Recent Fiber Construction Denials:
We always suspected that FY 2016 would be a learning experience for applicants applying for newly eligible dark fiber and self-provisioned fiber construction. USAC outreach on the topic has stressed the importance of providing comprehensive system requirements and of always comparing the costs of such systems against equivalent lit fiber alternatives. It is only within the last few funding waves that we’ve begun to see how well applicants have learned these lessons. There have been some failures.
The most common reason given by USAC for denying fiber requests has been that “The products and services that were requested on your FCC Form 471 (‘Leased Dark Fiber’ or ‘Self-Provisioned Fiber Network’) are substantially different than those requested on your FCC Form 470.” For example, one denial was for posting a “Dark Fiber Network” on the Form 470, but selecting a “Self-Provisioned Fiber Network” on the Form 471. Another example was seeking a “Leased Dark Fiber IRU fee,” and instead applying for “Dark Fiber Special Construction.”
A second common basis for denial is the failure to properly evaluate the cost-effectiveness of leased lit fiber against dark or self-provisioned fiber alternatives. Such comparisons are not trivial if properly accounting for different time frames and for all costs likely to be incurred.
Applicants with fiber applications still pending for FY 2016 may want to review their procurements and funding requests with a more critical eye, and consider whether they should rebid their fiber projects for FY 2017.
Missing “Or Equivalent” Denials:
In its 2011 “Queen of Peace” appeal decision (DA 11-1991), the FCC adopted a rule that an applicant cannot request a specific manufacturer’s make and model on a Form 470 or RFP without appending a phrase such as “or equivalent” to express their willingness to consider bids providing similar functionality. Adding “or equivalent” to every manufacturer’s name sometimes seems to be little more than a useless rote exercise, but E-rate requires it. We continue to see funding denials when the phrase is missing from an applicant’s procurement documents.
Our newsletter of December 5th discussed the FCC’s recently released FY 2016 Agency Financial Report. One section of that report discussed the Commission’s efforts to ensure compliance with E-rate rules. In particular:
The forms to request bids and seek support for services (FCC Forms 470 and 471) have been redesigned to minimize applicant mistakes and increase automation. For example, the forms contain drop-down menus that require applicants to select from lists of products and services that are eligible. Limiting applicants to selecting only eligible services and products sends a clearer signal to potential bidders (service providers) that the applicant is seeking only eligible services and products.
More specifically, the Form 470 drop-down menus for most products (with the exception of the “Other” category) list manufacturers by name, each followed by the required “or equivalent” phrase. Unfortunately, we are hearing reports of applicants being denied for failure to also include the same phrase after manufacturers’ names in any associated and less formal RFP attachments. Applicants facing such denials may wish to appeal based upon compliance with the “or equivalent” requirement in the more formal Form 470 and upon the FCC’s clear intent to provide the drop-down menus to minimize applicant mistakes.
Better yet, at least going forward into FY 2017, applicants should make liberal use of “or equivalent” whenever possible.
Form 486 Review Status:
USAC has indicated that some 800 Form 486s for FY 2016 remain in review because of inconsistent CIPA certifications. The pending Form 486s may also include filings with no FRNs, a potential EPC system error.
Applicants awaiting Form 486 approvals should check with the Client Service Bureau (“CSB”). If necessary, CSB can cancel the pending Form 486 allowing it to be correctly refiled. For additional information, see USAC’s Schools and Libraries News Brief of November 11, 2016.