Surviving ERate

1
Surviving E-Rate

• Presented by Mike Beeman
• Avnet Enterprise Solutions

2
Surviving E-Rate

• Introduction
• This presentation was created by Mike Beeman of
  Avnet and presented at a recent cross-country
  seminar series that included VBrick Systems as a
  guest partner. Avnet is a VBrick Network
  Certified Partner (VNCP) and offers a great deal
  of knowledge and expertise in the Educational
  marketplace. This is a great up-to-date
  presentation that explains the gritty details of
  the E-Rate program. All credit goes to Mike for
  this one (thanks Mike).

3
Surviving E-Rate

• Agenda
• Introduction
• Steps for Survival
• Questions

4
Surviving E-Rate

• Who is Avnet Enterprise Solutions?
• Part of Avnet, Inc. - 201 on the Fortune 500
• Eighteen (18) regional AES offices across the US
• One of ONLY 65 Cisco Gold Partners in the US
• Cisco DVAR of the year
• Hewlett-Packard Storage Partner of the Year
• In the top ten of the largest providers of
  Internal Connections in the E-Rate program
• Advanced Technology specialists
• Acquisition Services (Financial) specialists
• Networking Solution specialists

5
Surviving E-Rate

• Who is Mike Beeman?
• Part-time college teacher for 20 years
• Ysleta (TX) ISD IT Director 5 years (60
  schools/ 47,000 students)
• Austin (TX) ISD IT Director 5 years (105
  schools/78,000 students)
• Avnet Enterprise Solutions 8 years
• Over 400 free E-Rate seminars across the country
• Over 555 million E-Rate
• mike.beeman_at_avnet.com
• 800-369-9130, ext. 2014
• AES NATIONAL EDUCATION PRACTICE TEAM

6
Surviving E-Rate

• Steps for Survival
• Dont Take This Lightly
• Defining Ethics and Responsibilities
• Planning for the Process
• Strategies to Maximize Opportunities
• Post-Funding Activities

7
Surviving E-Rate

• Dont Take This Lightly
• SURVIVE (per Miriam-Webster Online Dictionary)
• intransitive senses (not having or containing a
  direct object)
• to remain alive or in existence live on
• to continue to function or prosper
• transitive senses (having or containing a direct
  object)
• to remain alive after the death of
• to continue to exist or live after
• to continue to function or prosper despite

8
Surviving E-Rate

• Dont Take This Lightly (OK one time
  exception!)
• SURVIVE (per an E-Rate participant)
• nonsense (lost your object and/or your
  objectivity)
• to remain sane or barely exist mentally
• to understand what a PIA review is supposed to
  do?
• to remain awake after reading another FCC Order
• to continue to exist or live after the 471 window
• to continue to function or prosper despite E-Rate
  seminars
• to understand funding year is different than
  the SLD definition
• to try again next year after receiving funding
  (reduced..)
• All of the above

9
Surviving E-Rate

• Defining Ethics and Responsibilities
• Ethics
• do you use the E-Rate program wisely?
• do you plan for what you need, not what you can
  buy?
• do you conduct a fair and competitive bid
  process?
• do you always get at least 3 responses?
• how do you evaluate the winner?
• do you purchase based on best price or best
  value?
• do you have up to date bid policies?
• do your bid policies encompass E-Rate guidelines?
• how long do you post an RFP ?

10
Surviving E-Rate

• Defining Ethics and Responsibilities
• Ethics
• Why is it necessary to discuss ETHICS?
• In the first 8 waves of year 8 funding, a total
  of 240.4M has been cancelled or denied,
  including 155.6 in Internal Connections.
• Over the last few years, the SLD has experienced
  several instances of waste, fraud and abuse. The
  United States House of Representatives has an
  investigative sub-committee to review problems in
  this area, and we must do all we can, as both
  applicants and Service Providers to ensure we
  abide by the rules. Otherwise, the benefits
  provided within this program will disappear,
  hurting those schools and libraries that need
  these services the most.

