e-rate central & e-rate exchange e-rate overview, update, and key issues lower hudson ric...

E-Rate Central & E-Rate Exchange

E-RateOverview, Update,

and Key Issues

Lower Hudson RIC

November 3, 2004

11/1/04


Workshop Agenda

• Brief overview of E-rate program

• What’s new for FY 2005

• Review of new Form 470 and Form 471

• Selected topics– Basic maintenance– WANs– Compliance issues

• LHRIC consortium issues


General Framework

• 20-90% discounts on three types of services:– Telecommunications– Internet Access– Internal Connections (Networking)

• Annual applications for funding– Annual cap of $2.25 billion – plus roll-over– Priority 1: Telecom and Internet Access – Full funding– Priority 2: Internal Connections – Allocated funding

• Basic SLD overview– http://www.sl.universalservice.org/overview


Eligible Services

• Telecommunications– Basic telephone (local, long distance, and

mobile)– Advanced telecom (Centrex, T-1, WANs, etc.)

• Internet access (not content)

• Internal Connections– Network wiring– Servers, routers, hubs, switches– PBXs and key systems


• Important source of technology funding (FY 1998 – 2004)

– $13.1 billion nationwide – $1.9 billion for NYS

• Time-consuming, bureaucratic, and confusing program– Forms 470, 471, 472, 479, 486, and 500

– Service eligibility and discount rate issues

– Long lead time, competitive bidding procedures

– Strict application review process

– Additional procedures for consortiums

– Program may not be for everyone

• Funding freeze status

E-Rate Opportunities and Issues


Basic E-Rate Cycle

Pre-Commitment

Form 470 - Describes services required(fall) - Posted on SLD Web site

Form 471 - Calculates allowable discount rate(winter) - Requests funding for specific services

- Requires billing or contract documentation

PIA - Detailed SLD review of applications(spring/summer) - Often requires additional documentation


Basic E-Rate Cycle

Post-CommitmentForm 486 - Confirms use of approved services (summer) - Certifies tech plan and CIPA compliance

- Appeals and SPIN Changes as required

Funding Alternatives (throughout year)

SPI - Service provider discounts bills(Form 474) - Schools pay only undiscounted amount

BEAR - Discounts reimbursed after the fact(Form 472) - Based on actual bills paid


Critical Deadline Issues

Form 470 (Allowable Contract Date) 28 days after SLD posting

Form 471 Filing window closes 2/4/2004

PIA or invoice review inquiries 7 day response cycle

Tech plan and CIPA compliance Service start date (usually July 1)

Form 486 120 days after service start or FCDL (often October 29)

Service delivery June 30 or September 30 (unless extended)

Invoices (BEARs or SPIs) 120 days after last day of service or 486 notification (often October 28)

Appeals (SLD or FCC) 60 days after decision


Benefits of Filing Online

• Available for Form 470, Form 471, and Form 486

• Provides check on field information

• Direct entry or interview mode

• Important: Must use electronic signature or mail signed certification page to SLD


What’s New for FY 2005

• Increased focus on waste, fraud, and abuse– New compliance rules and procedures– 1000 site visits

• All new forms– New formats– Revised and expanded certifications– Clarified rules on technology plans and budgets

• New “2 in 5” rule on Internal Connections• Contracts and LOA requirements• “NCES” Codes and FCC Registration Numbers


Site Visits: Purpose

• “Robust after the fact physical site review to help curb waste, fraud, and abuse.”– Evaluate procurement process– Review deployment results

• “Enhanced outreach to the school and library community.”– Identify new outreach requirements– Identify “best practices”


Site Visits: Process

• Random selection based on recent invoices

• Applicant notification 1-2 weeks before visit– SLD will provide list of documentation required

• Visits will be “short and focused”– Target is one-day review

• Key “audit” issues– Competitive procurement practices– Applicant invoicing– Equipment installation and use– Other resources


New “2 in 5” Rule for IC

• Internal Connections funding is available only for two years of any five year period– FY 2005 is the first year– Limitation is on an individual entity/site basis

• Restriction excludes basic maintenance– Maintenance becomes a new category of service– Leasing is NOT excluded

• Planning considerations– Shared services count for all included entities – Any amount counts for the year — 1¢ or $1 million


Contracts and LOAs

• Contracts must be signed and dated by both parties– Quotes are not sufficient without covering contract letter– Multi-year tariffs may be treated as contracts

• Letters of Agencies (“LOAs”) required before filing– For consultants and consortium members– Should be service specific– Should not be for longer than a two year period


“NCES” Codes and FRNs

• ID codes required on FY 2005 Form 471– NCES Codes for public schools– FSCS Codes for libraries– PSS Codes for private schools– No guidance yet for separate administrative sites (“NIFs”)

• FCC Registration Numbers required for all entities– Required under the Debt Collection Improvement Act– Needed for implementation of FCC “red light” rule– Not used on FY 2005 forms, but technically required by 11/1/04– At least one/applicant; maybe one/site– Awaiting further SLD/FCC guidance


What’s New for FY 2005, cont.

• Form color for FY 2005 is BLUE

• Ms. Smith has retired


Form 470: Purpose

• Identifies applicant

• Describes services needed

• Must wait 28 days after filing – Select vendors and sign contracts

– File Form 471


New on Form 470

• Service descriptions required for RFP

• BEAR/SPI preferences

• New basic maintenance category

• New certifications

• Authorized person’s employer identification

• Relaxed minimum process standards for paper filings


Service or Function Quantity and/ or Capacity Telecommunications – Item (8)

Local and long distance voice services 50 existing or new phone lines

Cellular/ PCS services (with voicemail) 20 existing or new users

Paging services 25 existing or new users

High-speed access (ISDN, T-1, OC3, etc.) 5 buildings

Internet Access – Item (9)

Dedicated access services 5 buildings Dial-up services 25 user accounts Web hosting 1 domain

Internal Connections – Item (10)

Upgrade LAN network (servers & cabling) 5 buildings (wired or wireless) New PBX system (incl. voicemail) 2 buildings LAN and/ or telephone system maintenance 5 buildings

Form 470: Block 2 Examples


Item 20: Tech Plan

• Must have a plan before filing– EETT or five components– Covering the 2005-2006 year– Covering all types of E-rate services– Including budget: revenues and expenses

• Must have an approved plan before services start– Generally by July 1, 2005– Approval good for up to three years


Item 21: Procurement

• Services must be competitively bid– Form 470 posted for at least 28 days

• Selection must be cost-effective– Price must be primary factor

• Records must be kept for five years


Bid Assessment Matrix

http://www.e-ratecentral.com/applicationTips/bidAssessment/FRN_Bid.xls


Item 22: Purpose

• Services must be for educational purposes

• Restrictions on resale or transfer

• “Free services” prohibition to assure applicant pays non-discounted amount


Item 23: Resources

• Must have supporting resources– Computer hardware and software– Training– Maintenance– Electrical capacity

• Dollar amount must be quantified– In Selective Reviews– In Form 471 Certification


Other Certifications

Item 19: Eligible Entities

Item 24: Authorization to order and file

Item 25: Compliance with FCC, state, and local procurement rules

Item 26: Penalty acknowledgment


Form 471: Purpose

• Calculation of discount rate(s)

• Requests specific discount on each tariffed, monthly, and contract service

• Separates eligible from ineligible costs

An important and complex form


New on Form 471• Simplified service impact blocks

• Single Block 4 discount worksheet– Different columns and sections used for different applicants– “NCES” Code requirement– Special check boxes for special schools and alternative measures

• New check boxes on Block 5 requests

• New certifications

• Authorized person’s employer identification

• Relaxed minimum process standards for paper filings


Block 4: Discount Rates

• Based on need– Poverty

∙ Defined by National School Lunch Program http://www.fns.usda.gov/cnd/governance/iegs/iegs.htm

– Location∙ Rural vs. Urban

• All flow from individual school data

• School districts use weighted average of school discounts

• Libraries use aggregate school district data


Discount Percentages

Urban Rural

<1% 20% 25%

1-19% 40% 50%

20-34% 50% 60%

35-49% 60% 70%

50-74% 80% 80%

75-100% 90% 90%

% of Students Eligible for School Lunch Program Discounts


• http://portal.nysed.gov/pls/cn_port/mel3_pkg.elig_enroll_query

• Features:

– Search feature for individual school or group

– Data available on month-by-month basis

– Pro forma enrollment numbers for Provision II schools

– Note: Must use with Internet Explorer, not Netscape

NYSED Web Site for School NSLP Enrollment Data


Participation vs. Eligibility: Alternative Measures

• Comparable measures (milk/breakfast programs, Medicaid/public housing data)

• Sibling searches

• Survey (can extrapolate from 50% response rate)

• Feeder system not approved

Note: SLD reviews using state lunch program participation

data, so document all higher eligibility data


New on Block 5

• New Priority 2 category for maintenance

• Special check boxes for:– Duplicate funding requests (requires prior year FRN)– Non-contract services– Master contracts– Multi-year contract continuation (requires prior year FRN)– Multiple billing accounts (requires attachment)


Item 21 Attachments

• Required to describe and document actual services requested on Block 5

• Types of documentation– Copy of contract– Vendor quote or bill– Applicant-provided description– Eligible Products database may provide Item 21 attachment

http://www.sl.universalservice.org/reference/Form471item21Attachments.asp


SLD Telecommunications Example


470-Type CertificationsItem 24: Eligible entities

Item 26: Technology plans

Item 27: Competitive bidding

Item 28: Procurement rules

Item 29: Educational purpose

Item 32: Record retention

Item 33: Authorization

Item 34: Penalty acknowledgment


Item 25: Resources

• Must have supporting resources– Computer hardware and software– Training– Maintenance– Electrical capacity

• Requires budgeted amount for these resources

• Special “killer” check box for vendor funding– See related certification in Item 37


Item 30: Compliance

• Catch-all for overall program compliance

• Signed contracts for all services– Except tariff and MTM

• Certification penalty acknowledgment


Other Certifications

Item 31: Eligible Entities - Particularly important for consortiums

Item 35: Eligibility allocation

Item 36: Compliance with “2 in 5” rule

Item 37: Non-discount payments


Selected Topics

• Basic Maintenance

• WANs

• Compliance Issues


Basic Maintenance

What is “basic” maintenance?

• “Without the maintenance, the connection would not function and serve its intended purpose with the degree of reliability ordinarily provided in the marketplace.”

Generally eligible:• Repair and upkeep of eligible hardware• Wire and cable maintenance• Basic technical support• Configuration changes.


Basic Maintenance, cont.

NOT eligible:

• On-site technical support– i.e., contractor duty station is at the applicant site

– When off-site technical support can provide basic maintenance on an as-needed basis

• Help Desks – Providing a comprehensive level of support beyond basic

maintenance, even if only for eligible components



NOT eligible, cont.:

• 24-hour network monitoring

• Network management

• Technical support contracts that are more than basic maintenance.



Question #1: Eligible or Ineligible?• Hardware maintenance contract (“break/fix”) for 40 routers, 200

network switches, 50 eligible file servers, and internal network cabling.

Answer: Eligible as basic maintenance if:

• Components are all eligible• Services are cost effective• Agreement provides make, model, and location



Question #2: Eligible or Ineligible?• Technical support described as “basic maintenance” that provides

break/fix, configuration changes, and network monitoring and management.

Answer: Ineligible• A funding request for these services would be denied in full because

the services go beyond basic maintenance as defined by the FCC.

• The ineligible components are network monitoring and management.


Technical Services

Conditionally eligible Technical Services:• Design & Engineering• Installation• Project Management• Training

To be eligible, services must be:• Basic• Necessary for installation and initial configuration• Coincident with (occurring at the same time)• Part of the same contract or bid as the related products

and services


WANs and On-Premise Equipment

• WAN eligibility requirements– Service of a telecommunications carrier (with a “Y”)– Not purchased (or equivalent)– Installation charges >$500K amortized

• WAN eligibility issues– Exclusive use (non-rural)– Dark fiber systems– Internet allocation– On-premise equipment


WANs and On-Premise Equipment, cont.

• On-premise equipment is Priority 2, unless:– Integral component of Telecom/Internet service– Provided by same vendor– Maintained by same vendor– Ownership will remain with vendor– Installation < 67% of total charges– Used only for eligible Priority 1 service– Independent of applicant’s internal network– Non-exclusive usage


Program Compliance Issues

• Greater focus on “waste, fraud, and abuse”– PIA scrutiny, including selective reviews– Audits by SLD, FCC, and contractors– Vendor investigations by SLD, FCC, DOJ, etc.

• Consequences for applicants and vendors– Denied or reduced funding– Delayed funding decisions– Retroactive commitments (“COMAD”)– Criminal indictments


Applicant Reviews

• Increasing review of all E-rate forms

• Data entry of mailed applications– Problem resolution review– Minimum processing standards issues

• Program Integrity Assurance (“PIA”)– Requests for supporting documentation– Seven day response cycles– Selective (or Item 25) Reviews

• On-site audits


Selective Reviews• Special PIA review team

– Typically initiated with 14 page fax of questions and instructions. Sample available at:

http://www.sl.universalservice.org/data/pdf/MegaFax.pdf– Target criteria: “Large” requests or suspected vendor problems

• Areas of concern– Technology plans– Budget to cover all needed resources (see Form 471 Item 25)– Competitive procurement (bids and evaluations)– Consultants– Contracts


On-site “Beneficiary” Audits

• In-depth, on-site audits– USAC staff or FCC’s OIG staff– Professional outside auditors (e.g. KPMG)– Approximately 100+ full on-site audits this year– 1000 site “visits”– Target criteria: Random (with weighted probabilities) or suspected

problems

• Areas of concern– Technology plans – Supporting resources– Discount rate – Invoices– Competitive procurement – Equipment verification


Required Recordkeeping

• Technology plan and approval letter• Application documentation

– NSLP data– Budget for Item 25 resources– Backup for Item 21 attachments– PIA submissions– All forms and attachments

• Bids and evaluations (incl. losing bids or “no” bids)

• Contracts

• Delivery, testing, and asset inventory records

• Invoices and proof of payment


SLD Help• Web: www.sl.universalservice.org

• Help lines: 888-203-8100 (General)888-276-8736 (Fax questions)question@ universalservice.org

• Web: www.e-ratecentral.com/us/nys

• Weekly news (via e-mail)

• Help lines -- Fax: 516-832-2877

-- E-mail: question@ e-ratecentral.com • OGS: www.ogs.state.ny.us/purchase

NYS Help

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