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Donald J. Welch, Ph.D.
Dr. Donald J. Welch has been the President and CEO of Merit Network, Inc. since jin July 2006. Since 2006 Merit has grown significantly, serving more members wit
services. In 2010 Merit won $103 million in grants towards a $130 million project network infrastructure throughout rural areas of Michigan. In 2010 he was named thThornton/Lawrence Tech Leader and Innovator of the Year as well as one of MichCEOs by Corp! Magazine.
Prior to his arrival at Merit, Don was the Director of Enterprise Technology (CTO) Merchandising Applications for H-E-B, a $12 B retailer in Texas and Mexico. He hresponsibility for enterprise architecture, integration, infrastructure and security as w
delivering and supporting Merchandising applications. In addition, he created H-E-Technology Innovation Store, where new technology was developed and piloted in store.
Before joining H-E-B, he served for 25 years in the U.S. Army attaining the rank ofearning the Legion of Merit for his service. His last assignment was as the AssociaInformation Technology (CIO) and Professor of Computer Science at West Point. Hresponsible for the computer operations and infrastructure used to educate future ArHe built West Points wireless network, one of the first large and secure wireless newhich was the recipient of a Computerworld Best Practices in Mobile and Wirelessecurity. He is also a recipient of the Apgar Award for innovation in teaching for hiclassroom.
Among his other Army assignments, Don was the Chief of Software Engineering focounterterrorist unit, Delta Force. In this role he oversaw the integration of numerou
applications into an enterprise database as well as pioneering technologies such as gpositioning system (GPS) and digital maps. He has also been the senior human resomanager for the Army's professional information technology workforce, where he hreshape the officers to better meet a changed approach to information technology. Hmanaged information technology support for the Department of Computer Science aand a branch of the Army Human Resources Command. While at West Point, he taucomputer science, information technology, and international relations at the undergrAt the start of his Army career he commanded two light infantry companies and thr
platoons.
He has been active in information assurance and software engineering research withpublications and a dozen invited talks in those disciplines. He is a frequent speaker onetworking, regional networks and related topics. He is involved in the research ancommunity in many ways. He is a member of the Educause and Internet2 Network
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February 10, 2010
One Hundred Twelfth Congress
Congress of the United States
House of RepresentativesCommittee on Energy and Commerce
ARRA Broadband Spending
Witness Name: Dr. Donald Welch
Witness Organization: Merit Network, Inc. (www.merit.edu)
Summary of Written Testimony
Problem
In rural and remote Michigan, a lack of viable backhaul infrastructure limits Intern
service performance, availability and affordability for community anchor institution
and businesses, placing these entities at a disadvantage compared to their
metropolitan areas of Michigan and the US.
Solution
Merit Network, Inc., Michigans research and education network provider, in collabo
commercial providers, acting as sub-recipients of the BTOP grants, will create 2,287
mile, shared infrastructure that will address Michigans backhaul shortfalls.
Impact
Through REACH-3MC, Merit will provide 105 community anchor institutions with a d
fiber connection, and enable the same benefits of a high-capacity connection for
community anchor institutions in the service area.
REACH-3MC will create a statewide CAI network that will enable M ichigans publ
consolidate resources, cut costs and provide more service to Michigans citizens.
The REACH-3MC service area encompasses over 1 million homes and 55,000 busines
benefit from the fiber-optic infrastructure either as direct customers of a REACH-3M
or indirectly through an existing service provider that obtains backhaul from a R
recipient.
Because it is a middle mile network with open access principles, REACH -3MC
harm incumbent service providers in the service area.
Extending broadband to financially troubled areas in Michigan will improve the qual
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February10,2010
OneHundred
Twelfth
Congress
CongressoftheUnitedStates
HouseofRepresentatives
CommitteeonEnergyandCommerce
ARRABroadbandSpending
Witness
Name:
Dr.
Donald
Welch
WitnessOrganization:MeritNetwork,Inc.(www.merit.edu)
In2010,MeritNetwork,Inc.receivedtwograntsfromtheBroadbandTechnologyO
Program(BTOP)
administered
by
the
National
Telecommunications
and
Administration (NTIA)and theDepartmentofCommerce, and funded through
RecoveryandReinvestmentActof2009(ARRA). TogethertheBTOPgrants,with
publicuniversitiesofMichigan,fundREACH3MC(Rural,Education,Anchor,Comm
careMichiganMiddleMileCollaborative),aprojectthatwillcreatemuchneed
infrastructure in ruralandunderservedareasofMichigan,withkey interconnec
WisconsinandMinnesota.
REACH3MC
engages
Merit
Network,
Michigans
research
and
education
communityanchor institutions(CAIs),andeightcommercialsubrecipientstoser
of society: homes, businesses and CAIs. REACH3MC solves the backhaul pro
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REACH3MCwill createmuch needed infrastructure in a state thatmust tran
manufacturingbased
economy
to
one
that
is
based
on
information
and
tech
infrastructure is vital to both education and economic development. REACH
MeritsvisionofequalaccesstoinformationforallofMichigan,andenablesMic
institutionswithamechanismtocutcostsandprovidemoreservicetotheirconst
ProblemREACH3MCSeekstoAddress
In rural and remote areas ofMichigan, a lack of backhaul infrastructure, or a
effectivebackhaulduetoshortfallsincapacityandcompetitiveserviceofferings,l
service performance, availability and affordability for end users. Internet Serv
(ISPs)thatservehomes,businessesandcommunityanchorinstitutions(CAIs)inr
arehinderedbecausethemajorityoftheircostsgotoobtainingbackhaul. Circui
and transport tomajorTier1accesspointsareeither costprohibitiveorunava
limitedcapacity.
Michigansuniquegeographycreatesastatewithasubstantiallandmassandapo
ispredominatelyconcentrated inmetropolitanareasof theLowerPeninsulasso
Intheruralareasbeyondthiscore,populationdensityisnotenoughtosupporta
buildout of Internet infrastructure. The cost of construction is too great
sustainable return on investment. The result is that the regions of the No
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Becauseofthe lackofbackhaul,communityanchor institutions inruralandrem
areforced
to
operate
with
levels
of
Internet,
telecommunication
and
networkin
arebelow theirneed. TheseCAIsprovide the samevitalservices that thepubl
withonlyafractionoftheresourcestheircounterpartsinpopulousregionsofMic
UShaveaccessto. TheproblemisthesameforbusinessesinruralandremoteM
mustcompeteintheemergingglobaleconomywithoutaneffectivemethodtoa
usersathomefacesimilarpredicamentsregardingaccesstoinformation.
AboutMeritNetworkandtheSHLBCoalition
MeritNetwork,Inc.isanindependent,501(c)3,nonprofitorganizationthatreceiv
orfundingofanykindfromtheStateofMichigan. Ouroriginsdatebackto1966
was foundedby the threemajoruniversities inMichiganasa shared resource
their networking needs. Over time,Meritsmission has evolved to include t
community anchor institutionsof all kinds. MeritprovidesourMemberswith
networkresourcesandnetworkrelatedservices. Today,Meritownsandoperate
runningresearchandeducationnetworkinAmerica.
MeritNetworkbelieves in thestrengthofa robusteducationalcommunity,bot
andnationwide. AsamemberoftheSchools,HealthandLibrariesBroadbandCoa
we believe that improving the broadband capabilities of schools, libraries and
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Asavalued resource toourMemberorganizations,MeritNetworkhashelped
achievesuccess
by
working
with
them
to
facilitate
collaboration
between
organ
Meritbackbone,anetworkofCAIsconnectedtooneanotherisoptimalinfrastruc
for telecommunication and access to information,but also for the sharingof r
consolidationofservicesforMichiganspublicinstitutions. ItallowsourMember
andprovidemoreservicetotheirpatronsandconstituents. Duetothelackofbac
and remoteMichigan,not allCAIshave the ability to connect to theMeritnet
advantageofthesebenefits.
MeritNetwork
is
guided
by
avision
of
equal
access
to
information
for
all
o
citizensregardlessofphysical locationorgeography. Thoughwehavefostered
quite some time,Merit lacked the financialmeans necessary to bring our visi
Absent theBTOPgrantsMeritNetwork received,building thenecessary infrastr
takedecades. TheBTOP grants greatly accelerate thatprocess to thebenefit
state.
SolvingtheBackhaulProblem,aFoundationforMichigansFuture
REACH3MC will create 2,287 miles of fiberoptic infrastructure through 52
Michigan. Thefiberwillbelitwiththemostadvancedtechnologiesandisdesign
allsectorsofsociety:homes,businessesandcommunityanchorinstitutions.
