merit network - welch testimony to house comm & tech committee of 02-10-2011

8/7/2019 Merit Network - Welch Testimony to House Comm & Tech Committee of 02-10-2011

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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
http://www.merit.edu/http://www.merit.edu/http://www.merit.edu/http://www.merit.edu/


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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


16/38

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.


17/38

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


18/38

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


19/38

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.


22/38

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

$


23/38

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


24/38


25/38

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


26/38

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


27/38

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


28/38

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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merit network - welch testimony to house comm & tech committee of 02-10-2011

Documents