Last month, in its S&L News Brief for August 8, 2014, USAC briefly discussed the procedures for filing an FY 2015 Form 470 for contracted services. Because the Form 470 is such a critical and integral part of the E-rate competitive bidding and application process — and because we’re still getting many questions on the Form 470 for FY 2015 — it is worth delving into this issue in more detail.
Delay in Implementing the Form 470 for FY 2015:
Usually, well before this time of the year, USAC would have updated its online Form 470 tool to reflect the coming funding year. If you file an online Form 470 for FY 2015 now, however, you will find that the only option in the Funding Year field is 2014. If you submit a paper Form 470, you can write “2015” in that field, but USAC’s only option for now is to data enter it as “2014.”
The reason given for the delay in enabling the Form 470 for FY 2015 is that the Form 470 (as well as the Form 471) is in the process of being revised. A draft of the new version has not yet been made public. At the very least, the revision is expected to change the current Priority 1 and Priority 2 designations to Category 1 and Category 2, and to eliminate the technology plan certification. Changes to the Form 470 instructions will also be required to reflect the E-rate modernization Order.
Before the revised Form 470 can be made available, a draft will first have to be sent to OMB for review (as per the Paperwork Reduction Act of 1995). The FCC is expected to take this step later this month. The OMB approval process requires publication in the Federal Register and at least a 30-day comment period. Practically, the revised Form 470 is not likely to become effective before November.
Interim Use of the FY 2014 Form 470 for Contract Procurements:
As a preliminary matter, it should be noted that this year’s delay in implementing the Form 470 for FY 2015 is a historically unique problem. Last year, in roughly the same time period, the Form 470 was also being revised. In this case, however, the previous version of the Form 470 had already been enabled for FY 2014. Applicants were free to use the previous version until the revised version became effective in December 2013. The only transitional hitch, affecting a few applicants, was that Form 470s started, but not finished, before the effective date of the revision, had to be redone.
This year is different. The current version of the Form 470 has not been enabled for FY 2015. Although this may avoid the limited transitional issue that arose last year, it creates a larger issue for applicants seeking to begin their procurement cycles for the coming year.
To understand the current issue, it is important to understand the E-rate distinction between (a) contracted services and (b), tariffed or month-to-month (“MTM”) services. E-rate rules require contracts for all Category 2 services and many Category 1 services. Obtaining such services usually involves more formal procurement procedures, often including RFPs or the equivalent. E-rate does, however, recognize that certain Category 1 services are often made commercially available on a monthly recurring basis without a formal contract. The Form 471 uses different fields to distinguish between the two types of services. One critical criterion for using tariffed or MTM services is that they must be rebid via a Form 470 each year — specifically a Form 470 for that funding year. A Form 470 for contracted services, on the other hand, is required only when a new contract — often a multi-year contract — is sought.
For FY 2015 Form 470 purposes, applicants are currently faced with two options. Depending upon the services ultimately utilized, picking the wrong option may lead to funding denials for FY 2015.
For Tariffed/MTM Services:
An applicant filing for tariffed or MTM services for FY 2015 must have posted its requirements for such services on a FY 2015 Form 470. Since there is currently no 2015-enabled Form 470, an applicant’s only option is to wait until it becomes available — hopefully by about November.
In theory, this should not be a problem. Generally, the procurement of tariffed/MTM services is not a complicated process. Assuming that Form 471 applications will not be due until March of next year, waiting until November or December to file the requisite Form 470 merely delays when applicants can begin the FY 2015 application cycle. For some, this is just an annoyance.
The fear is that some applicants may take advantage of the “FY 2014” Form 470 filing option discussed below, but forget to file a FY 2015 Form 470 for tariffed/MTM services.
For Contracted Services:
Recognizing that some applicants, particularly those generally seeking contracts with long procurement cycles, need to file their Form 470s earlier in the year, the FCC has approved the use of the current Form 470, with the default funding year of 2014, if it is clearly marked as being for FY 2015 services.
The procedure for using this option is described in the SLD News Brief referenced above. Essentially, the process involves filing what would otherwise be an “FY 2014” Form 470, but using the textual capability of Item 13 to explain that the Form 470 is really for FY 2015. The language needed to be able to do this may be as simple as “This Form 470 is for contractual services to be procured for Funding Year 2015.”
For filing such a Form 470, the specific steps required are as follows: