1. E-rate for Beginners John Noran Schools and Libraries Division Universal Service Administrative Company Train-the-Trainer Workshop September 27-29, 2004

2. Universal Service Administrative Company Slide 2  School and Libraries Support Mechanism –Provides discounts to eligible schools and libraries for Telecommunications Services, Internet Access, Internal Connections, and Basic Maintenance. –Applicants can be schools, libraries, or consortia, but only eligible recipients of services can receive discounts. –Applicants must apply for discounts each year. –Funding is capped at $2.25 billion annually. –From January 1, 1998 through September 7, 2004, more than $13.7 billion in funding commitments have been issued to eligible schools and libraries.  School and Libraries Support Mechanism –Provides discounts to eligible schools and libraries for Telecommunications Services, Internet Access, Internal Connections, and Basic Maintenance. –Applicants can be schools, libraries, or consortia, but only eligible recipients of services can receive discounts. –Applicants must apply for discounts each year. –Funding is capped at $2.25 billion annually. –From January 1, 1998 through September 7, 2004, more than $13.7 billion in funding commitments have been issued to eligible schools and libraries. Overview 2

3. Universal Service Administrative Company Slide 3 History  Schools and Libraries Support Mechanism started providing discounts as of January 1, 1998 –Telecommunications Act of 1996 Congress directed the FCC to “establish competitively neutral rules... to enhance, to the extent technically feasible and economically reasonable, access to advance telecommunications and information services for all public and non-profit elementary and secondary school classrooms... and libraries.” First Report and Order (FCC 97-157) 3

4. Universal Service Administrative Company Slide 4 Introduction  Vendor Assistance –NSI in New Jersey Application review — Program Integrity Assurance (PIA) Invoice review (PIA) Appeal process Program correspondence, including change and extension requests –Pearson Government Solutions in Kansas Client Service Bureau (call center) Forms processing 4

5. Universal Service Administrative Company Slide 5 Eligibility  Eligible Entities –Schools Must meet the statutory definition of elementary or secondary school found in the No Child Left Behind Act of 2001. Must be a non-profit institutional day or residential school, including a public charter school, that provides elementary or secondary education, as determined under state law. Must not be operating as a for-profit business. Must not have an endowment exceeding $50 million. 5 Applicants

6. Universal Service Administrative Company Slide 6 Eligibility  Eligible Entities –Schools (cont.) Pre-kindergarten, Adult Education, Juvenile Justice –Must meet state definition of elementary or secondary education. –Students and/or facilities may be eligible. –SLD requests updated information from state departments of education every two years. 6 Applicants

7. Universal Service Administrative Company Slide 7 Eligibility  Eligible Entities –Libraries Must meet the statutory definition of library or library consortium found in the Library Services and Technology Act (LSTA) of 1996. Must be eligible for assistance from a state library administrative agency under LSTA. Budget must be completely separate from any schools. Must not be operating as a for-profit business. 7 Applicants

8. Universal Service Administrative Company Slide 8 Eligibility  Service Providers –Must file Form 498, Service Provider Information Form Request a Service Provider Identification Number (SPIN) Provide/update contact information. –Must file Form 473, Service Provider Annual Certification Form, on an annual basis Required for invoices to be paid. 8 Service Providers

9. Universal Service Administrative Company Slide 9 –Providers of Telecommunications Services Must contribute to the Universal Service Fund, if applicable. Must provide telecommunications services on a common carriage basis to be a telecommunications carrier. To be a telecommunications carrier, the carrier must –(1) allow the customer to transmit information of its own design and choosing, without change in the form or content of the information, and –(2) provide that capability for a fee directly to the public, or to such classes of users as to be effectively available to the public (i.e., hold itself out to serve indifferently all potential users). Service Providers Telecommunications Carrier

10. Universal Service Administrative Company Slide 10 –Telecommunications Carriers Must file Form 499A on an annual basis and check at least one box on Line 227 and file Forms 499Q, if applicable. Must revise the Form 498 to reflect Form 499 Filer. I.D. SP must be designated eligible in SLD database. –SP may not provide telecommunications services if it has not been designated as a telecommunications carrier. Service Providers Telecommunications Carrier