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Merit,willeachown fiber strandsovervariousportionsof theREACH3MCnet
whatis
commonly
referred
to
as
acondo
build
in
the
telecommunications
ind
primarygrantrecipient,Meritownsthefibersheath,whiletheownershipandop
fiberstrandswithinthesheatharedividedbetweenMeritandthecommercialp
aresubrecipientsofthegrants.
REACH3MCnetworksegmentswillhavebetween12and168strandsoffiber. Th
speedswillrangefrom10Gbps(gigabitspersecond)and1Gbps. Theinfrastruct
capacity to be easily increasedwith a simple upgrade in optronics to accomm
growthand
industry
innovation
with
additional
investment
in
fiber
optic
infrastruc
Merits portion of the fiber will allow state and local governments, universi
libraries,healthcarefacilities,communitycolleges,publicsafetyentitiesandothe
anchorinstitutionstoconnecttoMeritsprivate,highperformancenetwork,ena
lowercosts,consolidateservicesandprovidemoreservicetoMichiganscitizens.
REACH3MCwillprovideover100directconnectionstocommunityanchorinstitut
middlemile project, the aim of REACH3MC is not to directly connect eve
businessinthenetworkservicearea,butrather,REACH3MCwillbuildbackhaulLocal ISPswillthenhavetheopportunitytousethis infrastructuretoprovidefas
andmorereliableservice.
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goodfaithandaccesswillbeatmarketrates. Inthismanner,REACH3MCsuppo
ISPsin
the
service
area.
Leveraging
the
middle
mile
infrastructure,
local
ISPs
optiontoobtainaffordablebackhaulservicefromREACH3MCand improveserv
MeritwillworkwithanyISPinterestedinaccessingREACH3MCinfrastructureto
enclosureatadesiredlocationforinterconnection.
ThenumberanddiversityofsubrecipientsparticipatinginREACH3MCensurethe
beasustainedinvestmentthatdeliversresults. Oneachnetworksegment,there
serviceproviders(Meritandsubrecipients)competingtoprovideagivencommu
valuewhetherit
be
wholesale
transport
to
alocal
ISP,
afiber
connection
to
asch
orresidentialandcommercialservice. Eachsubrecipientbringsadifferentvalu
to the service area, employing different technologies, content and servic
Competitionwillalsoenforcemarketrates,ensuringthatconsumers inremote
paymoreforthesameservicethanthoseinmetropolitanareas.
BenefittoCommunityAnchorInstitutions
ThroughREACH3MC,Meritwillprovide105communityanchorinstitutionswith
Gbps fiber connection. REACH3MCwillmake it feasible for any other comm
institutiontoconnectatspeedsof1Gbpsorgreater. TheFCCNationalBroadba
goaltoconnecteveryCAI inAmericaat1Gbpsby2020. REACH3MCwillplace
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connectedtotheMeritnetwork. Additionally,REACH3MCwillenablethesame
highcapacity
connection
for
over
900
more
community
anchor
institutions
in
the
s
Indirectly,communityanchorinstitutionsineveryregionofMichiganwillbenefit
3MCbecauseitwillcompleteastatewidenetworkforCAIs. Meritcurrentlycon
privateuniversities,93%ofpublicuniversities,66%ofcommunitycolleges,63%
50%oflibrarycooperativesand37%ofpubliclibrariesinMichiganthevastmaj
notconnectedduetoalackofaffordablebackhaulintheirarea.
Advanced Placement (AP) classes, which provide students with a significa
advantage in college preparation, are only available on a limited basis in rem
Michigandistrictsifatall. Foreign languageclasses tella similar story: studen
areas have fewer opportunities and options than those inmetropolitan areas.
statewideCAInetwork,studentsanywhereinthestatewillbeabletotakeadva
APand foreign languagecourses, leveling theplaying fieldandensuring thatev
schoolisequippedtoproduceaskilledworkforcethatwilldrivethe21stcenturye
REACH3MC received over 250 letters of support from community anchor i
Michigan, including letters from over 30 CAI Leadership Organizations (examp
AssociationforIntermediateSchoolAdministrators). REACH3MChasthebackin
UniversitiesinMichiganthatarecommittedtofullysupportingtheprojectinitsen
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PublicSafety:aFoundationforMichigansTransitiontoNextGeneration911
Duetotheneedtoupdatefirstresponsepublicsafety,theStateofMichiganco
studyontransitioningtoNextGeneration(NG)911service. Theresultingplanha
highavailability network as its foundation. The cost of such a network ha
implementationofthisplanindoubt. WithREACH3MCinplace,makinganincre
totheNG911systemisnotonlypossible,butlikelyinthefuture.
