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  1. 1. E-rate 201 An Update for 2005 October 2004 This presentation may not be copied or presented without the express written permission of Funds For Learning, LLC
  2. 2. About Funds For Learning, LLC <ul><li>Educational technology consultants </li></ul><ul><li>Offices in Arlington, VA, and Oklahoma City </li></ul><ul><li>Focused on E-rate program since program’s start </li></ul><ul><li>Member of 2003 SLD Task Force on Prevention of Waste, Fraud and Abuse </li></ul>
  3. 3. What We’ll Cover Today <ul><li>A Program Update for 2005 </li></ul><ul><li>Designed for Experienced Applicants </li></ul><ul><li>Details on Eligible Services </li></ul><ul><li>Important Changes in Forms </li></ul><ul><li>New Compliance Requirements </li></ul><ul><li>Answers to Your Questions </li></ul>
  4. 4. How the Process Works <ul><li>Applicants tell vendors what they want (Form 470) </li></ul><ul><li>Applicants must receive and consider bids for 28 days </li></ul><ul><li>Applicants sign contracts or purchase agreements </li></ul><ul><li>Applicants submit funding requests (Form 471) </li></ul><ul><li>Funding requests reviewed for approval </li></ul><ul><li>Applicants and service providers follow up with payment paperwork (Form 486, BEAR, SPIs) </li></ul>
  5. 5. Funding Priorities <ul><li>Priority One services </li></ul><ul><ul><li>Telecommunications services </li></ul></ul><ul><ul><li>Internet access </li></ul></ul><ul><ul><li>Everyone qualifies, no matter your discount rate </li></ul></ul><ul><li>Priority Two services </li></ul><ul><ul><li>Internal connections </li></ul></ul><ul><ul><li>New category: Basic Maintenance </li></ul></ul><ul><ul><li>Awarded, based on need, with funding left over after Priority One funding is awarded </li></ul></ul><ul><li>New “2 out of 5 years” rule takes effect this year </li></ul>
  6. 6. “ But I’m Not Poor Enough to Qualify for Internal Connections” <ul><li>Maybe not. . . </li></ul><ul><li>Program changes may make more funding available for applicants that have fallen below threshold in the past </li></ul>
  7. 7. New Rule Changes That Should Impact Demand <ul><li>Can’t transfer E-rate-supported equipment for three years unless facility closes temporarily or permanently </li></ul><ul><li>Sites can “receive commitments” in only 2 out of every 5 years </li></ul><ul><ul><li>Will count when commitment is approved </li></ul></ul><ul><ul><li>Districts should plan and aggregate work </li></ul></ul><ul><ul><li>Should tend to discourage district-wide funding requests for internal connections </li></ul></ul><ul><li>Priority 2 funding available every year for network maintenance IF school is poor enough </li></ul>
  8. 8. Other Factors Impacting Threshold <ul><li>SLD authorized to commit more than $2.25 billion </li></ul><ul><ul><li>$2.6 billion approved for 2003 through Sept. 1 </li></ul></ul><ul><li>USAC authorized to “roll over” undisbursed funds from previous years </li></ul><ul><li>SLD trimming and rejecting more requests </li></ul><ul><li>Discount matrix revision still possible </li></ul>
  9. 9. Other Discount Rate Issues <ul><li>Some mechanisms available to improve rates through “eligibility” measurement instead of “participation” </li></ul><ul><li>Application strategies (shared vs. site-specific?) should be reviewed in light of new rules </li></ul><ul><li>Will the internal connections products really be used at that site if approved? </li></ul>
  10. 10. Some Basic Requirements <ul><li>Must have approved tech plan </li></ul><ul><li>Must be able to pay non-discounted portion of price </li></ul><ul><li>Must comply with state and local procurement rules </li></ul><ul><li>Must be able to certify that you have sufficient funds for other necessary tech components (desktop computers, staff development, network maintenance, etc.) </li></ul><ul><li>May have to comply with Children’s Internet Protection Act (CIPA) </li></ul>