11. Universal Service Administrative Company Slide 11 Eligibility  Eligible Services –Priority 1 Telecommunications Services –local and long distance –wireline and wireless –voice, data, video Internet Access –Priority 2 Internal Connections (switches, hubs, routers, wiring) Basic Maintenance on Internal Connections –Priority 1 funded first, then Priority 2 funded beginning with neediest applicants (90%, 89%, 88%, etc.) 11

12. Universal Service Administrative Company Slide 12 Eligibility  Eligible Services –Eligible Services List Lists services by category (Telecommunications Services, Internet Access, Internal Connections, and Miscellaneous) –Services which are conditionally eligible –Ineligible services Available on SLD web site 12

13. Universal Service Administrative Company Slide 13 Calculating Discounts  Discount Calculation –National School Lunch Program (NSLP) Individual schools — start with the percentage of students eligible for NSLP for their school School districts — start with the NSLP percentages of individual schools in the district, calculate weighted average of all schools Libraries — start with the percentage of students eligible for NSLP for the school district in which the library is located Consortia — calculate simple average of discounts of members –Urban or rural status of county in which school or library is located (from web site) 13 Applicants

14. Universal Service Administrative Company Slide 14 Calculating Discounts Points to Remember:  All discount calculations will involve  percentage of students eligible for NSLP in a school or school district  determination of Urban/Rural status  discount from Discount Matrix.  Applicant with members or subunits must calculate an average of those members  School district – individual schools  Library system – library outlets/branches  Consortium – eligible member entities 14 Applicants

15. Universal Service Administrative Company Slide 15 Application Process Technology Plan – What is my plan? Form 470 – What services do I want? Form 471 – What services did I order? Form 486 – When did services start? Form 472 or Form 474 – How do I receive reimbursements or discounts?  Online filing/certification available for most forms 15 Applicants

16. Universal Service Administrative Company Slide 16 Application Process Form 498 – What is my SPIN? Form 499A for Telecom Carriers – What is my responsibility to the Universal Service Fund? Form 473 – What am I required to do before receiving payment on an invoice? Form 472 or Form 474 – How do I submit invoices to USAC?  Online filing available for most forms  Online service provider certification under consideration 16 Service Providers

17. Universal Service Administrative Company Slide 17 Technology Planning Technology Plans Not required for basic local, cellular, PCS, and/or long distance phone service and/or voice mail Must be written before Form 470 filing Must be approved by an SLD-certified approver before Form 486 filing or start of services, whichever is earlier Must cover five areas: Goals / Strategies for using technology Professional development Needs assessment Sufficient budget Evaluation process 17 Applicants

18. Universal Service Administrative Company Slide 18  Service providers may offer NEUTRAL technical assistance.  Service providers may not act as technology plan approvers. Technology Planning Service Providers

19. Universal Service Administrative Company Slide 19 Form 470 Opens a competitive bidding process Applicant responsible for ensuring an open, fair process and selecting the most cost-effective provider of the desired services Must wait 28 days after POSTING of Form 470 to select service provider, sign contract, and sign and submit Form 471 Can be filed once for multi-year contracts, but 470 and RFP must indicate intent to sign multi-year contract with extensions Make RFP available or list specific service/function and quantity/capacity 19 Applicants

20. Universal Service Administrative Company Slide 20 Form 470 Competitive Bidding Request for Proposal (RFP) Not required under the FCC Rules, but a good idea Must comply with local and state procurement laws Describes your project scope, location, other requirements in detail Competition Goal is to have as many bidders as possible Promotes better service and lower prices Fair and open process All bidders treated the same, no advance knowledge of RFP information No secrets in the process, all bidders know what is required of them 20 Applicants

21. Universal Service Administrative Company Slide 21 Competitive Bidding Process  Service providers must remain NEUTRAL at all times.  Service providers may not interfere with applicant’s affirmative duty to conduct a fair and open bid process.  Service providers may not exert undue influence over an applicant. Service Providers

