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In This Week's Issue
» Funding Status Update
» "Free" VoIP Phone Issue Resolved? Maybe or Maybe Not
» E-Rate Updates and Reminders
» Schools and Libraries News Brief dated January 11 — Responding to Bids

E-Rate Central News for the Week
January 14, 2013

Introduction

The E-Rate Central News for the Week is prepared by E-Rate Central. E-Rate Central specializes in providing consulting, compliance, and forms processing services to E-rate applicants. To learn more about our services, please contact us by phone (516-801-7804), fax (516-801-7814), or through our Contact Us Web form. Additional E-rate information is located on the E-Rate Central Web site.

Funding Status

The FY 2013 Form 471 application window opened on Wednesday, December 12, 2012, and will close at 11:59 p.m. (EDT) on Thursday, March 14, 2013.

Wave 26 for FY 2012 will be released on Tuesday, January 15, 2013, for $12.6 million.  Priority 2 funding is being provided at 90%, and is being denied at 89% and below.  Cumulative funding for FY 2012 is $1.73 billion.  Informally, USAC has indicated that its target for completing the reviews of all "workable" FY 2012 applications — i.e., those without any special issues — is March 31st.

Wave 76 for FY 2011 will be released on Wednesday, January 16, 2013, for $3.9 million.  Priority 2 requests are being funded at 88% and above, and denied at 87% and below.  Cumulative funding for FY 2011 is currently $2.49 billion.  It is safe to assume that remaining applications for FY 2011, much less those for FY 2010, are considered something other than "workable" under USAC’s definition.

"Free" VoIP Phone Issue Resolved? Maybe or Maybe Not

Late last week, Jive Communications began notifying its customers that it had been advised USAC "…will allow the provision of free handsets without cost allocation as part of the E-rate program" (presumably USAC’s own language).  Jive initially indicated that, as a practical manner, this means that:

  1. Funding decisions for [Jive’s pending] 2012 FRNs will be processed "in the near future"
  2. Current and future applicants are free to take advantage of Jive’s free handset program

Jive subsequently released a partial retraction of its first notice indicating only that it was expecting "positive funding decisions" on its customers’ pending FY 2012 FRNs.

Because this information broke late in the week, we have been unable to get formal clarification, from either the FCC or USAC, on the issues involved.  The following two points should be noted:

  1. The last formal FCC position on the free phone issue was a warning issued in September in the FCC’s final Report and Order (DA 12-1533) for the FY 2013 Eligible Services List indicating that it would "defer acting on these issues for now."
  2. One possible interpretation of last week’s confusing announcements is that the FCC may have decided not to penalize applicants applying for free phones in FY 2012 since those applications preceded the FY 2013 warning.  In other words, this was a retrospective decision on bundled end user equipment, not a prospective decision.

Until we see a formal decision by the FCC — or at least get clarification from USAC — we would reiterate the FCC’s warning.  Applicants should not yet assume that free phones may be bundled in with hosted VoIP services without allocating out the cost of those phones.

E-Rate Updates and Reminders

Extended Deadlines Expiring January 28th:

The extended FY 2011 recurring service invoice deadline, previously set to expire last October 29th, is January 28, 2013.  The January 28th date corresponds to the regular invoice deadline for non-recurring services with a September 30, 2012, service delivery deadline.

The extended FY 2012 Form 486 deadline for Waves 1-12 is also January 28th.  The normal 120-day deadline will apply for other later FY 2012 waves.  For example, the Form 486 deadline for Wave 13, issued October 2, 2012, will be January 30, 2013.

