News of the Week

Wave 30 for FY 2015 will be released this Thursday, December 24th. Funding for FY 2015 is available for both Category 1 and Category 2 services at all discount levels. As of Wave 29, cumulative funding for FY 2015 was $2.81 billion.

FY 2016 Application Window Delayed:

USAC released a Special Edition News Brief dated December 18, 2015, stating that it will not be announcing the FY 2016 application window until “early January.”  The announcement delay was attributed to USAC’s ongoing development of the EPC version of the Form 471.

For initial planning purposes, USAC indicated “that the window will open no earlier than January 20th and close no earlier than March 31.”  As a practical matter:

1. This is going to be a difficult year. Don’t use the application window delay as a reason to put off pre-Form 471 preparations. There is a lot to do. Most importantly:
   1. EPC accounts must be established for all applicants, consultants, and service providers.
   2. EPC Account Administrators must add all necessary users to their accounts and must assign individual user permission rights. Permissions may have to be updated as new types of forms are added to EPC, as was the recent case for the new Form 498 and will likely be the case for the Form 471 (when available). Remember that user passwords need to be reset every 60 days to stay current.
   3. Applicants need to make sure that all their associated entities (or consortium members) are correctly included under their EPC accounts. Depending upon the type of entity, additions or deletions can or cannot be done within EPC. In particular:
      1. School districts (or groups of schools treated as districts) and library systems cannot currently add or delete individual schools or libraries. These corrections can only be done by the Client Service Bureau (which may take some time).
      2. Schools and libraries (as defined by their states) with multiple locations must now list those sites as “annexes” (see our newsletter of December 14th). This is a new relationship definition that must be set up within EPC.
      3. Consortia can designate other billed entities as members (or such entities can join consortia) within EPC, but this should be done prior to starting Form 471s.
   4. In many cases, entity information (including school NSLP data) was carried over into EPC from FY 2015 applications, but it is likely to be incomplete and/or out-of-date. It does not appear as if the EPC version of the Form 471 will have the same capability to import entity data as it did last year via a Block 4 template file. Presumably, applicants will be required to update data manually for each entity.
   5. Form 470s should be filed well in advance of the Form 471s. Actual Form 470 creation is easy within EPC, but requires more careful coordination of RFPs (which must be uploaded into EPC) and certifications.
2. Note carefully that USAC’s announcement indicates that the FY 2016 will close no earlier than March 31st. This could mean well into April. Last year, the close of the window was delayed three weeks until April 16th, largely at the urging of big city school districts concerned with the complexity and data entry requirements of the FY 2015 Form 471. This year, a new Form 471, combined with other EPC problems and/or requirements, could make the application window worse. Our recommendation: Don’t plan a non-cancelable post-window vacation in April.

Simplified D-U-N-S® Searches:

As of July 1, 2016, applicants filing Form 472 (or “BEAR”) reimbursement forms will have to first have filed a Form 498 in order to provide USAC with direct payment bank account information (see our newsletter of December 7th).  The Form 498 is now available for completion within EPC.

Completion of the Form 498 requires several types of applicant ID numbers including a Dun and Bradstreet (“D&B”) Number — formally abbreviated as a “D-U-N-S®” (often shortened to “DUNS”) number. Most schools and libraries already have DUNS numbers, but those numbers may not be easily accessible to their E-rate contacts. Other applicants will have to apply for new numbers.

To find an existing DUNS number, USAC’s News Brief of November 20th suggested using the online D-U-N-S database website, but that lookup mechanism is available only to applicant personnel (or an “agent”) and is a bit cumbersome. The DUNS search is by entity name and often returns a selection of similarly named entities for review.

To provide easier access, E-Rate Central has developed a DUNS lookup tool, searchable by BEN. The new DUNS tool is publicly available for applicant use on E-Rate Central’s state website pages. Please note the following:

1. The DUNS database itself does not include E-rate Billed Entity Numbers (“BENs”). What E-Rate Central has done, in cooperation with D&B, is to create a searchable database matching DUNS numbers, names, and addresses with the E-rate BENs, names, and addresses as used by E-rate applicants over the last five years.
2. The matching mechanism yields a confidence level indicator based on an algorithm comparing both the DUNS and E-rate names and addresses. If no DUNS number is found, or if the resulting confidence level of the match is low, a “not found” message is displayed.
3. Based on our experience to date, users of the E-Rate Central lookup tool should find good BEN-to-DUNS matches in more than 90% of the searches. As a check, the search results also show names and addresses as shown in the DUNS database.
4. In some cases, when an organization has different DUNS numbers for different locations, E-Rate Central’s search tool may also display the DUNS information for what DUNS considers to be the organization’s headquarters location. If the DUNS headquarters information differs from the BEN lookup information, the applicant should consider using the headquarters’ DUNS number.
5. To prevent data mining of DUNS information, which D&B considers proprietary, E-Rate Central’s search tool employs a “CAPTCHA” mechanism requiring a user to enter a series of characters prior to each search. If you’re having trouble reading a particular sequence, click the arrow icon for a new sequence, or click the audio button for a voice-generated numeric code.

FCC Appeal Decision Watch – Competitive Bidding:

The FCC issued a strict Order (DA 15-1439) dismissing and denying related Petitions for Reconsideration for nine New York City Catholic schools (three of which are now closed). The petitions sought to reverse USAC commitment adjustments (“COMADs”), and subsequent FCC appeal denials, rescinding funding for FY 2012. The Order should serve as an object lesson as to the importance of competitive bidding and document retention.