A portion of REACH3MC was designed with input from the State of M
Administrator. The fiber, leveragingREACH3MCandMeritsexistingnetwork,w
footprint to connect all Public Safety Answering Points (PSAPs) to a rob
infrastructure that will create costsavings and enable the consolidation of re
redundancy, security, interoperability, and flexibility of this network will be p
maintainingareliable911system inMichigan,andprovideoptionsandfunction
changingdemandsofpublicsafety.
ImprovedServiceforHomesandBusinesses
REACH3MCwill enable the commercial subrecipients access to 51 Central O
throughout the state,which theywilluse toprovide middlemile serviceand
existing infrastructure of local ILECs (Incumbent Local Exchange Carriers) to p
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TheREACH3MC serviceareaencompassesover1millionhomesand55,000bu
standto
benefit
from
the
infrastructure
either
as
direct
customers
of
aREA
recipient,orindirectlythroughanexistingserviceproviderthatobtainsbackhaulf
3MCsubrecipient.
EconomicDevelopment
REACH3MC is focused on the needs ofMichigan andMichigans efforts to fix
economy. Untilrecently,MichiganhadthehighestunemploymentrateinAmeric
Michiganhaslostmorethan300,000jobssince2000,including170,000manufact
Extendingbroadbandtothesefinanciallytroubledareaswillcreatejobsandbols
growth in a statewith one of the highest needs of any in the nation. Merit
received strong support and interest from a number of Economic Developmen
NorthernMichigan
who
are
very
excited
about
the
possibility
that
REACH
3MC
holds fortheircommunities. Theybelieve intransformativepowerofbroadban
thequalityoflifeinMichigansruralareas.
Morehighspeedinternetmeansmoresmallbusinesses,farmers,andentreprene
betteraccess tonationaland internationalmarkets, toabroaderarrayofvend
andcustomersandtoateamofskilledemployees.
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Governments part that favors one entity over another, but rather, because
accessprovisions
and
the
investment
in
community
anchor
institutions,
it
is
impo
REACH3MCasaninvestmentinafoundationthatwillbenefittheentirestate.
Businesses considering relocation toMichiganwillno longer facedifficultchoic
hasalwayshad incrediblephysicalbeauty,buta lackofmodern infrastructureh
deterred potential companies from operating here. With the completion of
prospectivecompanieswillnotbeforcedtodecidebetweensettingandresourc
willhavepristinenaturalresourcesandleadingedgemodernbusinessinfrastructuJobCreation
MeritNetworkplanstohire13newpositions insupportofREACH3MC funded
program. Of those 13, Merit has hired 5 thus far. REACH3MC subrecipien
indicatedthat
they
will
hire
new
staff
in
support
of
the
project.
Merit
has
al
additionalstafffromnonBTOPfundssincethefirstaward.
Merit Network has awarded $7,871,851 in contracts to vendors in support of
implementation for environmental assessment consulting, engineering, fiber a
MerithasretainedthreeconstructioncontractorsinsupportoftheREACH3MCb
ofwhichhasbegunconstructionandreportedaddingsixnewjobsinsupportofth
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application. Specifically,Merit utilized themethodology found in Table 5 of t
EconomicAdvisers
Estimates
of
Job
Creation
from
the
American
Recovery
and
Actof2009.
A studybyGartnerConsulting referenced in MichigansPush forBroadband,
MichiganDepartmentofInformationTechnology,concludesthatacceleratingthe
statewide broadband infrastructure in Michigan could result in a $440 billio
Michigansgrossstateproductoverthenexttenyears.
Because theBTOPgrant requiresa20percentcashmatch, the initialFederal in
catalyzedanadditional$25.7millioninprivateinvestment. Merithassuccessfully
million in loansthatwillaccount for itsportionofthetotalmatching funds,and
subrecipientsareintheprocessofsecuringtheirportionoftheremaining$17.4m
ProjectOversight
and
Control
Fromanorganizational standpoint,MeritNetwork isvery capableof successful
REACH3MC. Merithasownedandoperatednetwork infrastructureforover40
alsohasextensiveexperiencemanagingnetworkconstruction. Meritcontinuest
experiencefrommanagingtheNSFNET,theprecursortothemodernInternet.
