Updates and New Initiatives USAC Staff

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Updates and New InitiativesUSAC Staff

Train-the-Trainer Workshop September 2729,
2004 Schools Libraries Division
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Overview

• Introduction
• Statistics on Funding Years
• Heightened Oversight
• Updates on FCC Orders
• Site Visits
• Ombudsman
• Outreach Training, WebEx, Online E-mail, SP
  Portal, ETP

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Introduction and StatisticsGeorge McDonald
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Statistics on Funding Years

• Demand by Year Service Type
• Commitments vs. Disbursements
• Funding Threshold by Year
• Online Form 470/471 Filers
• E-certifications

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Demand by Year Service Type(in millions of
dollars)
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Commitments vs. Disbursementsas of September 7,
2004(in thousands of dollars)
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Funding Threshold by Year

• 1998
• 1999
• 2000
• 2001
• 2002
• 2003
• 2004

• Internal Connections at 70
• All approved requests funded
• Internal Connections at 82
• Internal Connections at 86
• Internal Connections at 81
• Internal Connections at 70
• Internal Connections at ??

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Online Filers by Year Form 470
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Online Filers by Year Form 471
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Online Filers by Year Form 471
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E-certified Forms
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OversightMel Blackwell
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Heightened Oversight

• E-rate program subject to heightened oversight
  during the last year
• By whom?
• Why?
• What are the implications?

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Oversight By Whom?

• Congress
• Oversight of the program is part of their
  responsibility
• Congress created the law under which the program
  operates (Telecommunications Act of 1996)

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Oversight By Whom?

• Federal Communications Commission (FCC)
• Responsible for developing the regulations
• Accountable to Congress and to program
  beneficiaries for successful implementation of
  the E-rate program

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Oversight By Whom?

• USAC
• USAC internal audit division
• Accountable to USAC Board, FCC and Congress to
  implement the E-rate program according to FCC
  rules and the Telecommunications Act of 1996

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Oversight By Whom?

• Public in general
• E-rate funds are collected from phone users
• Schools and libraries and thereby students,
  teachers, parents, library patrons, and others
  are impacted by the program
• The public has a stake in the successful results
  and implementation of the program

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Oversight Why?

• Responsibility
• Dollars involved 2.25 billion each year
• Program highly visible
• One of the few federal programs thats
  available for schools and libraries who meet the
  requirements
• E-rate touches everyone
• Oversight is proper

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Oversight What Does It Mean?

• USAC
• Congressional oversight hearings
• Three Congressional hearings
• Various meetings with Congressional staff
• Ongoing activities
• GAO review
• FCC oversight and proceedings, both formally
  (through orders) and informally (through
  meetings)
• Audits of USAC internal procedures

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Oversight What Does It Mean?

• Applicants and Service Providers
• Results in a program that has clearer rules and
  procedures on how and when they should comply
  with program rules
• Results in more available funding by reducing
  waste, fraud and abuse identify and suspend bad
  actors and reduce excess requests
• Increased USAC presence through site visits
• More information and guidance from USAC on issues
  related to program compliance

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Oversight What Should You Do?

• Make sure you are aware of program rules
• Review materials on the web site frequently
• Contact the SLD Client Service Bureau
• Submit a Question through the web site
• Fax questions to 1-888-276-8736
• Call 1-888-203-8100
• If something sounds too good to be true, it
  probably is

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Oversight What Should You Do?

• Emphasize what you learn here with others in your
  state or territory
• Departments of Education and State Libraries
• School and library administrators
• Information Technology administrators and
  employees

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Oversight What Should You Do?