11
Surviving E-Rate

• Defining Ethics and Responsibilities
• Responsibilities
• are all your entities eligible entities under
  Federal definitions?
• does your technology plan cover all 12 months of
  the funding year ?
• will your technology plan be approved BEFORE you
  start to receive goods or services?
• when you file a Form 470, do you always wait at
  least 28 days before selecting a vendor?
• when you file a Form 470 and indicate you have an
  RFP, is that RFP available to vendors from the
  first day of posting?
• Do you retain all documents to prove E-Rate
  program compliance for 5 years?

12
Surviving E-Rate

• Defining Ethics and Responsibilities
• Responsibilities
• are you prepared to be audited for any
  application at any time?
• are you applying for goods and services that are
  for educational purposes only?
• do you agree that you or your staff have not
  accepted anything of value, or a promise of
  something of value, from either a Service
  Provider or a Consultant other than the services
  sought on the Form 470?
• Have you secured access to all resources
  necessary to use the services requested through
  the E-Rate program effectively, including
  computers, training, software, internal
  connections, maintenance, and electrical
  capacity?
• When you submit the Form 470, is it done by a
  person authorized to complete this task, and are
  you sure all statements provided are true?

13
Surviving E-Rate

• Defining Ethics and Responsibilities
• Responsibilities
• do you comply with all FCC, State and Local
  procurement and competitive bid requirements?
  Will you certify that?
• are you aware that if any of your employees are
  convicted of criminal violations or are held to
  be civilly liable for acts arising from
  participation in this program, you are subject to
  suspension and debarment from this program?
• have you signed all contracts for all required
  services except those excepted from this
  requirement?
• do you understand that failure to comply with all
  rules of this program could result in criminal or
  civil prosecution?

14
Surviving E-Rate

• Defining Ethics and Responsibilities
• Responsibilities
• do you understand that if anyone on your staff
  takes kickbacks, it may result in suspension or
  debarment from the program?
• do you cost allocate out ineligible items as
  necessary?
• do you understand and agree to comply with the 2
  in 5 rule?
• do you understand that your applicant share cant
  be paid by the Service Provider?
• do you understand that the pre-discount cost of a
  project submitted to the SLD is NET of rebates
  and/or discounts?

15
Surviving E-Rate

• Defining Ethics and Responsibilities
• Responsibilities
• All the previous items reviewed are part of the
  signature page and self-certifications you sign
  and agree to when submitting the Form 470 and
  Form 471.
• Read and understand what you sign.
• It is your responsibility.

16
Surviving E-Rate

• Planning for the Process
• When do you start Planning?

17
Surviving E-Rate

• Planning for the Process
• When Do You Start?
• E-Rate Timeline

18
Surviving E-Rate

• Planning for the Process
• Why is Planning necessary?
• 1.) Rules Change
• 2.) Needs Change

19
Surviving E-Rate

• Planning for the Process
• Rules Change
• The Federal Communications Commission, the
  Federal oversight agency for the E-Rate program,
  published their Third Order and Report on
  December 23, 2003. Within this report, the
  changes finalized by the FCC are the most
  significant changes in the E-Rate program since
  the inception of the program.
• These changes are effective March 11, 2004.
• The most significant part of this Order is the
  ruling that will permit a particular eligible
  entity to receive support for discounted Internal
  Connections products and services no more than
  twice in every five years.

20
Surviving E-Rate

• Planning for the Process
• Rules Change
• In the first seven (7) funding years of the
  E-Rate program, applicants who qualified for a
  high discount level, typically in the 80-90
  discount range, could apply every year for
  equipment and services in the Internal
  Connections category with very good chances for
  being funded.
• And, with few exceptions, these applicants were
  successful.
• Conversely, applicants who qualified for discount
  levels below 70 were typically denied funding
  because all available funds had been awarded.