  11. 11. Eligible Services: Basic Concepts <ul><li>Key Reference: Each year’s update of Eligible Services List </li></ul><ul><li>Services must be used for “educational purposes” </li></ul><ul><li>Eligibility ultimately depends on who uses it, where and for what purposes </li></ul><ul><li>Services cannot be sold, resold or transferred in return for compensation </li></ul><ul><li>End-user devices and content generally not eligible </li></ul>
  12. 12. Internal Connections: Eligible Services <ul><li>If it can be owned, it has to be internal connections </li></ul><ul><li>Routers, hubs, switches </li></ul><ul><li>Network operating software </li></ul><ul><li>NICs if separately priced </li></ul><ul><li>Wireless networks </li></ul><ul><li>Wiring </li></ul><ul><li>Firewalls </li></ul><ul><li>PBXes (but not handsets) </li></ul>
  13. 13. Internal Connections: Network File Servers <ul><li>Eligible uses </li></ul><ul><ul><li>DHCP servers </li></ul></ul><ul><ul><li>Domain Name servers </li></ul></ul><ul><ul><li>E-mail servers </li></ul></ul><ul><ul><li>Firewall servers </li></ul></ul><ul><ul><li>Terminal server </li></ul></ul><ul><li>Ineligible uses </li></ul><ul><ul><li>Caching server </li></ul></ul><ul><ul><li>Print server </li></ul></ul><ul><ul><li>Proxy server </li></ul></ul><ul><li>Allocation required if used for combination of eligible and ineligible purposes </li></ul>
  14. 14. Internal Connections: Cost-Allocated Services <ul><li>Eligible to the extent they support eligible equipment </li></ul><ul><li>Uninterruptible Power Supplies </li></ul><ul><li>Racks </li></ul><ul><li>Taxes, shipping and installation costs must be allocated based on product eligibility </li></ul>
  15. 15. Tougher Standards for Maintenance, Tech Support <ul><li>Basic maintenance services are “necessary,” if but for the maintenance at issue, the connection would not function and serve its intended purpose with the degree of reliability ordinarily provided in the marketplace to entities receiving such services without E-rate discounts </li></ul><ul><li>Does not include services that maintain ineligible equipment or that enhance the usefulness of equipment beyond the transport of information, or diagnostic services in excess of those necessary to maintain the equipment’s ability to transport information. </li></ul>
  16. 16. More on Maintenance <ul><li>Must be cost-effective </li></ul><ul><li>Must identify specific products, models to be maintained and sites </li></ul><ul><li>Generally Eligible </li></ul><ul><ul><li>Repair and upkeep of eligible hardware </li></ul></ul><ul><ul><li>Wire and cable maintenance </li></ul></ul><ul><ul><li>Basic tech support and configuration changes </li></ul></ul><ul><li>Ineligible </li></ul><ul><ul><li>“ On-site” duty station when off-site could provide “as needed” </li></ul></ul><ul><ul><li>24-hour network monitoring </li></ul></ul><ul><ul><li>Network management </li></ul></ul><ul><ul><li>Help desks and tech support contracts covering more than basic maintenance </li></ul></ul><ul><ul><li>Broader tech support contract </li></ul></ul><ul><li>Maintenance plans like SmartNet on eligible equipment in eligible locations can qualify </li></ul>
  17. 17. Internal Connections: Other Things to Remember <ul><li>Ineligible services </li></ul><ul><ul><li>Desktop computers, faxes, modems, control devices </li></ul></ul><ul><ul><li>Network management or monitoring software </li></ul></ul><ul><li>Wide Area Networks only eligible when leased from a telecommunications carrier </li></ul><ul><li>Internal connections in admin buildings must be part of instructional network (e.g. a hub) to qualify </li></ul>
  18. 18. Eligible Services: Telecommunications Services <ul><li>Basic telephone service </li></ul><ul><li>Long distance service </li></ul><ul><li>Cellular services </li></ul><ul><li>Paging services </li></ul><ul><li>Data lines </li></ul><ul><li>High-speed transmission (ISDN, DSL, Frame Relay, etc.) </li></ul><ul><li>Satellite transmission service </li></ul><ul><li>Voice mail </li></ul>
  19. 19. Telecommunications Services: Things to Remember <ul><li>Must be purchased from a common carrier </li></ul><ul><li>Break out cost of handsets, directory advertising, other ineligible items from amount you request </li></ul><ul><li>Review bills to exclude any ineligible users, facilities and services </li></ul><ul><li>Does not have to be under contract </li></ul><ul><li>But if not under contract, must file a Form 470 every year </li></ul><ul><ul><li>No exceptions—even when only one telephone carrier is available </li></ul></ul><ul><li>Purchased PBX equipment is not a telecom service </li></ul>
