Program Updates 

The SLD Web site is the best and most authoritative place for information on the E-Rate program. The following updates contain information that libraries in Massachusetts ought to be aware of when participating in E-Rate. Many of these changes will require additional record keeping and certifications on various SLD forms.

The Funding Year 2006 (FY2006) Form 471 filing window will open at 12:00 pm ET on December 6, 2005 and will remain open for 73 days until 11:59 pm ET on February 16, 2006.

Funding Bottleneck Eased for FY2005

On August 3rd the flow of E-Rate funding commitments to libraries came to a screeching halt. The FCC had imposed a different set of accounting rules on the Universal Service Administrative Company (USAC) program in July; the E-Rate program administrators were no longer allowed to commit money that they did not have in hand. Then, with strong advocacy from the library and school community, on December 8th, the Senate passed H.R. 5419, a bill that would allow a one-year exemption from the accounting rules of the Anti-Deficiency Act. The House had passed the bill on November 20th. Though well into the fiscal year, normal funding commitments should soon be flowing.

E-Rate is normally allowed to commit up to $2.25 billion per year for library and school telecommunications, Internet services, and internal connections projects. Participants need to know whether they will have E-Rate discounts at the very beginning of a fiscal year, to plan for large projects, to pay monthly bills, and to know how what size telecommunications and Internet links they can afford.

With the accounting procedure changes, the SLD (Schools and Libraries Division of the USAC) would only be able to commit funds that they had already collected. However, the universal service pool is not like an annual budget line item that is available at the beginning of the year; rather, it is replenished by monthly collections from telecommunications providers.

Recognizing that the E-Rate program could not function on this basis without major restructuring, Congress has provided a year's grace period to the USAC in order find a solution. Once signed into law, H.R. 5419 will allow the E-Rate program to operate somewhat like it has done in previous years. Unfortunately, half the year is over, and many schools and libraries still do not know the fate of their E-Rate requests.

FCC Registration Numbers

All applicants will be required to provide an "FCC Registration Number" during the application process for the July, 2005 - June, 2006 program year. Though there is no assigned space on the approved Form 470 or Form 471 to report your number, the Program Integrity Assurance (PIA) Team from the SLD will call and ask for your number. You may be able to report the FCC Registration Number on your Item 21 attachment to the Form 471. The E-Rate Task Force has provided guidance on this process

In order to obtain an FCC Registration Number, go to the FCC Web site and select CORES from their left navigation. You will be required to provide a Tax Identification Number (TIN) or Employer Identification Number (EIN) for your municipality or organization. The application process should take about 5 minutes.

The SLD has indicated that you may be told there is already a Funding Request Number assigned to your TIN/EIN; however, you should continue through and obtain a separate number for the E-Rate program. As you fill out the Web form, you will be asked for a business type. Most public libraries will use "State or Local Agency" with a Subtype. of "Township" If you are unsure what subtype to use, take your best option. SLD is aware that these are FCC designations that don't fit the E-Rate program properly.

"Red Light Rule" (Debt Collection)

The Debt Collection Improvement Act of 1996 is now being applied to the E-rate program. An notice went into effect on October 1, 2004. Libraries that have failed to follow E-Rate procedures, either by not paying the non-discounted portion of their service, falsifying certifications, receiving discounts on services or equipment that are found not to be eligible, or not completely expending funds that were disbursed through service reductions, may be subject to the red light rule. These libraries may be required to return unused or improperly used funds. The SLD will issue a demand for repayment.

Libraries should be aware that if they have been red-lighted, no invoices will be paid by the SLD either to the library's service provider or for a reimbursement request from the library until the red-light status has been lifted. That is, the library is no longer in debt. If the library has been red-lighted during the application process, the SLD will dismiss the application without further recourse by the library. There is no appeals process for such dismissals.

Tip: Libraries should write into their contracts with service providers that if the service provider is red-lighted, the library has the right to break the contract and change to a new vendor.

  • Libraries should be extremely careful about how they work with vendors and consultants. The library must obtain and keep in its own files a Letter of Agency (LOA) for any consultant before it files its Form 470.

    Possible vendors should play no role in preparing 470 Forms or procurement documents or be part of the bidding process.