Thestaffing,policiesandpracticesarecurrentlyinplacetomanageaprojectof
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maintenance, and cash flow related to the project. All of these controls are
SupplementalInformation
submitted
with
this
testimony,
Project
Safeguards.
TheARRA,NTIAandNOAA(NationalOceanicandAtmosphericAdministration,a
supportsNTIA in theirgrantoversightactivities) requireMerit tosubmit severa
detailprojectperformance,constructioncompletion,andfundsexpended.
Additionally Merits financials are audited annually and Merit has always
unconditionalreportfromtheauditfirm. Inthefallof2011andeachsubsequen
willreceiveanA133auditasrequiredbythegrants.
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SupplementalInformation
ProjectSafeguards
AbilitytoSuccessfullyCompletetheProject
Control:
Merit isafullservicecompanyprovidingexpertise innetworkenginee
operations, a 24/7 Network Operations Center, member relations, m
financeandadministration.Merithasalreadybuilthundredsofmilesof
operated a network for over forty years. Merit currently has appr
employees and estimates that it will be hiring about 10 more over
months.Belowisalistofstaffthatworksdirectlyandindirectlyonthep
GrantSpecific
Staff
GrantsManagerprojectmanager, NTIAliaison, compliancComplianceManager Documentationspecialist,compliance
systemscoordinator
PermitSpecialiststate/county/municipalitypermitcoordinAccountantbillingandinvoicing,projecttracking
-
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NetworkEngineerEquipmentspecialistEngineerTechnicians aidtoengineersMeritSupportStaff
DirectorofEngineeringMappingSpecialistGISTechnicianDirectorofOperationsEngineeringStaffControllerAssistantControllerCommunityRelationsManagersCommunication
Specialist
Merithaswritten andposted aConflictof Interest (COI)policy andw
informationinitsoffices.Merithasazerotolerancefortheacceptance
gratuityatanylevel. TheCOIoutlinesstandardsofconducttoestablish
prohibit employees from using their positions for a purpose that c
presentstheappearanceofpersonalororganizationalconflictofinteres
i i th d i i t ti f th d All M it l
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keepabreastofanychangesandtoreinforcepriortraining. They int
knowledgeand
skills
learned
with
other
staff
to
ensure
compliance
requ
metthroughouttheorganization. Alltoolsaremadeavailabletoallst
the grant agreements, the NOFA, various regulations, terms and
handbooks,costprincipalcirculars,andFederalInternetsites.
WagesandBenefitswithinAcceptableLimits
Control:
All staff (except the project Outside Plant Project Manager who
consultant) areUniversity ofMichigan employees. Salaries are regul
prescribed market ranges within the university system. All fringe
standardUniversityofMichiganbenefitpackagesandaverageabout28
Nopreferential
treatment
is
given
for
position
or
title.
All
positions
a
staffishiredaccordingtoUniversitypolicyandprocedure. Meritisaud
andallpayrollandfringebenefitregistersandalistingofallemployee
salariesarereviewedforaccuracyandomissionsbytheauditors.
TravelandOtherEmployeeExpenseWithinAcceptableLimits
Control:
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Overnight trips require advance approval from the direct supervis
paymentutilizes
the
Federal
per
diem
rates
or
actual
reimburse
Consultantsare reimbursed for travelbasedon thesameprocedures.
notownanyvehicles;however,theUniversityofMichiganrentsvehicl
rateswhichMeritutilizesasoftenasitcantoreducetravelcosts.
Projectstaffequipment is limitedtostandard issue laptopsandmonit
included in the corporations inventorydatabase. Cellphonesareeit
issuedthroughareducedrateplanwiththeUniversityofMichiganor
canchoose
to
utilize
their
own
cell
phone.
A
standard
$20
to
$30
tax
stipend is provided for those who utilized their own phones. Cell
stipendsprovidedbyMeritmustbeapprovedbythesupervisingmanag
ofthesupervisingmanager.Allinvoicesandpaymentsareauditableth
financialrecords.