  20. 20. Eligible Services: Internet Access <ul><li>Basic Internet access service charges </li></ul><ul><li>Data links provided to Internet gateway </li></ul><ul><li>E-mail service </li></ul><ul><li>Web hosting (excluding content creation or data storage) </li></ul><ul><li>Firewall service </li></ul>
  21. 21. Internet Access: Things to Remember <ul><li>Does not have to be under contract </li></ul><ul><li>But if purchased under month-to-month arrangement, a Form 470 must be filed every year </li></ul><ul><li>Content priced separately is not eligible for support </li></ul><ul><li>“ Bundled” content not eligible unless service was the “most cost-effective” Internet access </li></ul><ul><li>Filtering software ineligible </li></ul>
  22. 22. “On-Premises Equipment for Priority 1 services” <ul><li>Lets applicant make use of WAN network elements as part of data network to deliver Internet access </li></ul>
  23. 23. Requirements to Qualify <ul><li>Equipment must be owned and maintained by service provider </li></ul><ul><li>School district can never own equipment—watch contract language </li></ul><ul><li>Must operate independently of LAN, with clear demarc point </li></ul><ul><li>Equipment cannot be used for purpose other than telecom service or Internet access </li></ul><ul><li>Upfront costs can’t exceed $500,000 or 67% of total requested </li></ul>
  24. 24. Requirements to Qualify <ul><li>Contract must not guarantee exclusive use to school </li></ul><ul><li>Configurations must be economically justifiable </li></ul><ul><li>PBXes now specifically excluded from qualifying as Priority 1 services </li></ul>
  25. 25. Last Year’s Changes Still in Place <ul><li>Voice/Video Over IP Services </li></ul><ul><ul><li>FCC still has not determined whether it is a telecom service </li></ul></ul><ul><li>Voice over IP equipment IS eligible </li></ul><ul><ul><ul><li>Handsets still excluded </li></ul></ul></ul><ul><li>Dark fiber </li></ul><ul><ul><li>FCC still has not determined whether it is a telecom service </li></ul></ul><ul><ul><li>Provision made for applicants who signed multi-year contracts when eligible </li></ul></ul><ul><li>Voice Mail now eligible </li></ul><ul><li>Firewalls now eligible </li></ul>
  26. 26. When in Doubt. . . <ul><li>Check out SLD’s formal eligible services list at Reference/eligible.asp </li></ul><ul><li>Additional FAQs and eligible services framework available </li></ul><ul><li>Final list for 2005 issued October 14 </li></ul><ul><li>Break out questionable items separately </li></ul><ul><ul><li>Be mindful of “30 percent rule” </li></ul></ul><ul><li>Seek help from KNOWLEDGEABLE Vendors </li></ul>
  27. 27. New Pilot Online Eligible Services Data Base <ul><li>Only for internal connections equipment </li></ul><ul><li>Manufacturers volunteered to participate </li></ul><ul><li>Participation lower than SLD had expected </li></ul><ul><li>Eligibility of listed products is always conditional on use </li></ul><ul><li>Non-inclusion does not mean product is ineligible </li></ul><ul><li>SLD hopes to implement mechanism for generating paper Description of Services documents this year </li></ul><ul><li>Many projects will require additional items to be cited </li></ul>
  28. 28. The Most Important Rules <ul><li>Applicants must accept bids for 28 days </li></ul><ul><li>Applicant must not sign a contract or final application before the 28 days have passed </li></ul><ul><li>Applicants must meet ALL the deadlines </li></ul><ul><li>Applicants must be careful not to request support for ineligible services </li></ul>
  29. 29. A New Number This Year: Another “FRN” <ul><li>Federal Communications Commission Registration Number </li></ul><ul><li>Designed to facilitate “Red Light Rule” of Debt Collection Improvement Act </li></ul><ul><li>Go to and click on link at top left </li></ul><ul><li>Will need Taxpayer ID Number (typically Employer Identification Number for firms) </li></ul><ul><li>Supposed to get by Nov. 1, but not yet required on an application—PIA will request </li></ul><ul><li>Applicants must obtain one for every school or branch </li></ul>