22. Universal Service Administrative Company Slide 22 Competitive Bidding Process Obligation to Pay Non-discount Share Applicants are required to pay their share of the cost (the “non-discount” portion or share) — cannot be donated, forgiven or ignored. Service providers cannot waive or credit the applicant’s share. Offers to reduce price must be incorporated into the “total pre-discount amount.” Service provider must bill the applicant for non-discount share of services. 22 Both

23. Universal Service Administrative Company Slide 23  FORM 470 –Service providers may offer basic information, such as timelines and deadlines. –Service provider or its consultant may not complete the 470. –Service provider or its consultant may not sign the Form 470. –Service provider or its consultant may not file the Form 470. –Service providers may not prepare the RFP. –Service providers may contribute information on technical issues. Competitive Bidding Process Service Providers

24. Universal Service Administrative Company Slide 24 Form 470 Points to Remember:  Competitive bidding process must be open and fair.  List services sought in correct category of service (Form 471 must match).  Retain worksheets, bid evaluation criteria, winning AND LOSING bids.  Form 470 must be certified by close of Form 471 application filing window.  Filing online speeds processing and reduces errors. 24 Applicants

25. Universal Service Administrative Company Slide 25 Form 470 Form 470 Receipt Notification Letter (RNL) Cover page of important reminders and deadlines Notifies applicant that Form 470 has been posted to the SLD web site System will generate RNL for Forms 470 filed online after form is submitted but before it is certified. Form MUST be certified before close of Form 471 application filing window. Contains Allowable Vendor Selection / Contract Award Date 25 Applicants

26. Universal Service Administrative Company Slide 26 Form 471 Provides specific information on services, service providers selected, and contracts Provides discount calculation information Must be filed for each funding year Must be postmarked on or before the last day of the Form 471 application filing window Applicant certifies compliance with rules, which include securing access to resources to make effective use of discounts. 26 Applicants

27. Universal Service Administrative Company Slide 27 Form 471 Points to Remember:  WAIT AT LEAST 28 DAYS from the posting of the Form 470 before  selecting a service provider  signing a contract  signing and submitting a completed Form 471.  File separate Forms 471 for Priority 1 and Priority 2 services.  Remove ineligible costs and document or estimate eligible costs carefully (30% Rule).  Filing online speeds processing and reduces errors. 27 Applicants

28. Universal Service Administrative Company Slide 28  Service providers should always provide correct SPINs and contact information.  Service providers are encouraged to provide guidance to the applicant on its services and functionality during the application process. Service Providers Form 471 Points to Remember:

29. Universal Service Administrative Company Slide 29  Service providers are encouraged to assist with providing information for the Item 21 attachment for their services. –Clear level of detail on the Item 21 attachment may advance the processing of the invoice. An example of such detail would be the inclusion of the item (model #), quantity, and unit cost. Service Providers Form 471

30. Universal Service Administrative Company Slide 30  Applicants will not receive support for contracts that provide only a single price for a package that bundles both eligible and ineligible services together. –Service provider and applicant should work together to create pricing terms in the contract that separate eligible services from ineligible services.  Service providers are also encouraged to assist in providing applicant with billing account numbers and contract numbers. Service Providers Form 471

31. Universal Service Administrative Company Slide 31 Form 471 Form 471 Receipt Acknowledgment Letter (RAL) Cover page of important reminders and deadlines Provides confirmation of certain information entered from Form 471 Data entry errors may be corrected by submitting a copy of the RAL with the specific errors lined out and the correct information supplied — three-week deadline. Funding request reductions may also be submitted before funding commitment. 31 Applicants

32. Universal Service Administrative Company Slide 32 Contract Requirements  FCC Rules require applicant to sign a contract prior to the filing of a completed Form 471. 47 C.F.R. §54.504(c).  Fifth Report and Order requires both the applicant and service provider to sign the contract prior to the filing of a Form 471. –This rule does not apply to tariffed or month-to- month services. –Verbal agreements are not acceptable. –Quotes are not acceptable. Both

33. Universal Service Administrative Company Slide 33  Service provider and applicant must comply with state contract law.  Service provider and applicant must comply with state and local procurement laws. Contract Requirements Both