Merit does not have a negotiated indirect cost rate with any Fed
Therefore, indirectcostshavenotbeen included intheprojectasdire
CircularA21.
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Network, Fiber, Conduit, Splice Cases, Huts, Handhole, and Tagging Equipm
Within
Acceptable
Limits
Control:
Merit has a very knowledgeable staff of network and operations e
manyyears
of
experience
procuring
network
equipment
and
fiber
relat
TheoriginalbudgetsubmittedtotheNTIAfornetworkequipmentwa
vendorquotesor current vendor contracts.Allequipmentpurchased
Stimulus granthas tobematched against the submitted and approv
Stimulus listing forequipment. Since the listingwasapprovedover
very often the cost of the equipment has gone down or the fea
equipmenthaveimproved.Merithasbeenabletonegotiateadditional
costby
leveraging
the
awarding
of
the
second
grant.
Merit
seeks
to
whenever possible. However, it anticipants increased costs in s
categories. One example is the current escalation of petroleum ba
resulting in thecost increaseofconduitmaterial. Merit iscarefullyb
monitoringthese
differentials
in
order
to
successfully
complete
the
p
budget.
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Allequipmentpurchases,except thosewitha solesourcejustificatio
with
an
Internet
published
Request
for
Proposal.
Submissions
are
r
ranked for quality, price, compatibility and other necessary conditi
suppliersare interviewedbeforeafinalselection ismade.Thedecisio
contract, includingoneswithasolesourcejustification, ismade ina
withinthe
company;
no
one
individual
has
the
sole
authority
to
approv
choice. Once selectionhasbeenmade it is announcedonMeritsW
vendor contracts must contain the compliance conditions required
and/or Merit which may include but are not limited to the
consequencesforbreachordefaultbythecontractororsupplier,b)su
guarantee, c) performance bond if required, d) equal employment
agreement,e)compliancewiththeCopelandAntiKickbackAct,f)com
the
Davis
Bacon
Act,
g)
Compliance
with
Contract
Work
Hours
and
Saf
Act,h)compliancewith theCleanAirActandtheFederalWaterPoll
Act,g)compliancewiththeByrdAntiLobbyingAmendment,h)compli
E.O.s 12549 and 12689Debarment and Suspension, i)minimum insu
andj)
compliance
will
all
NTIA
regulations
and
requirements.
Merithasanofficialwrittenrestrictivepolicyforprocurement.Allpurc
$
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acceptability testing then the cost of the equipment is aggregate
environmental
assessment,
engineering,
construction,
and
other
relat
recordedintotheassetmanagementsystem.
Allrelatedequipmentorders,packingslips,invoices,locationinformat
management documentation is kept indefinitely either electron
hardcopyuntildisposaloftheequipment. Noequipmentcanbesold
conveyed, ormortgagewithout the expressedpermissionof theNT
usefullifeoftheassetinwholeorinpart.
Underlyingtransaction
records
are
reviewed
to
assure
they
properly
re
and costs that are ARRA allowable. All requests for payment are e
project appropriateness, budget alignment, and proper authoriz
paymentisissued.
Environmental Assessment, Engineering, Construction, Maintenance Expe
AcceptableLimits
Control:
Allcontractoragreements,exceptthosewithasolesourcejustificatio
with an Internet published Request for Proposal. Submissions are r
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property is not being properly and efficiently administered, op
maintained,
then
the
NTIA
has
the
right
to
terminate
the
award.
M
operates and maintains a network in Michigan. It operates an e
NetworkOperationsCentertomonitor, identifyandreportdisturbanc
network. Furthermore, it is currently planning on hiring additional e
techniciansto
monitor
the
physical
network
by
quarterly
driving
the
mile routeand inspecting all related assets. Meritwillestablish ann
withemergencyrepaircrewsandwillutilizeitsownoperationsandeng
tofacilitaterepairsandgeneralmaintenancealongtheroute.
Underlyingtransactionrecordsarereviewedtoassuretheyproperlyre
and costs that are ARRA allowable. All requests for payment are e
project appropriateness, budget alignment, and proper authoriz
paymentis
issued.
ARRAReportingRequirements
Control:
TheNTIAhasanumberofSpecialAwardConditions(SACs)relatedto
monitoring. Merit isrequiredtoreportontheprogressoftheproject
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BaselineReport Due:
45
days
after
the
award
date
The report lays out the project plan in narrative for
percentagecomplete.Thereportidentifiesthenumber
will connect and contractsMerit haswithWholesales
Providers. This report is used to gauge the annual a
performanceprojectreports.