21
Surviving E-Rate

• Planning for the Process
• Rules Change
• For E-Rate year 8, the first year of the 2 in 5
  rule, applications for Internal Connections were
  about 600 million less for 90 applicants over
  the previous year, an indication that this part
  of the 2 in 5 rule is working.
• However, we dont know what the volume of Basic
  Maintenance requests are to date?
• The SLD has announced that the 1st wave for Year
  8 Internal Connections will be in the early
  September timeframe and will fund to 87.
  Hopefully, discounts will ultimately be awarded
  to those below 70.

22
Surviving E-Rate

• Planning for the Process
• Rules Change
• This 2 in 5 rule will provide applicants with
  discount levels less than 70 a better
  opportunity for funding, but a well planned
  5-year strategy will be critical in order to
  increase your chances for funding.
• Of equal importance within the FCC announcement
  is that maintenance for E-Rate eligible equipment
  will not be subject to the 2 in 5 rule, thus
  allowing support for those years when an
  applicant does not receive any E-Rate funding for
  Internal Connections.

23
Surviving E-Rate

• Planning for the Process
• Additional Important Rule Changes
• Applicants MUST use PRICING as the primary factor
  when awarding E-Rate projects
• Equipment purchased with E-Rate funds MUST remain
  in the same location for 3 years before the
  equipment can be moved
• Substitution requests may be granted where the
  new equipment is priced higher than the original,
  provided the applicant pays the full difference.

24
Surviving E-Rate

• Planning for the Process
• Needs Change - Questions
• What effect do these RULE changes have on your
  technology plan?
• When do I start Internal Connections projects?
• Will I be able to finish in time?
• How do I measure quality?
• How do I measure completion progress?
• What if new equipment is introduced?
• What if my focus changes?

25
Surviving E-Rate

• Planning for the Process
• Needs Change - Answer
• What effect do these RULE changes have on your
  technology plan?
• You MUST PLAN to maintain your Technology Plan on
  a regular basis. It is especially important for
  Multi-Year and/or Voluntary Extension Contracts.

26
Surviving E-Rate

• Planning for the Process
• Needs Change - Answer
• When do I start Internal Connections projects?
• You MUST PLAN when the project will start. If you
  cant wait until you receive the Funding Letter,
  you must plan to pay for the entire project in
  full and seek reimbursement. The reimbursement
  can be incremental as work is done.

27
Surviving E-Rate

• Planning for the Process
• Needs Change - Answer
• Will I be able to finish in time?
• You MUST PLAN whether you will finish your
  project within the funding year. Always ask for
  the automatic 90 day extension but you must
  fill out a Form 500 to do this. If you need more
  time, determine if any extensions are automatic
  due to funding after March 1st, and if not you
  need to write an extension request. Understand
  the rules for extensions.

28
Surviving E-Rate

• Planning for the Process
• Needs Change - Answer
• How do I measure quality?
• You MUST PLAN to have scheduled project meetings
  and review test results with your Service
  Provider(s). You should expect a professional
  Project Management plan and documented results.

29
Surviving E-Rate

• Planning for the Process
• Needs Change - Answer
• How do I measure completion progress?
• You MUST PLAN to inform all potential Service
  Providers that you expect to have a written Scope
  of Work for every project, with a formal sign-off
  procedure by the Applicant before the project is
  completed. Progress billing milestones should be
  planned in advance, and no billing should occur
  until a signed statement of work is completed.

30
Surviving E-Rate

• Planning for the Process
• Needs Change -Answer
• What if new equipment is introduced?
• You MUST PLAN in advance of the project starting
  whether any equipment originally ordered could or
  should be replaced with more current equipment.
  If so, plan early to create a Service
  Substitution request. Check to see if the changes
  you desire might be covered by a Global
  Substitution request by the manufacturer.

31
Surviving E-Rate

• Planning for the Process
• Needs Change - Answer
• What if my focus changes?
• You MUST PLAN to review Advanced Technologies
  pertinent to your environment. If you elect to
  move in this direction, start with your
  technology plan and revisit all previous steps we
  have just reviewed.
• Justify changes with financial analysis in
  addition to technology advances.

