Updates and New Initiatives USAC Staff Train-the-Trainer Workshop September 27–29, 2004 Schools & Libraries Division

Updates and New InitiativesUSAC Staff

Train-the-Trainer WorkshopSeptember 27–29, 2004

Schools & Libraries Division

Slide #2Schools and Libraries Division

Overview

Introduction Statistics on Funding Years Heightened Oversight Updates on FCC Orders Site Visits Ombudsman Outreach & Training, WebEx,

Online E-mail, SP Portal, ETP


Introduction and StatisticsGeorge McDonald


Statistics on Funding Years

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


Demand by Year – Service Type(in millions of dollars)

YearTelecommServices

InternetAccess

Internal Connections Total

1998 $703.6 $114.3 $1,484.5 $2,302.4

1999 $678.7 $166.6 $1,461.7 $2,307.0

2000 $1,072.7 $363.3 $3,285.3 $4,721.3

2001 $1,285.6 $447.0 $3,462.1 $5,194.7

2002 $1,404.8 $411.9 $3,919.2 $5,735.9

2003 $1,306.7 $438.5 $2,972.8 $4,718.0

2004 $1,273.9 $326.7 $2,677.8 $4,278.4


Commitments vs. Disbursementsas of September 7, 2004

(in thousands of dollars)

YearBase Committed

AmountAuthorized to

Disburse% of Base Disbursed

1998 $1,714,600 $1,400,652 81.7%

1999 $2,151,497 $1,662,109 77.3%

2000 $2,082,494 $1,643,566 78.9%

2001 $2,203,745 $1,630,081 74.0%

2002 $2,189,702 $1,407,380 64.3%

2003 $2,594,488 $702,621 27.1%

2004 $764,041 $1,953 0.3%


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 ??


Online Filers by Year – Form 470

Year Number of Forms Filed Online

Percent of All Forms 470 Filed

1998 31,878 82%

1999 29,219 82%

2000 32,139 93%

2001 32,048 95%

2002 30,055 94%

2003 29,786 93%

2004 30,087 95%



Year # of Forms Filed Online % of All Forms 471 Filed

1998 0 0%

1999 9,234 27%

2000 29,192 80%

2001 29,299 85%

2002 31,697 87%

2003 37,392 92%

2004 38,791 95%



Year Dollars Requested % of Total Requests

1998 $0 0%

1999 $437,088,245 17%

2000 $2,067,626,642 51%

2001 $3,096,718,642 69%

2002 $4,477,763,172 88%

2003 $4,176,568,566 95%

2004 $3,634,912,954 87%


E-certified Forms

Form 470 Form 471

FY2002 2,047 6,056

FY2003 7,629 12,009

FY2004 8,040 11,264

FY2005 90 —


OversightMel Blackwell


Heightened Oversight

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


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)



Federal Communications Commission (FCC) Responsible for developing the regulations Accountable to Congress and to program

beneficiaries for successful implementation of the E-rate program



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



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


Oversight – Why?

Responsibility Dollars involved —$2.25 billion each year Program highly visible One of the few “federal” programs that’s available for

schools and libraries who meet the requirements E-rate touches everyone Oversight is proper


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


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


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



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



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


Update on Forms andFCC Orders

John Noran


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


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


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


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.


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



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.



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



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.



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.



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.



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.



Service provider involvement in Form 470 process Direct involvement in the Form 470

process by a service provider would thwart the competitive bidding process.


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.


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.



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.



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.



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.



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.



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.



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.



Service substitution procedures USAC’s service substitution procedures are

formally adopted and codified Applicants may request a substitution for an

eligible service with a higher pre-discount priceHowever, USAC will provide support based on

the lower, original price



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.



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.



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/DSUCable modemFiber-to-copper converter



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.


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.


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.


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.



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.



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.



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.



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.



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.



Pre-bidding process

Bidding process

ContractsApplication

process

Purchase and delivery of services

Invoicing InventoryForms and rule compliance

Document retention requirements – Examples



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.



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.



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.



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



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.


Eligible Products DatabasePhil Gieseler


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.



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.



Implementation timeline:

Spring 2004– Mfgr enrollment Summer 2004– Mfgr data entry Fall 2004– Publicly available



Manufacturers participating in the pilot program include:

3Com Avaya Cisco Systems Dell

Hewlett Packard IBM Nortel Sprint



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?


Site VisitsLiz Goff


Introduction

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


Purpose of Site Visits

Two Purposes:1. Robust after the fact physical site

review to help curb waste, fraud and abuse.

2. Enhanced outreach to the school and library community.


Objective of Site Visits

Gather information on:

1. Procurement

2. Deployment

3. Use of technology as it relates to E-rate

4. Possible best practices by applicants

5. Success of current outreach efforts


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.


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.


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.


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.


Summary

Site Visits will benefit the applicant community by: 1. Allowing SLD to see first-hand how E-rate funded

services and technology are being procured and utilized.

2. Interviews with applicants and direct observation will allow SLD to expand our training and outreach efforts.

3. Allows SLD to streamline and improve the E-rate process.


OmbudsmanBob Spiller


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


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


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.


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


Outreach & Training, WebEx, Online E-mail, SP Portal, ETP

Cynthia Schultz


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


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


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


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


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


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


QUESTIONS

Documents

Updates and New Initiatives USAC Staff Train-the-Trainer Workshop September 27–29, 2004 Schools & Libraries Division