FCC Appeal Decisions Watch:

The FCC released the following two appeal decisions last week:

DA 13-13: Granted a consolidated appeal, including a limited waiver of the competitive bidding rules, on behalf of 52 Puerto Rican schools and libraries.  The most interesting issue involved a right-of-first-refusal provision in a five-year consortium contract.  Under the contract, the vendor could continue to provide service for five years, but only if it agreed to meet any lower bids by competitors throughout the contract term.  The FCC granted a waiver in this case because, as a practical matter, the right-of-first-refusal was never exercised.  The FCC made clear, however, that such a provision, while "widely accepted" in the commercial world, is not appropriate under E-rate competitive bidding rules.  The rationale was that by "their very nature, right-of-first-refusal provisions give the holder…an unfair advantage in the bidding process by allowing it to wait until all of the bids have been submitted to match the lowest bid."
DA 13-15: Denied two appeals and one petition for reconsideration — each decision involving different issues, but technically related to missed appeal deadlines.  The FCC can waive appeal deadlines, but typically does not for appeals it would not otherwise grant.  Cynically, denials based on missed appeal deadlines are easier to write than issue-specific denials.

Block 4 Identification of CEO Schools:

USAC has indicated that schools providing free meals for all students under the USDA’s Community Eligibility Option ("CEO"), currently limited to six states (IL, KY, MI, NY, OH, WV, and DC), should be listed in Block 4 of their Form 471 applications as using an alternative discount mechanism — i.e., with a "Y" in field #10.  CEO schools should note the following:

  1. Under USDA rules, CEO schools are precluded from collecting NSLP applications hence, for E‑rate purposes, they are by necessity using an alternative discount mechanism.
  2. Although CEO meal expense reimbursement is currently based on a 1.6x multiple of the number of students identified via direct certification, the multiplier approach is not deemed an acceptable method of calculating student eligibility percentages for E-rate discount rate purposes.
  3. Currently, E-rate student eligibility must be determined either by using the most recent pre-CEO NSLP data (typically 1-2 years old) or by survey.

Senator Rockefeller Retiring:

Senator Jay Rockefeller (D. WV) has indicated his plan to retire when his current term ends in 2014.  Senator Rockefeller and ex-Senator Olympia Snowe, who just retired, were the two primary Senatorial architects of the E-rate program under the Telecommunications Act of 1996.  Both have been enthusiastic supporters ever since.  Hopefully, Senator Rockefeller can use the remaining two years of his term to provide the leadership necessary to put the E-rate program back on a firmer financial footing.

Schools and Libraries News Brief Dated January 11 – Responding to Bids

Applicants with posted or pending Form 470s (and/or RFPs) should carefully review the SLD News Brief for January 11, 2013.  Fair and open competitive bidding is the most critical part of the E‑rate process, and last week’s News Brief provides an excellent overview of the applicants’ responsibilities, including:

  1. Responding to questions from potential bidders — particularly important if there is no RFP and if the Form 470 provides only limited information on detailed needs.
  2. Receiving one or no bids — and how to memorialize such a situation.
  3. Rejecting all bids or canceling a procurement — requiring a new Form 470 (and/or RFP) if the procurement is reinitiated.
  4. Making significant changes in the scope of a project and/or services requested — also requiring a new Form 470 (and/or RFP).
  5. Considering all bids received — and documenting the bid selection process with a bid evaluation matrix.
  6. Retaining documentation — see E-Rate Central’s discussion (and bid matrix template) on Competitive Bid Response Documentation.

One particularly welcome piece of guidance, at least from an applicant perspective, was a brief discussion of a vendor’s responsibility for making a good faith bid.  The News Brief notes that:

…service providers also have a responsibility to respond to posted FCC Forms 470 and RFPs with specific requests for information necessary to prepare responsive bids. Simply sending a generic email to the applicant saying that the service provider can provide the general type of service requested and requesting a call-back would not be considered a good faith response to an FCC Form 470 posting. Emails that can be identified as "spam" do not require a response — especially if the applicant has indicated in the FCC Form 470 and/or RFP a specific procedure or mechanism for submitting questions.

 

Disclaimer: This newsletter may contain unofficial information on prospective E-rate developments and/or may reflect our own interpretations of E-rate practices and regulations. Such information is provided for planning and guidance purposes only. It is not meant, in any way, to supplant official announcements and instructions provided by either the SLD or the FCC.