    Tip: The successful vendor should help, if possible with the Form 471, especially Item 21, where you list the services to be provided under your new contract.

  • All Form 470s must have a complete description of services desired. Descriptions of services cannot be "encyclopedic", in an attempt to justify any selected service. The library must have a way to describe the service desired, and quantity or capacity needed.

  • All bids must be up for a period of 28 days. RFPs, if used, must be made available for a period of 28 days.

  • Libraries must now ensure that the bid selected is the most cost-effective and that price was the most heavily-weighted factor in the procurement evaluation. This is true even for state blanket contracts.
    Recommendation: Libraries should develop evaluation sheets for their procurement review that clearly indicate cost having the most weight.

  • Libraries can set preconditions to limit or pre-qualify the bidders to be evaluated, but should not be so restrictive that only one bidder can respond.

  • Libraries should document how they meet relevant Massachusetts procurement rules.

  • Libraries must keep records of the RFP and its release date, all bids received, including losing bids, and all contracts. Libraries should keep all ancillary documentation, having to do with the creation of the RFP, advertising of the RFP, responses to bidders, evaluation and selection of the winning bidder.

Technology Plan Due Dates

You should submit your technology plans to the Board BEFORE you submit your Form 470s to the SLD. Your technology plan must cover the whole funding year. If you have two plans (e.g., one ends December 31, and the next one kicks in January 1st of the funding year), both must have been submitted to the Board before you file your Form 470.

The SLD is looking closely at all sections of the technology plan, and are very concerned that you have a sufficient budget to not only pay for the non-discounted portions of the service, but to pay for non-eligible equipment, such as computer replacements, computer maintenance costs, and electrical costs. SLD will also be checking to ensure that technology plans have a realistic means of evaluating or monitoring your progress, so that your library can make "mid-course corrections" should the services not be advancing you toward your library service goals.

Any service that you request on a Form 470 or that you establish a contract for and list on a Form 471, should be traceable back to your technology plan. The complexity of your technology plan should guide the complexity of your Form 470. If you have a simple and general technology plan, it will not support a request for a highly complex network infrastructure.

Letters of Agency for Networks (Library Consortia)

There are two types of letters of Agency: one for consultants (see Competitive Procurement Process above) and another for members of a library consortium or network. If you are a member of an automated network, you must provide a Letter of Agency to your network that authorizes the network to purchase services on your behalf. The LOA must contain: the name of the consortium leader (e.g., C/W MARS network), the name of your library, the type of service (usually telecommunications and/or Internet services), the timeframe or end-date for the authorization, your signature and title. It must be dated no later than when the network submits its form 471, and the LOA must have a specific expiration date. An LOA that lasts longer than three years is allright, but may need to be justified to the SLD Program Integrity Assurance team by an explanation of how Massachusetts library networks act on behalf of their members.

Site Visits

Starting November, 2004, the SLD will begin to make approximately 1,000 site visits per year to E-Rate and recipients. The site visit group will trace back a single invoice back through the Form 486, form 471, Form 470 and all the way to the technology plan. The visits are to provide outreach and teaching to recipients. More information can be found in the SLD news archives.

Two Out of Five Rule

Beginning with the upcoming program year (SLD Year 2005), a new rule limiting Internal Connections funding commitments has been put into place (3rd Report and Order). Applicants can receive internal connection committments no more than twice in five funding years, the "Two Out of Five Rule". Basic Maintenance on internal connections is exempted from this rule.

Basic Maintenance

Basic maintenance on Internal Connections (not telecommunications services) is now an eligible service. Basic maintenance, is a "Priority 2" service; therefore, like the Internal Connections funding commitments, it is only funded for applicants at the higher discount bands. Basic maintenance is extremely circumscribed. It does not include Help Desk services, network monitoring services, staff of any kind, and must be tied to the specific make, model and location of the equipment.

Transfer of Equipment

Rules have now been established for libraries which wish to discard equipment purchased with E-Rate funds. In general, a library must keep the equipment for at least three years. After that time, the library may give the equipment to another E-Rate eligible entity. The library may also trade in the equipment and apply the trade-in value to the pre-discount amount for the new equipment.
 
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Page last updated on 09/19/2007