file a Form 470 which could be used with a FY 2012 application will be February 21, 2012 — 28 days before the Form 471 window deadline of March 20th (remember that 2012 is a Leap Year, so there are 29 days in February).
But please don't wait until February 21st to submit your Form 470 (or until February 14th, if filing on paper). There are just too many ways things can go wrong if you wait until the last moment.
Correcting a Form 470:
Once a Form 470 has been submitted, USAC will send the applicant a Receipt Notification Letter ("RNL"). Although the RNL provides the applicant an opportunity to make certain corrections on the filed Form 470, the type of corrections which can be made are very limited (e.g., contact information). Any changes of substance — RFP vs. non-RFP, new service, or change of category in which a service is posted — cannot be corrected on an existing Form 470. Such changes would require filing a new Form 470 with the full 28-day posting requirement.
Avoid Posting in the Wrong Category:
If an applicant posts a service in one category, which should have been posted in another, funding for that service request may be denied. The two most common problems are:
- Services such as dark fiber, VoIP, or wireless data services can be provided by telecommunications or Internet providers. To cover either possibility, such services should be posted under both the Telecommunications and the Internet Access categories.
- There are two Priority 2 categories, one for new Internal Connections equipment and one for Basic Maintenance of Internal Connections. If new equipment may require separate maintenance services, or if maintenance may require the purchase of new equipment, postings should be made in both categories.
When in doubt, post for all applicable categories of service.