• Give input to USAC
• Call the Whistleblower Hotline with specific
  information
• Suggest updates to guidance materials
• Consider changes you can make or influence to
  combat waste, fraud and abuse

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Update on Forms andFCC OrdersJohn Noran
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Update on FCC Forms

• ALL forms currently stamped DRAFT in forms
  notebook
• Form 470 and Form 471
• Significant changes
• Covered in later presentations
• Other program forms
• Additional certifications proposed
• Form 500
• Additional formatting changes proposed

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Updates on FCC Orders

• Ysleta Order
• FCC 03-313, released December 9, 2003
• Third Order
• FCC 03-323, released December 23,2003
• Fourth Order
• FCC 04-181, released July 30, 2004
• Fifth Order
• FCC 04-190, released August 13, 2004

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Updates on FCC Orders

• Orders available on FCC web site
• Excerpts of orders available in SLD archives on
  web site (search in archives of release date)
• Rule changes and guidance information also
  incorporated in presentations

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Updates on Orders Ysleta

• Technology Plans
• Form 470 must be based upon carefully thought-out
  technology plan
• Must detail specific services sought in a manner
  that would allow bidders to understand the
  specific technologies an applicant is seeking
• NOT a planning device for applicants trying to
  determine what is available
• Form 470 developed from Tech Plan should mirror
  the level of complexity of products and services
  for which discounts are being sought.

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Updates on Orders Ysleta (cont.)

• System Integration services
• FCC rules and procedures
• Contemplate that providers will bid on the cost
  of specific products and services eligible for
  discounts
• DO NOT contemplate that bidders will bid solely
  on Systems Integration services

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Updates on Orders Ysleta (cont.)

• Overbroad Forms 470 (cont.)
• Applicant may list multiple services on Form 470,
  knowing that it intends to choose one over
  another
• However, products and services must be linked in
  a reasonable way to the Technology Plan and not
  request duplicative services.

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Updates on Orders Ysleta (cont.)

• Overbroad Forms 470
• Requirement for a bona fide request means that
  applicants must submit a list of specific
  services for which they are likely to seek
  discounts consistent with their Technology Plans
• Should provide bidders with sufficient
  information to enable them to reasonably
  determine needs of applicant

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Updates on Orders Ysleta (cont.)

• RFPs and Form 470
• Applicants must submit a complete description of
  services sought (on Form 470 / RFP) for bidders
  to evaluate the services in order to formulate
  bids.
• If an applicant relies on an RFP, that RFP must
  be available to bidders for 28 days.

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Updates on Orders Ysleta (cont.)

• State and local procurement rules
• FCC rules apply IN ADDITION TO state and local
  procurement laws and competitive bidding
  requirements.
• Example State or local procurement law may
  permit an applicant to forego competitive bidding
  for products and services under a certain dollar
  threshold, but FCC rules require that applicants
  seek competitive bids on those products and
  services.

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Updates on Orders Ysleta (cont.)

• Most cost-effective bid
• Applicants must select the most cost-effective
  offerings.
• Price must be the primary factor, but need not be
  the exclusive factor.
• Price must be given more weight than any other
  factor.

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Updates on Orders Ysleta (cont.)

• Ineligible products and services
• Applicants are prohibited from using E-rate
  discounts to subsidize the procurement of
  ineligible products and services, or from
  participating in arrangements that have the
  effect of providing a discount level greater than
  that to which the applicants are entitled.
• In general, cost allocation may be used to
  determine the portion of the cost that may
  receive discounts.

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Updates on Orders Ysleta (cont.)

• Service provider involvement in Form 470 process
• Direct involvement in the Form 470 process by a
  service provider would thwart the competitive
  bidding process.

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Updates on Orders Third

• Upgrading/replacing Internal Connections
• Starting with FY2005, eligible entities can
  receive Internal Connections commitments no more
  than twice every five funding years.
• Includes shared services, but does not include
  consortium members who do not actually receive
  Internal Connections funding.

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Updates on Orders Third (cont.)

• Basic maintenance on Internal Connections
• Not subject to twice every five years rule
• Only necessary basic maintenance services are
  eligible
• 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.

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Updates on Orders Third (cont.)

• Basic maintenance on Internal Connections (cont.)
• Technical support, including on-site Help Desks,
  is not eligible if it provides any ineligible
  features or functions.
• The deadline for renegotiating or cost-allocating
  existing contracts was June 9, 2004.

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Updates on Orders Third (cont.)

• Transfer of equipment
• All transfers, without regard to whether money or
  anything of value has been received in return,
  are prohibited for three years after purchase.
• After three years, equipment may be transferred
  to other eligible entities but not in
  consideration for money or anything else of value.

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Updates on Orders Third (cont.)