ARRAReport Due:10daysaftereveryquarterends
The report identifies financial information,vendor info
recipientinformation,FTEscreatedbyfederalfundsas
discussingMeritsquarterlyactivities.Wealso report c
toofficers
when
the
federal
funds
are
substantially
expe
SF425 Due:30daysaftereveryquarterends
The report depicts the federal funds expended and
funds expended as well as the balance remaining.
requiredtoshowitscashreceiptsanddisbursementsof
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narrative formilestones/accomplishments and any cha
Merit
may
have
faced
in
the
past
quarter
and
similar
p
thenextquarter.Merit reportsonnetworkmilesactiv
Federal funds.Thisreport iscomparedtotheBaseline
there are variances an explanation is given in narrativ
reportalso
lays
out
the
budget
for
the
entire
project,
the
theinceptionoftheprojectandprojectionsfromtheinc
endofnextquarter.
PerformanceProgressReportAnnual Due:30daysaftereverycalendaryearendofthefunded
ThereportiscomparedtotheBaselineReportwhereinf
beenreportedonanannualbasis. Information include
costper
new
mile,
listing
the
facility
name
and
construction is taking place and listing agreements M
interconnection,peering,transit,etc.
Meritcollects thisdataona regularbasis. Therehavebeenno issue
reporting deadlines.Meritmanagementmeetsweeklywith its Gran
other specialists to discuss any problems Merit may be having or
questions the Grant Officer/Merit may have concerning the p
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MatchFundsRequirements
Control:
Meritmustprovide, fromnonFederal funds,not lessthan20%ofth
projectcosts. Meritwillcontributeapproximately$8.16Minmatchin
sub
recipients
will
contribute
approximately
$17.56M.
All
of
Merits
m
areintheformofcash. Meritwassuccessfulinobtainingfundingtosu
match. Its subrecipientsareselffundingorobtaining loans for their
cashmatch.Adequatedocumentation isbeingmaintained toprovide
cashsupport
for
the
project.
Merit
only
submits
requests
for
fund
invoicehastobepaidorcostsforstaffsalariesandfringebenefitcos
incurred. All submissions for funding are reviewed and approved
Manager and the Controller, only 80% funding is requested for
expense.
Cash,FundingandPaymentRequirements
Control:
TheNTIArequiresthatcashflowrelatedtoprojecteventsbekeptseg
standardoperationalcashflowevents. Meritkeepsaseparatecheckin
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Merithasputinplacestrongcontrolstopreventtheftandfraudand
properallocationofARRAfunds. Thesecontrolsarepresentintheen
process, from payment, to draw down, to disbursement. Separ
accountsaremaintainedforthereceiptandsubsequentdisbursemen
eachARRAaward. Checksarekept inasecure, locked location. The
vendorinvoice
initiates
the
flow
of
ARRA
funds.
The
process,
and
institutedineachphaseoftheprocessareoutlinedbelow:
1. VendorInvoiceReceiveda.
Reach
staff
prepare
payment
request
form
b. Payment request form and related backup aremanagement for approval. Payment request a
obtainedbasedonthefollowingcriteria:
i. Under $5k are approved by the GrantManager(GCM)andtheCFO
ii. Over $5k but less than $10k are approvedCFO
iii. Over$10krequirethecreationofaPOandbytheGCM,CFOandCOO
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3. Every Friday the Senior Accountant collects all submitrequestsandpreparesananalysiswhichdeterminesAR
Merits20%allocationoftotalpendingpayments.
4. Senior Accountant submits the allocation analysis toAdministrator who reviews analysis, prepares a
Drawdownof
Funds
form
and
signs
off.
5. TheRequestforDrawdownofFundsform isthensubControllerwhoreviewsandsignsoff.
6. TheRequestforDrawdownofFundsform isthensubGCM who reviews and accesses the ASAP system to
drawdownof funds,viadirectdeposit, into theappropr
account. OnlytheGCMandtheCEOhaveaccesstoASAP
GCMnortheCEOhasaccesstothecheckingaccountsw
controlbyseparatingduties. TheGCMthenroutesthe
DrawdownofFundsformtotheSeniorAccountant.
