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E-Rate Central & E-Rate Exchange
E-RateOverview, Update,
and Key Issues
Lower Hudson RIC
November 3, 2004
11/1/04
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
• 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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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”
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
“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
E-Rate Central & E-Rate Exchange
What’s New for FY 2005, cont.
• Form color for FY 2005 is BLUE
• Ms. Smith has retired
E-Rate Central & E-Rate Exchange
Form 470: Purpose
• Identifies applicant
• Describes services needed
• Must wait 28 days after filing – Select vendors and sign contracts
– File Form 471
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
Bid Assessment Matrix
http://www.e-ratecentral.com/applicationTips/bidAssessment/FRN_Bid.xls
E-Rate Central & E-Rate Exchange
Item 22: Purpose
• Services must be for educational purposes
• Restrictions on resale or transfer
• “Free services” prohibition to assure applicant pays non-discounted amount
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
• 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
E-Rate Central & E-Rate Exchange
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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)
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
SLD Telecommunications Example
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
Item 30: Compliance
• Catch-all for overall program compliance
• Signed contracts for all services– Except tariff and MTM
• Certification penalty acknowledgment
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
Selected Topics
• Basic Maintenance
• WANs
• Compliance Issues
E-Rate Central & E-Rate Exchange
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.
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
Basic Maintenance, cont.
NOT eligible, cont.:
• 24-hour network monitoring
• Network management
• Technical support contracts that are more than basic maintenance.
E-Rate Central & E-Rate Exchange
Basic Maintenance, cont.
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
E-Rate Central & E-Rate Exchange
Basic Maintenance, cont.
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.
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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
E-Rate Central & E-Rate Exchange
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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