• Transfer of equipment (cont.)
• If a recipient is permanently or temporarily
  closed
• Equipment may be transferred to another eligible
  entity regardless of discount level
• USAC must be notified of the transfer
• All recipients of Internal Connections must
  maintain asset and inventory records for five
  years sufficient to verify the actual location of
  the equipment.

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Updates on Orders Third (cont.)

• Allocating eligible and ineligible costs
• Must allocate to the extent that a clear
  delineation can be made between eligible and
  ineligible components.
• Price for the eligible portion must be the most
  cost-effective means of receiving the service
• Ancillary ineligible functionality need not be
  cost-allocated.

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Updates on Orders Third (cont.)

• Annual update of Eligible Services List
• USAC must submit a draft list by June 30 of each
  year.
• FCC will issue a Public Notice seeking comment.
• FCC will later issue a Public Notice with the
  final list attached.
• List will represent a safe harbor for the coming
  year.

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Updates on Orders Third (cont.)

• Prohibition on the provision of free services
• Entities must pay the entire non-discount portion
  of the cost of any services they receive through
  E-rate.
• The provision of unrelated free services by the
  service provider constitutes a rebate of the
  non-discount portion of the cost, which is a
  violation of FCC rules.

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Updates on Orders Third (cont.)

• Service substitution procedures
• USACs service substitution procedures are
  formally adopted and codified
• Applicants may request a substitution for an
  eligible service with a higher pre-discount price
• However, USAC will provide support based on the
  lower, original price

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Updates on Orders Third (cont.)

• Lit fiber as a Priority 1 service
• Dark fiber is ineligible for discounts.
• The service provider is responsible for ensuring
  that both the fiber and the equipment to light
  the fiber are provided.
• To receive support for services using lit fiber
  as a Priority 1 service, the entity must purchase
  a functioning service from a telecommunications
  service provider or Internet access provider.

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Updates on Orders Third (cont.)

• Lit fiber as a Priority 1 service (cont.)
• If a school or library has previously purchased
  equipment to light fiber
• The equipment may be traded in and leased back to
  the school or library.
• The credit may not be used to pay the
  non-discount portion.
• Under certain circumstances, this trade-in can be
  considered a minor contract modification.

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Updates on Orders Third (cont.)

• On-premise Priority 1 equipment
• Discounts may be provided on the lease of a
  single basic terminating component used at a site
  as a Priority 1 service
• Examples
• CSU/DSU
• Cable modem
• Fiber-to-copper converter

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Updates on Orders Third (cont.)

• Carryover of unused funds
• USAC will file quarterly estimates of unused
  funds with the FCC.
• The FCC will make unused funds available annually
  in the second quarter of each calendar year for
  use in the next full funding year.

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Updates on Orders Fourth

• Direction of recovery actions
• Recovery should be directed to the party or
  parties that committed the rule or statutory
  violation in question.
• This applies on a going forward basis.
• USAC will make the determination to whom recovery
  should be directed by individual cases.

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Updates on Orders Fourth

• Enforcement action
• Recipients of demand letters must repay the
  recovery amount pursuant to the Debt Collection
  Improvement Act (DCIA).
• Good Samaritans
• Good Samaritans are not subject to recovery
  actions unless the Good Samaritan itself
  committed the act or omission that violated FCC
  rules or the governing statute.

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Updates on Orders Fifth

• Framework for recovery of funds
• Funds disbursed in violation of the statute or a
  rule that implements a substantive program goal
  must be recovered.
• Full recovery may not be appropriate for
  violations of certain rules.

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Updates on Orders Fifth

• Timeframe for recovery of funds
• The FCC will initiate and complete any inquiries
  within a five-year period after final delivery of
  service.
• The FCC and USAC will carry out any audit or
  investigation that may lead to discovery of any
  violation within a five-year period after final
  delivery of service.

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Updates on Orders Fifth

• Timeframe for recovery of funds (cont.)
• USAC will not seek recovery when the
  administrative cost is greater than the recovery
  amount (de minimis amount).
• USAC should subject any school or library that
  exhibits systematic noncompliance with FCC rules
  to more rigorous scrutiny in subsequent years.