32
Surviving E-Rate

• BREAK
• 15 Minutes

33
Surviving E-Rate

• Strategies to Maximize Opportunities
• Best Practices
• Pick the best time to apply.
• How do you apply?
• Make sure your technology plan still fits.
• Is your Free and Reduced Lunch count optimized?
• Adopt an FRN strategy.
• Line up your budget.
• Is your application BONDED?
• To RFP or NOT? That is the question!
• Always MAINTAIN your posture!

34
Surviving E-Rate

• Strategies to Maximize Opportunities
• Pick the Best Time to Apply
• What did you apply for in E-Rate year 8?
• How can we predict when the best chance for
  funding will be?
• Funding history how desperate are you?
• What is your Technology Position vs. your plan?
• Apply for MAINTENANCE every year!

35
Surviving E-Rate

• Strategies to Maximize Opportunities
• Example 1 Example 2 Example 3 Example 4
  Example 5 Example 6
• 2005 YES YES YES
  YES ELIG/NF YES
• 2006 YES ELIG/NF
  ELIG/NF ELIG/NF ELIG/NF ELIG/NF
  
• 2007 N/E ELIG/NF YES
  ELIG/NF ELIG/NF ELIG/NF
• 2008 N/E YES N/E
  YES ELIG/NF ELIG/NF
• 2009 N/E N/E
  N/E N/E YES
  YES
• 2010 YES ELIG/NF YES
  YES YES
  YES
• 2011 YES YES N/E
  N/E N/E N/E
• 2012 N/E N/E
  YES N/E N/E
  N/E
• 2013 N/E ELIG/NF N/E
  YES N/E N/E
• 2014 N/E YES
  N/E N/E YES
  YES

36
Surviving E-Rate

• Strategies to Maximize Opportunities
• Does Your Technology Plan Apply?
• Keep your Technology Plan constantly updated.
• Applicants MUST have a 5-year plan, including a
  contingency if funds are not received when
  expected.
• Plan for Solutions, not equipment. Be sure your
  E-Rate requests are a reflection of your
  technology plan.
• Plan for Advanced Technology it aint
  whether, but when

37
Surviving E-Rate

• Strategies to Maximize Opportunities
• How Do You Apply?
• Do you create an RFP?
• Do you use purchasing co-operatives?
• Do you use State Master Contracts?

38
Surviving E-Rate

• Strategies to Maximize Opportunities
• Is your Free and Reduced Lunch Optimized?
• Do you do an annual Free and Reduced application
  process?
• Do you do sibling matches?
• Timing is always an issue
• SLD is always behind
• Alternate mechanisms available

39
Surviving E-Rate

• Strategies to Maximize Opportunities
• Do you have an FRN Strategy?
• How do you break your project(s) up?
• Do you break by site or type?
• How do you segregate ineligible products?
• Are you always aware of the 30 rule?
• Do you separate out partially eligible
  products?
• What about Advanced Technologies?
• End of Life products?
• Trade-ins?

40
Surviving E-Rate

• Strategies to Maximize Opportunities
• Is your Funding Aligned?
• Do you have your projects approved?
• Do you have your applicant share quantifed?
• Can you find a copy of your budget page quickly
  if asked to produce for a PIA inquiry?
• Are you prepared to monitor and track your
  expenditures?

41
Surviving E-Rate

• Strategies to Maximize Opportunities
• To RFP or NOT? That is the Question!
• Do you like doing RFPs every year for Internal
  Connections?
• Do you like doing RFPs every year you request
  Basic Maintenance Services?
• Do you create a committee to review bid responses
  and evaluate proposals received?
• Do you argue over weighting criteria and the
  evaluation procedure you have adopted?
• Do you wish you could just make the selection
  without involving other non-technical people?