  30. 30. Form 470 Application <ul><li>Applicant explains what it wants to buy </li></ul><ul><ul><li>Must reference an RFP if there is one or will be one </li></ul></ul><ul><li>Applicant is supposed to provide enough specificity that a vendor can bid </li></ul><ul><li>Filed by entity that will sign the contract and negotiate with vendors </li></ul><ul><li>Applicant needs to manage state and local procurement rules at the same time </li></ul>
  31. 31. Form 470 Revisions for 2005 <ul><li>More clarity about whether an RFP is available </li></ul><ul><ul><li>Released or “intend to release” </li></ul></ul><ul><ul><li>Must make available to all interested bidders </li></ul></ul><ul><li>Must briefly describe what RFP is seeking </li></ul><ul><li>New category of “basic maintenance of internal connections” </li></ul><ul><li>Applicants can designate billing preference method </li></ul><ul><li>Applicants must certify that they will consider all bids and choose the most cost-effective one for meeting educational goals and tech plan </li></ul>
  32. 32. How Much Help Can a Vendor Give? <ul><li>FCC/SLD very concerned about maintaining fair and open bidding process </li></ul><ul><li>No longer considered appropriate to get an RFP from a vendor </li></ul><ul><li>Applicants can specify brands (“compatible with”), but govt. is wary of too much upfront advice from single company </li></ul><ul><li>Key is for applicant to provide all vendors with the chance to bid </li></ul><ul><li>Must retain documents detailing vendors they heard from and how they made their choice </li></ul><ul><ul><li>May be asked to provide bid analysis when application reviewed </li></ul></ul>
  33. 33. 28-Day Posting Period <ul><li>Pay attention to “Allowable Contract Date” </li></ul><ul><li>DON’T sign a contract before that date </li></ul><ul><li>DON’T sign a Form 471 before that date </li></ul><ul><li>Communicate with all responsive bidders </li></ul><ul><li>Vendors may report applicants to SLD if they feel they are violating competitive bidding requirements </li></ul><ul><li>Keep good records on vendor contacts and how you reached your decision </li></ul><ul><li>Don’t have to choose lowest bidder, but must be able to demonstrate that cost was given the greatest weight </li></ul>
  34. 34. After Allowable Contract Date <ul><li>Contract or purchase agreement required for internal connections </li></ul><ul><li>Priority 1 services can be purchased at tariffed rates or month-to-month basis, if desired </li></ul><ul><li>When contract required, both parties must sign and date before Form 471 is filed </li></ul><ul><li>Contracts can be made contingent on receiving E-rate support </li></ul>
  35. 35. Other Contracting Issues <ul><li>Pre-existing contracts bid outside E-rate rules only eligible if signed before July 10, 1997 </li></ul><ul><li>All E-rate eligible contracts must be able to point to a Form 470 that started the procurement </li></ul><ul><li>Multi-year contracts permissible (but must file for funding each year) </li></ul><ul><li>State contracts can be used if done correctly </li></ul><ul><li>E-rate-eligible contracts may only be “extended” if original contract included an extension clause </li></ul><ul><li>If willing to do multi-year contract, inform all bidders through Form 470/RFP </li></ul><ul><li>Know the history of your contracts </li></ul>
  36. 36. Form 470 Mistakes That Could Be Avoided <ul><li>RFP occurs early in school year? </li></ul><ul><ul><li>Form 470 can be filed at any time of year </li></ul></ul><ul><li>Form 470 not filed in right categories </li></ul><ul><ul><li>Review Eligible Services List, consider all options </li></ul></ul><ul><li>Contract signed before Allowable Contract Date </li></ul><ul><ul><li>Check the permissible date online </li></ul></ul><ul><li>Contract not signed </li></ul><ul><ul><li>Start early, get it done </li></ul></ul><ul><li>Form 470 certification not filed before filing window deadline </li></ul><ul><ul><li>Double-check online </li></ul></ul><ul><li>“ We’ve already decided” </li></ul><ul><ul><li>That’s a rule violation </li></ul></ul>