USAC’s bidding inquiries in these cases were apparently triggered by a complaint from a service provider whose emails requesting information on eight of the schools’ Form 470 basic maintenance requests had gone unanswered. In two cases, the schools had responded to other service providers by inviting them to open houses to review requirements. In six other cases, USAC determined that the schools’ Form 470s were “insufficiently detailed” to permit vendors to bid without additional information. As USAC’s inquiries broadened to review the schools’ other bidding actions for FY 2012, another NYC Catholic school, sharing the same consultant and similar Form 470 language, came under scrutiny. Based on the initial target of the inquiries, USAC issued COMADs of Priority 2 funding for eight schools. Additionally, failing to receive adequate documentation on bids and bid evaluations more generally, USAC issued COMADs on Priority 1 funding for five of the schools (including the ninth school).

It is clear that E-rate rules require applicants to fairly provide the necessary bidding information to all potential bidders, and to be able to document their bidding and bid evaluation actions. As a practical matter, it is also pretty clear that applicant bidding procedures receive much greater scrutiny when a vendor objects to the process.

In the case of these nine schools, several issues deserve further discussion.

1. One problem with email bidding responses is that it is often difficult for an applicant to know whether a particular email is a legitimate bid and/or request for information, or whether it is essentially spam. In this case, the schools all noted (at least after the fact) that this particular vendor had made no attempt to follow up, had never filed a Service Provider Annual Certification (“SPAC”) form, or had ever been selected as an E-rate provider — thus, argued the schools, it was not considered a potential bidder. Although the FCC rejected this explanation, the argument does point to the practical difficulty of determining the legitimacy of email responses. This particular problem most often arises when an applicant is seeking services without a formal RFP dictating specific types of responses. One way to help screen out generic or spam-type responses is to require responders to reference the applicant’s specific Form 470 number (in the bidding restrictions section).
2. A more general problem, when a detailed RFP is not used, is attempting to provide adequate descriptions of services needed in the Form 470. Here’s an example of the basic maintenance description (similar to others) used by one of the schools involved:
   
   The schools argued that, by requesting hourly pricing for broad classes of equipment, responding bidders needed little or no additional information. Again, the FCC rejected this argument.
   The EPC version of the Form 470 provides more flexibility in providing complete descriptions of service requirements either by (a) adding descriptive text in the Narrative section, and/or (b) uploading a less-than-formal “RFP” description.
3. On a more legalistic basis, all nine Petitions for Reconsideration argued (a) that the FCC failed to address the schools’ waiver requests, and (b) that the FCC’s streamlined notice process, under which the initial FCC appeals were denied, is “procedurally defective.”  The FCC rejected both of these claims.
4. Three of the schools involved in this decision were closed at the end of the 2012-2013 school year (perhaps one of the reasons bid documentation was not easily available). It will be interesting to see what actions, if any, USAC and/or the FCC take seeking repayments of COMAD funds previously disbursed.

Form 486 Deadlines for 2015:

The Form 486 deadline for certifying the start of service (and CIPA compliance, if applicable) is 120 days from the later of the FCDL approval date or the start of service date. The remaining 2015 deadlines for approved FY 2015 applications (adjusted to Monday for 120-day deadlines falling on Saturdays) are:
                                          Wave 13                12/21/2015
                                          Wave 14                12/28/2015

Applicants who missed earlier Form 486 deadlines should review the related article in USAC’s News Brief of December 4, 2015. USAC has mailed FCC Form 486 Urgent Reminder Letters to many of these applicants giving them an additional 20 days (to December 22nd) to file without penalty.

Note:  USAC’s December 11th News Brief was actually released on Monday, December 14th, too late to make our previous newsletter. Both recent News Briefs are reviewed below.

The S&L News Brief of December 11, 2015, discusses both PQAs and bid responses.

PQA Process:

USAC has recently released a large batch of Payment Quality Assurance (“PQA”) notices to applicants whose invoices were paid during 2015. PQAs are essentially mini-audits focusing on individual FRNs (although USAC doesn’t like to use the word “audit” for these inquiries).

The primary purpose of the PQA process is to comply with the Improper Payments Elimination and Recovery Act of 2012 under which federal agencies, such as the FCC, must periodically report on the percentage of funds that were properly, or improperly, disbursed. This is a statistical test based on an examination of a random selection of paid invoices, regardless of dollar amount. For a selected payment and its associated FRN USAC is seeking to confirm that the applicant is eligible, that the service(s) was eligible, properly bid, used, and invoiced, and that both discount and non-discount payments were properly made and/or received.

Although the focus of a PQA is narrow, the amount of documentation required can be extensive. When in doubt as to the nature or extent of the data required, we recommend checking with the reviewer.

Bid Responses:

Fair and open competitive bidding has long been a mainstay of the E-rate program — not to mention being the subject of last week’s appeal decision and a key focus of the PQA review process (both discussed above). USAC’s December 11th News Brief addresses applicant response to bidders. It covers:

• Responding to questions from potential bidders
• Receiving one bid — or no bids
• Rejecting all bids/canceling a procurement
• Making “cardinal” changes in the scope of a project and/or services requested
• Considering all bids received
• Retaining documentation

The S&L News Brief of December 18, 2015, continues USAC’s discussion of bidding. It concentrates on the following topics, broadly grouped under the heading of “Evaluating Bids.”

• Closing your competitive bidding process
• Stating disqualification reasons
• Constructing an evaluation (see also our sample bid assessment worksheet in both Excel and PDF formats)
• Using mini-bids on state contracts
• Requesting tariffed/month-to-month services and contracted services
• Retaining documentation