42
Surviving E-Rate

• Strategies to Maximize Opportunities
• To RFP or NOT? That is the Question!
• Do you like preparing an extensive presentation
  every year to provide to the Board and it never
  addresses the questions they ask?
• If your technology plan changes, do you need to
  do a new RFP and go out to bid again? Do you
  create a committee to review bid responses and
  evaluate proposals received?
• BUMMER!!

43
Surviving E-Rate

• Strategies to Maximize Opportunities
• To RFP or NOT? That is the Question!
• There is an answer.
• Consider Voluntary Extensions!

44
Surviving E-Rate

• Strategies to Maximize Opportunities
• Is Your Application BONDED?
• When is your next infrastructure BOND issue?
• Are you planning to leverage BOND funds vs.
  E-Rate funds received?
• Can you leverage other grants vs. your BOND
  issue?

45
Surviving E-Rate

• Strategies to Maximize Opportunities
• Is Your Application BONDED?
• Plan in conjunction with E-Rate application
• Understand the time frames involved when bond
  money is available
• Develop Auxiliary plan to utilize excess funds
• Sell Auxilliary utilization internally to
  Supt/Cabinet
• Long term planning necessary
• Work with bond planning committee

46
Surviving E-Rate

• Strategies to Maximize Opportunities
• Is Your Application BONDED?
• Leveraging Example
• Bond Issue 10 Million
  E-Rate Application 10 Million
• Assume Bond Issue passes, E-Rate application is
  funded!!!
• Transfer 5 Million ---------------?
  Applicant share 5 Million
• Balance of Bond 5 Million
  Available E-Rate 10 Million
• --------------------------------------------------
  ----------------------------------------------
• Total Available funds for project
  15 Million
• Available for E-Rate project 10 Million
• Available for ineligible items 5
  million

47
Surviving E-Rate

• Strategies to Maximize Opportunities
• Things to Consider
• The smoothing effect will set in within the
  first couple of years and then all Internal
  Connections applicants should be funded every
  year.
• Your true strategy should include a 10 year
  E-Rate funding pattern, supplemented by your
  maintenance and operations budget, planned E-Rate
  eligible maintenance, potential bond issues that
  include technology, and other grants for specific
  issues.
• Be aware of changes that may occur within the
  E-Rate program that could affect you.
• Select vendors with more to offer than just
  pricing.

48
Surviving E-Rate

• Strategies to Maximize Opportunities
• Things you MUST know
• Service Substitutions Impact of Increased
  Auditing Oversight
• Fourth Order and Report Recovery and
  Enforcement
• Fifth Order and Report Strong E-Rate Support
  Tighter Rules
• Fifth Order and Report Applicants must pay
  within 90 days
• More Audits 1,000 authorized target 500K and
  above
• Reduction of award at Service Provider invoice
  time
• Records must be kept for 5 years

49
Surviving E-Rate

• Strategies to Maximize Opportunities
• Things you MUST do
• Understand Your State Competitive Bidding laws
• Have written binding agreement or Contract before
  471 submitted
• Must have price as PRIMARY factor
• Get FCC Registration Numbers for all entities
• Use ROI and Solution oriented tools/analysis
• Have a formal evaluation matrix categories and
  weighting

50
Surviving E-Rate

• Strategies to Maximize Opportunities
• Things you MUST do
• Sample Weighting Matrix (total 100 points)
• Purchase Price 20 points
• Vendors K-12 and E-Rate expertise 10 points
• Vendors Financial Status 10 points
• Vendor reputation and years in the Network
  business 10 points
• Quality of the Vendors Goods and Services 10
  points
• The extent to which the goods or services meet
  your needs 10 points
• Vendors past relationship with the
  applicant 10 points
• Quality of the Project Management offered by the
  vendor 10 points
• Vendors certifications and knowledge of advanced
  technologies 10 points
• 100 points