  37. 37. Form 471 Application <ul><li>Most important application—take time to do it right </li></ul><ul><li>Funding requests and service details are critical </li></ul><ul><li>What you request is the most you can get </li></ul><ul><li>But you must be able to justify your request </li></ul><ul><li>Can do online but must follow up with Description of Services paper attachment </li></ul><ul><li>Pay close attention to the filing deadline! </li></ul><ul><li>Proofread, don’t leave blanks—you could fail “Minimum Processing Standards” for paper </li></ul><ul><li>SLD recommends separate applications for Priority One and Priority Two services to speed approval </li></ul>
  38. 38. Form 471: Revisions for 2005 <ul><li>New category of “Basic Maintenance of Internal Connections” </li></ul><ul><li>Flag state master contracts, continuation of FRN under previous multi-year contract </li></ul><ul><li>One discount worksheet, different columns for different situations </li></ul><ul><ul><li>Doing it wrong no longer grounds for automatic rejection </li></ul></ul><ul><ul><li>Requires NCES codes for schools, FSCS code for libraries </li></ul></ul><ul><ul><li>Flag Pre-K, Adult Ed or Juvenile Justice facilities </li></ul></ul><ul><ul><li>Flag Alternative Discount Calculation </li></ul></ul><ul><li>Must flag “duplicate funding requests” (e.g. not yet approved, under appeal) </li></ul><ul><ul><li>Must provide number of duplicate funding request </li></ul></ul><ul><li>Change in “Impact of Services Ordered” data </li></ul>
  39. 39. Reviewing Applications <ul><li>Receipt Acknowledgement Letter provides a chance to correct some kinds of clerical mistakes (but not revision upwards) </li></ul><ul><li>Problem Resolution and Program Integrity Assurance </li></ul><ul><li>SLD reviewers may call with questions </li></ul><ul><li>It’s important to be responsive </li></ul><ul><li>Can request additional time if necessary </li></ul>
  40. 40. Funding Commitment Decisions <ul><li>Don’t count on the money until it is approved </li></ul><ul><li>At least one Funding Commitment Decision Letter (FCDL) issued per application </li></ul><ul><li>Applications for Priority One services likely to get approved first </li></ul><ul><li>Vendors are notified at the same time </li></ul><ul><li>Don’t start projects before July 1 if you want them to remain eligible for support </li></ul><ul><li>If you can’t do project without E-rate discounts, don’t start it before your funding has been approved </li></ul>
  41. 41. Payment Paperwork Requirements <ul><li>Applicant must file Form 486 within 120 days of date of funding commitment letter or service start date, whichever is later </li></ul><ul><li>Starting July 1, 2004, applicant can choose preferred billing method </li></ul><ul><ul><li>Service Provider Invoice filed by service provider </li></ul></ul><ul><ul><ul><li>Applicant must pay its share within 90 days of project completion </li></ul></ul></ul><ul><ul><ul><li>Service certification may be requested of customer </li></ul></ul></ul><ul><ul><li>BEAR Form </li></ul></ul><ul><ul><ul><li>Applicant prepares, service provider signs </li></ul></ul></ul><ul><ul><ul><li>Payment must be remitted to applicant within 20 days </li></ul></ul></ul><ul><li>Once used for a funding request, must use all year long </li></ul>
  42. 42. Understanding the E-rate Calendar <ul><li>Can now apply for funding for July 1, 2005 to June 30, 2006 (September 30 in some cases) </li></ul><ul><li>Form 471 will likely be due in early February—Check SLD Website for dates </li></ul><ul><li>Count back from that to allow time for: </li></ul><ul><ul><li>School Board approval </li></ul></ul><ul><ul><li>Negotiating and signing a contract </li></ul></ul><ul><ul><li>28-day E-rate posting period </li></ul></ul><ul><ul><li>Additional procurement requirements, if any </li></ul></ul><ul><ul><li>Can post a Form 470 before the 2005 form is ready </li></ul></ul><ul><ul><li>Don’t wait until the last minute! </li></ul></ul><ul><li>Applications reviewed, starting in spring </li></ul><ul><li>Commitments may or may not be approved by funding year start </li></ul><ul><li>New funding commitments now on hold, but should be temporary </li></ul>