7. The Senior Accountant confirms receipt of funds intoaccount
and
signs
off
on
the
Request
for
Drawdown
of
8. UponCFOapproval theSeniorAccountant transfersMedirectdeposit, intotheappropriateReachcheckingacco
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10. TheSeniorAccountantprovides thebankwitha listofchecks. The bank then references this list as checks
payment. If there is an anomaly between the list
submitted to the bank for payment the Senior Acc
Controller are notified andmust provide their approva
beforean
anomalous
check
is
cashed.
11. Eachcheckingaccountisreconciledonabiweeklybasis.12. All payment requests, supporting documentation and
DrawdownofFundsformsareretainedelectronically.
All ARRA transactions are monitored through independent reconci
meeting feedbacks, supervisory review, and management review.
utilized to provide proper monitoring of grant activities, to valida
expendituresfor
each
budget
category
do
not
exceed
the
amount
as
category,andthatbudgetchangedgetpriorapprovalfromtheGrantsO
Subrecipients arenot allowed todrawdown fundswithin theARRA
requests for NTIA budget approved expenses incurred by the subr
have to be first reviewed and approved byMerit. The subrecipien
reimbursed until all required documentation has been submitted t
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EnvironmentalAssessmentRequirements
Control:
TheNTIArequiresthecompletionofanenvironmentalassessment(EA
therequirementsoftheNationalEnvironmentalPolicyActof1969befo
fundingexceptforsomelimitedcategoriessuchasmanagementandad
project planning, collecting environmentalrelated informatio
consultationactivities,conditional insurance,fundsusedtosecure lan
wayleases,rightofwayeasements,equipment,etc.Itshouldbenoted
tobe
allowed
the
use
of
the
limited
preliminary
funding
a6m
expenditureplanmustbesubmittedwithin30daysofreceivingthisS
Conditionandcannotresultinanirrevocablecommitmentofresource
cannotbeplacedinthefield,allcontractsmustcontainearlyterminati
Merit applied and was approved to utilize preliminary funding wit
limitations.
Consultationsmust includeStateHistoricPreservationOffices,federa
nativeAmerican
tribes,
and
the
U.S.
Fish
and
wildlife
Services.
The
demonstrate compliance with all other applicable federal, stat
environmental laws and regulations. Site preparation, demoli
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thanwithin sixmonths. (Unless a formal request for extension is su
approvedbytheGrantsOfficer.)
If a project is found to have significant impacts to environmenta
resources itmay facedeobligationof funding if the impactscannot
MeritisrequiredtoprovideanyinformationrequestedbytheNTIAto
the initial and ongoing compliancewith environmental and historic
laws, regulations, and best practices. Merit has weeklymeeting w
Officerwhodealsdirectlywiththeenvironmentalspecialist.
Merithired
an
environmental
consulting
firm
to
manage
the
e
assessment. MerithassincereceiveditsFONSI(FindingofNoSignifica
Round1. However,asthebuild isabouttoproceedandminorroute
adjustmentsarerequiredtheNTIArequiresthatMeritnotonlyshow
change but demonstrate that the FONSI results apply to the rout
before granting approval. TheNTIAhasbeenvery thorough in their
review in those instances. If it isnot consistentwith the approvede
assessment then theprojectwouldhave tobe reevaluated forcomp
has just submitted its EA draft for Round 2 and may be near so
archaeologicalsites. TheNTIAwillrequire thatMeritensures itwill
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ProjectOverlapRequirements
Control:
The NTIA will not allow the use of Federal funds for duplicate
acquisition,or leaseofbroadband facilities fundedbyARRA through
RUS. Meritrecentlywasinformedofthepossibilitythatsomesmallse
projectmayoverlapwithotherprojects. Merithad toprovideade
levelnetworkmapconfirmingthattherewasorwasnotduplicationof
In thevery few instanceswhereproject sectionoverlapwasconfirm
theother
funded
projects
were
directed
to
work
together
to
presen
resultedinnoduplicationbutretentionoftheoperationalintegrityofe
ProjectandCompanyAuditRequirements
Control:
MeritsfinancialsareauditedannuallybyPlante/Moranandhasalway
unconditionalreportfromtheauditfirm. IntheFallof2011,Meritw
133auditperformedbyPlante/Moranas itwillannuallyduringthedu
project.
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