51
Surviving E-Rate

• Strategies to Maximize Opportunities
• Use Common Sense
• Know the rules
• Know your environment
• Vision know where you want to go
• Pick the right strategic partner
• Use E-Rate as one of several funding sources

52
Surviving E-Rate

• Post Funding Activities
• Survival Issues
• SPIN Changes
• Service Substitutions
• Form 486 and 500
• BEAR filings
• Audits and Findings

53
Surviving E-Rate

• Post Funding Activities
• SPIN Changes
• Operational SPIN Change
• Must be allowed under your state and local
  procurement rules
• Must be allowable within the terms of any
  contract between the applicant and its original
  Service Provider
• The applicant has notified its original Service
  Provider of its intent to change Service Providers

54
Surviving E-Rate

• Post Funding Activities
• Service Substitutions
• For Internal Connections projects, the SLD will
  automatically provide a 90 day extension every
  year. The applicant MUST file a Form 500 to
  accept that extension.
• If your FCDL is issued after March 1st, the SLD
  will extend your project an additional year. The
  applicant Must file a Form 500 to accept that
  extension.
• An extension can be requested beyond the 90 day
  automatic extension if reasons can justify a
  longer extension. The reason must not be the
  fault of the Service Provider.
• Service substitutions FREEZE the FRN. Timing is
  everything.

55
Surviving E-Rate

• Post Funding Activities
• Forms 486 and 500
• The Form 486 must be filed within 120 days of the
  FCDL or it is possible funding could be reduced.
• The SLD recommends filing the Form 486 within the
  1st 10 days after the FCDL.
• Most applicants are funded several months late,
  and it is almost routine to file the Form 500 for
  the 90 day extension. However, many applicants
  wait until the end of the funding year to file
  the Form 500, and some forget. Our suggestion
• File the Form 500 at the same time you file
  your Form 486.

56
Surviving E-Rate

• Post Funding Activities
• Form 472 the BEAR form
• For Internal Connections, most applicants wait
  until the FCDL is issued before starting the
  project. However, sometimes it is imperative the
  project is started prior to the receipt of the
  FCDL.
• Remember, if you start any project prior to
  receiving the FCDL, you have selected the BEAR
  method of payment, and you MUST stay in that
  payment form throughout the completion of that
  FRN.

57
Surviving E-Rate

• Post Funding Activities
• Audits and Findings (per E-Rate Central)
• Applicants are not aware of or have not contacted
  their State E-Rate Coordinator.
• Applicants are not aware they should label their
  Universal Service funded equipment.
• An inventory/asset register did not exist
• Applicants do not receive the Quarterly
  Disbursement Report and would like to be able to
  specify where to receive the report.
• Applicants are unaware of the availability of
  Universal Service training materials and
  resources

58
Surviving E-Rate

• Post Funding Activities
• Audits and Findings (per E-Rate Central)
• Applicants are unaware of the 5 year retention
  rule.
• Applicants do not have a Universal Service
  recordkeeping system that includes forms, tech
  plans, Free/Reduced support, bids, bid selection
  process documents, inventory records, payments
  and invoices. They did not know that 5 years
  retention is from the last date to receive
  service in the funding year. Filing systems
  should be color coded.
• Applicants do not use a tracking system for
  invoices and bills. The system should track
  correct discounts, time it takes for BEAR form
  payments, and when applicant makes payments.

59
Surviving E-Rate

• Post Funding Activities
• Audits and Findings (per E-Rate Central)
• Applicants are unaware of the hot line for Code 9
  calls.
• Applicants are unaware of the ease of filing
  on-line.
• Applicants could not describe the competitive bid
  process.
• Applicants were unaware of their discount level.
• Applicants do not have an understanding of the
  consequences of falsely certifying their
  application forms.

60
Surviving E-Rate

• Summary
• Understand Your Responsibilities
• Plan for the process
• Use appropriate strategies
• Deal with the appropriate issues

61
Surviving E-Rate

• Survive E-Rate!
• Thank you!