News of the Week

The FY 2022 Form 471 Application Window will close on Tuesday, March 22, 2022, at 11:59 p.m. EDT.  Form 470s must be filed no later than February 22nd to meet the 28-day posting requirement before the Form 471 window closes.

E-Rate:

Wave 44 for FY 2021 was released on Thursday, February 10th, for $9.10 million.  Cumulative commitments are now $2.59 billion.  Nationwide, USAC has now funded 98% of the FY 2021 applications representing 93% of the requested funding.

ECF:

Wave 9 was released on February 8th for a total of $128 million.  Cumulative ECF commitments are now $4.54 billion.  Nationwide, USAC has funded almost 87% of filed applications.  Authorized disbursements as of last Friday totaled $384 million.

With Emergency Connectivity Fund (“ECF”) funding commitments still going out, many schools and libraries have realized that they will be unable to fully utilize all approved funding this fiscal year and are seeking expansion of ECF benefits beyond June 30, 2022.  As a result, an Ex Parte filing in late January by SHLB, CoSN, SETDA and ALA is beginning to generate broad support by the ECF applicant and service provider communities.

The original SHLB/CoSN/SETDA/ALA filing asked the FCC to take the following actions:

1. Extend the June 30, 2022, service delivery deadline;
2. Open a third funding window in the spring of 2022 to distribute the program’s remaining funds;
3. Extend the gift rule to coincide with the extended service delivery deadline;
4. Reconsider the record-keeping requirements with respect to library applicants; and
5. Waive the cost allocation rule in the E-rate program, at least for the duration of the public health emergency.

Support for these changes, most importantly for the extended service delivery deadline, came last week from:

E-Rate Management Professionals Association (“E-mpa”)
Schools, Health & Libraries Broadband (“SHLB”) Coalition
State E-Rate Coordinators Alliance (“SECA”)

The problems cited in these filings, which we have seen as well, include late approvals of applications, lengthy post-commitment changes, and delayed reimbursements, as well as major supply chain disruptions.  It is also becoming clear that total funding requested in the two windows, minus approved funding likely to be unused during the year, will mean that available funding may well exceed one billion dollars.  This excess funding could be used to support a third window and/or to extend approved recurring expenses well beyond June 30, 2022.

Upcoming Dates:

FCC Supply Chain Annual Reporting Portal:

Late in 2019, following the enactment of the Secure and Trusted Communications Networks Act of 2019, the FCC adopted the USF National Security Rules Order (FCC 19-121) (see our newsletter of December 2, 2019).  This Order barred the use of Universal Service Fund (“USF”) subsidies, including E-rate, to fund equipment, components, and services from “covered” companies deemed to provide a national security risk including, at the outset, Huawei and ZTE.

Although very few E-rate applicants have been found to have purchased equipment or services attributable, even in part, to Huawei and ZTE, the prohibition must be observed particularly with respect to advanced communication services provided by U.S. service providers.  The FCC has recently announced (DA 22-109) the establishment of the online reporting portal for providers of advanced communications services to report the extent to which their networks contain or use covered communications equipment or services.  Under the Order, each provider of advanced communications services must file an initial report by May 5, 2022.  Any service providers reporting such use must update their usage report annually with respect to the locations, types, suppliers, historic and replacement cost, functionality, replacement plans, and detailed justifications of why such equipment was obtained.

The reporting portal, instructions, and other information regarding the Annual Reporting requirement are now available at https://www.fcc.gov/supplychain.

Guilty Plea in E-Rate Fraud Case:

The U.S. Department of Justice announced a guilty plea by a Kentucky businessman in what it described as a decade-long scheme to defraud the E-rate program. The DOJ reported that the businessman, one of his employees, and the school E-rate consultant “…made false statements and submitted fabricated documents to the E-Rate Program regarding the required co-pays and the program’s fair and open bidding process. In essence…the co-conspirators used the victim schools as vehicles to fraudulently obtain money” from the E-rate program.  The loss to the E-rate program was calculated at approximately $6.9 million dollars.  The case, involving schools in Tennessee and Missouri, was investigated by the FCC’s Office of Inspector General (“OIG”) and the Federal Bureau of Investigation (“FBI”).

According to the plea agreement, obtained by a local Kentucky newspaper, the conspiracy to commit wire fraud carries a maximum statutory sentence of not more than twenty years, a fine of not more than $250,000, and a period of supervised release of not more than five years.

We conclude this article with a reminder to read the “Certifications” section of all E-rate forms that, in the case of the Form 473, the Service Provider Annual Certification (“SPAC”), reads in part:

I acknowledge that any false statement on this Form or on the Service Provider Invoice Form (FCC Form 474) can be punished by fine or forfeiture under the Communications Act, 47 U.S.C. § 502, 503 (b), or fine and imprisonment  under Title 16 of the united States Code, 18 U.S.C. § 1001, and could subject this Service Provider to liability under the False Claims Act.

USAC’s Emergency Connectivity Fund Program Newsletter of February 8, 2022, continues to provide information for requesting ECF reimbursements.  This week’s newsletter includes the following discussion of common mistakes USAC is finding in reimbursement claims:

• Please only request reimbursement for taxes on eligible equipment and services. Additional taxes on an invoice for equipment and services that are not eligible for reimbursement should be removed from the request for reimbursement amount.
• Costs that were bundled on the submitted ECF FCC Form 471 should also show as bundled on the submitted vendor invoice. For example, a license is not a reimbursable expense if it is itemized on the vendor invoice attachment, but if a license was bundled in the base price of a connected device on the ECF FCC Form 471, it must show as bundled on the vendor invoice attachment as well.
• Cases for iPads and headphones are not an eligible reimbursable expense.
• If the vendor invoice attachment does not include the delivery date, please also upload shipping/delivery documentation (i.e., packing slip) that references the equipment and includes the date of delivery, along with the vendor invoice attachment.

Although not referenced in the weekly ECF Newsletter, USAC presented an informative Invoice Training webinar for applicants last Tuesday.  That webinar is still available via the original registration link.  The three key slides on invoice attachments from the presentation are shown below.