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Updates on Orders Fifth

• Offset options and booking of recovery amounts
• Offset options implemented in COMAD Order
  eliminated.
• Administrative offset under DCIA still allowed.
• Recovery amounts should be recorded consistent
  with Federal Generally Accepted Accounting
  Principles.

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Updates on Orders Fifth

• Treatment of applicants subject to recovery
• Red light rule The FCC shall withhold action on
  any application made by an entity that is
  delinquent in its non-tax debts owed to the FCC,
  and shall dismiss such applications if the
  delinquent debt is not resolved.
• Applications will not be dismissed if the
  applicant has timely filed an appeal.

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Updates on Orders Fifth

• Document retention requirements
• Both applicants and service providers must retain
  all records related to the application for
  receipt and delivery of discounted services for a
  period of five years after the last day of
  service delivered.
• Applies starting with Funding Year 2004.
• Failure to maintain records or failure to make
  available required documentation is a rule
  violation that may warrant recovery of funds.

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Updates on Orders Fifth

• Document retention requirements Examples

• Purchase and delivery of services
• Invoicing
• Inventory
• Forms and rule compliance

• Pre-bidding process
• Bidding process
• Contracts
• Application process

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Updates on Orders Fifth

• Technology Plans
• Must be written prior to requesting bids on Form
  470.
• Must be approved prior to the commencement of
  discounted services.
• Should focus on research and planning for
  technology needs rather than acting as a
  preliminary RFP.

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Updates on Orders Fifth

• Technology Plans (cont.)
• Tech plans approved through EETT are acceptable
  with a supplemental analysis that the applicant
  will be able to secure the necessary financial
  resources.
• Applicants that do not have EETT plans must meet
  the five tech plan criteria.
• Applicants may make changes in technology as long
  as those services are designed to deliver the
  educational or library applications they have
  prepared to provide.

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Updates on Orders Fifth

• Technology Plans (cont.)
• If an applicant desires to order services beyond
  the scope of its existing tech plan, it must
  prepare and seek timely approval of an
  appropriately revised plan.
• Non-public schools that are not eligible to
  secure tech plan approval from their states may
  obtain approval from USAC-certified entities.

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Updates on Orders Fifth

• New or revised form certifications for applicants
  and service providers
• Form 470 - applicants
• Form 471 - applicants
• Form 473 - service providers

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Updates on Orders Fifth

• Resolving audit findings
• USAC must submit a proposed plan for resolving
  audit findings to the FCC
• USAC will maintain records of the status of all
  audit reports
• If findings cannot be resolved within six months,
  USAC will provide a projected timeframe for
  resolution to the FCC.
• USAC will submit annually a summary of all
  administrative procedures to the FCC for review
  and possible adoption as binding rules where
  appropriate.

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Eligible Products DatabasePhil Gieseler
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Eligible Products Database

• What is it?
• A pilot program established by the FCC in the 2nd
  Report and Order.
• A database of internal connections products that
  are eligible for funding.

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Eligible Products Database

• What is its value?
• Applicants can have higher assurance that a
  product is eligible if it is available in the
  database.
• Care must still be exercised, since eligibility
  in many cases depends on how a product is used.

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Eligible Products Database

• Implementation timeline
• Spring 2004 Mfgr enrollment
• Summer 2004 Mfgr data entry
• Fall 2004 Publicly available

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Eligible Products Database

• Manufacturers participating in the pilot program
  include

• 3Com
• Avaya
• Cisco Systems
• Dell

• Hewlett Packard
• IBM
• Nortel
• Sprint

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Eligible Products Database

• The pilot program will test the products database
  concept for Fund Year 2005.
• Can a database of this size be feasibly
  administered?
• Can applicants have confidence that all database
  entries are E-rate eligible?
• Will this approach limit applicant flexibility?

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Site VisitsLiz Goff
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Introduction

• Purpose of Site Visits
• Objective of Site Visits
• How Will Information Be Used?
• Selection Criteria
• Process

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Purpose of Site Visits

• Two Purposes
• Robust after the fact physical site review to
  help curb waste, fraud and abuse.
• Enhanced outreach to the school and library
  community.