  43. 43. Other Deadlines You Need to Know <ul><li>September 30, 2004—Deadline for using 2003 funding approved BEFORE March 1, 2004 </li></ul><ul><li>September 30, 2005—Deadline for using 2003 funding approved AFTER March 1, 2004 </li></ul><ul><li>October 28, 2004—Deadline for submitting payment paperwork for recurring bills for July 2003-June 2004 (phone, Internet, etc.) </li></ul><ul><li>January 28, 2005—Deadline, in most cases, for submitting payment paperwork for “non-recurring” projects installed by September 30, 2004 </li></ul><ul><li>Bottom Line: Procrastinators can lose out on money </li></ul>
  44. 44. Spotlight on Waste, Fraud and Abuse <ul><li>Convictions for fraud, obstruction of justice, bid-rigging </li></ul><ul><li>Individuals debarred from program participation </li></ul><ul><li>Ongoing investigations by Antitrust Division, FBI, FCC’s inspector general </li></ul><ul><li>House Commerce oversight and investigations subcommittee hearings on program waste </li></ul><ul><li>Media reports focused on excessive purchases </li></ul>
  45. 45. Important New Compliance Requirements <ul><li>E-rate-supported equipment must not be moved for three years </li></ul><ul><li>Rule can be waived only when a facility is closed, either permanently or temporarily </li></ul><ul><li>New asset inventory requirement for tracking where equipment is installed and located </li></ul>
  46. 46. Important New Compliance Requirements <ul><li>All E-rate documentation must be retained for 5 years after last date of service or installation </li></ul><ul><li>All stages of the process from bids, applications, installation, invoices, etc. </li></ul><ul><li>Failure to produce records can lead to Commitment Adjustment order to return funds </li></ul>
  47. 47. What’s Different Now? <ul><li>Actions that may not have been rule violations in the past now looked upon critically </li></ul><ul><li>Sloppy procedures no longer tolerated </li></ul><ul><li>Toughening up of SLD rules with force of law </li></ul><ul><li>Applicants can be penalized if they are at fault </li></ul><ul><li>SLD planning 1,000 site visits in coming year to assess program, evaluate compliance and outreach needs </li></ul>
  48. 48. If Something Goes Awry. . . <ul><li>Don’t wait forever to inquire about status </li></ul><ul><li>If application is rejected </li></ul><ul><ul><li>Are there valid grounds for appeal? </li></ul></ul><ul><ul><li>Must respond within 60 days </li></ul></ul><ul><ul><li>Don’t appeal to the SLD and FCC at the same time </li></ul></ul><ul><li>Very important to keep good records to make your case (or in case of an audit) </li></ul>
  49. 49. Available Resources: E-rate Manager SL <ul><li>Free Web-based tool created by Funds For Learning </li></ul><ul><li>Sign-up details at </li></ul><ul><li>Review your funding requests and available funding </li></ul><ul><li>Details of contracts that were reported to SLD </li></ul><ul><li>Stay on top of payment deadlines </li></ul><ul><li>Program updates </li></ul><ul><li>Searchable version of Eligible Services list and appeals decisions </li></ul><ul><li>Particularly useful if taking over E-rate from someone else </li></ul>
  50. 50. Available Resources <ul><li>E-rate Manager SL-Plus </li></ul><ul><ul><li>Available for annual subscription fee </li></ul></ul><ul><ul><li>Includes online archive for key documents (tied to funding request) </li></ul></ul><ul><ul><li>Includes Asset Inventory for tracking E-rate equipment and installation date </li></ul></ul><ul><li>Companion tool available for sale to your service providers to facilitate communication </li></ul>
  51. 51. Available Resources <ul><li>Submitting questions to the SLD </li></ul><ul><ul><li>Email is recommended approach </li></ul></ul><ul><ul><li>Click on “Contact Us” on SLD home page or </li></ul></ul><ul><ul><li>Go to </li></ul></ul><ul><li>Answers should be backed up with research on SLD Web site </li></ul>
  52. 52. Any Questions?