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Objective of Site Visits

• Gather information on
• Procurement
• Deployment
• Use of technology as it relates to E-rate
• Possible best practices by applicants
• Success of current outreach efforts

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Site Visit Reviewer

• Will gather information on the deployment and use
  of technology.
• Will identify topics for which further outreach
  and training related to the Schools and Libraries
  support mechanism may be worthwhile.

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How Will Information Be Used?

• To support the performance goals and efficiency
  measures that will be established by the FCC.
• To publicize best practices so that USAC can
  provide proactive help to applicants.

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Site Visit Selection

• Visits will be generally random based on receipt
  of recent invoices
• Indicates that products/services have been
  delivered
• Visits will be short and focused.
• Visits will include locations across all states
  and territories that receive E-rate funds.
• Applicant will be notified one to two weeks prior
  to visit and will be given a list of specific
  documentation to have ready.

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Site Visit Process

• Reviewer will interview applicant to determine
  any specific difficulties the applicant has
  experienced with E-rate
• Reviewer will gather applicant suggestions on
  additional outreach that USAC could provide to
  improve the E-rate process and program.
• Reviewer will determine what is the most
  effective means to disseminate important
  information to the applicant community.

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Summary

• Site Visits will benefit the applicant community
  by
• Allowing SLD to see first-hand how E-rate funded
  services and technology are being procured and
  utilized.
• Interviews with applicants and direct observation
  will allow SLD to expand our training and
  outreach efforts.
• Allows SLD to streamline and improve the E-rate
  process.

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OmbudsmanBob Spiller
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Ombudsman

• New position (August 2004)
• Four functions
• Coordinate and track responses to non-standard
  questions and issues
• Monitor questions to identify recurring issues
  for follow up with new or recast guidance
  documents or other outreach efforts
• Field and respond to complaints
• Generally monitor program operations and identify
  potential improvements

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Ombudsman

• Ombudsman issues
• Issues that can be resolved through normal
  channels should use those channels
• Submit a Question on the web site
• Fax to 1-888-276-8736
• Call to 1-888-203-8100
• Issues that cannot be resolved will be escalated

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Ombudsman

• What can you expect?
• Answers to issues that can be resolved promptly
  will be communicated promptly.
• Issues that cannot be resolved immediately will
  be identified as such to the caller.
• All issues will be tracked and not lost.

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Ombudsman

• What are your responsibilities?
• If possible, start with Submit a Question and get
  a case number
• Be prepared to explain your issue clearly and
  succinctly
• Have details ready Form 471 application number,
  Billed Entity Number, Funding Year, Funding
  Request Number, and so on

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Outreach Training, WebEx, Online E-mail, SP
Portal, ETPCynthia Schultz
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Outreach Training

• Since May 2004, new category for Outreach
  Training added to SLD website
• Provides hyperlinks to
• WebEx Training
• Provides links on how to join a session and view
  a recorded Session
• TTT Presentations in hard copy
• On Line E-Mail

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WebEx Training

• Extended to applicants as well as service
  providers
• 100 concurrent seats available through January
  2005
• Multiple Training Sessions on key topics from
  October 2004 through January 2005

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WebEx Training (cont.)

• First-year service providers may attend the TTT
  Workshop via WebEx
• All TTT Presentations available as recorded
  sessions by October 14, 2004
• Individual WebEx training sessions available via
  WebEx on an as-requested basis

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Submit A Question Online

• Available since November 2003
• Will provide How To document for WebEx sessions
• Provides for greater efficiencies in routing and
  tracking
• Received lots of constructive feedback
• Incorporating changes pursuant to feedback
  received from applicants and service providers

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Service Provider Portal

• FCC Forms 498 and 499 slated to be available for
  online certification in October 2004
• Working toward an SLD Service Provider Dashboard
• Slated to allow
• online filing and certifications for FCC Forms
  472 and 473
• service provider managed access to invoicing
  information and status updates

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ETP Update

• ETP designation is a USAC term that will be
  renamed telecommunications carrier to align with
  FCC regulatory definition.
• New requirements outlined by FCC and implemented
  by USAC
• Telecommunications carrier designation search
  tool will be created on web site to allow
  applicants and service providers to search
• status of TC designation
• date of USAC designation
• states in which service provider is operating as
  a TC

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QUESTIONS