34. Universal Service Administrative Company Slide 34  Applicant must provide signed and dated contracts for reviews and audits. –Applicant must be prepared to prove its contract meets the requirements of state contract law.  Applicant certifies that it has signed a contract on its Form 486. Contract Requirements Both

35. Universal Service Administrative Company Slide 35 Contract Requirements  Service provider is required to permit the applicant prior to the submission of the Form 471 to choose the Method of Payment — BEAR v. SPI — for discounted services. –FCC Second Report and Order encourages the applicant and service provider to work together to determine the method of payment. –FCC Second Report and Order encourages including the method of payment in the contract. Both

36. Universal Service Administrative Company Slide 36 Contract Issues  Know your legal rights.  SLD does not intervene in disputes that are contract-based rather than program-rule based. – Contract disputes should be brought before local and state courts, not the SLD or the FCC. Both

37. Universal Service Administrative Company Slide 37 State Master Contracts  If the state filed a Form 470, then the applicant may cite the state’s Form 470 on its Form 471. –The applicant is required to follow the applicable provisions of the state master contract and local and state procurement laws. –No separate bidding documents or contracts are required by the applicant citing the state’s Form 470, other than what is required by the state master contract and local and state procurement laws. –The signed state master contract between the state and service providers meets the FCC signed contract requirement. Both

38. Universal Service Administrative Company Slide 38 State Master Contracts  If the applicant files a Form 470 and considers a state master contract as one of the bids: –The applicant is required to comply with all competitive bidding requirements.  If the applicant selects the state master contract: –The applicant is required to follow the applicable provisions of the state master contract and local and state procurement laws. –The signed state master contract between the state and vendors meets the FCC signed contract requirement. Both

39. Universal Service Administrative Company Slide 39 State Master Contracts  Purchase orders or other state master contract requirements for applicants –If a state master contract requires the issuance of purchase orders or contains other binding requirements for applicants, the applicants must follow the applicable dates set forth in the state master contract. –For example, if a state master contract requires the applicant to issue a purchase order by July 1, then the applicant is required to meet that deadline. Both

40. Universal Service Administrative Company Slide 40 Application Review Review of Applications Review by PIA, which may include:  Competitive bidding process  Contracts  Discount calculation  Sufficient budget  Establishing Form 470  Technology Plan 40 Applicants

41. Universal Service Administrative Company Slide 41 Application Review Points to Remember:  Provide information requested by reviewers (PIA) promptly.  If desirable, work with your state coordinator to comply with information requests.  Ask for more time if you need it.  Retain documentation.  Review Request for Selective Review Information fax to understand what information might be requested. 41 Applicants

42. Universal Service Administrative Company Slide 42 Funding Commitments  Commitments vs. Disbursements –$2.25 billion cap for each funding year. –SLD may commit more that $2.25 billion for a funding year if unused funds from previous funding years have been rolled over to that year. 42

43. Universal Service Administrative Company Slide 43 Funding Commitments Funding Commitment Decision Letter Cover page of important reminders and deadlines FCDL reports status of individual funding requests:  Funded  Not Funded  As Yet Unfunded (Internal Connections)  Service provider does not receive this status  Canceled May receive more than one FCDL 43 Both

44. Universal Service Administrative Company Slide 44 Funding Commitments Points to Remember:  Check all entries on the FCDL carefully to make sure there are no data entry errors.  Applicants use the information on the FCDL to prepare the Form 486. 44 Both

45. Universal Service Administrative Company Slide 45 Form 486 Notification that services have started and the SLD can pay invoices Certifies that Tech Plan (if required) has been approved. If Tech Plan has not been approved by SLD-certified approver, the application is subject to denial and invoices will not be paid. Certifies status under Children’s Internet Protection Act (CIPA). Lead members of consortia may be required to collect CIPA certifications from consortium members on a separate form (Form 479). 45 Applicants

46. Universal Service Administrative Company Slide 46 Form 486 Form 486 Deadline Form 486 must be postmarked no later than 120 days after the Service Start Date featured on the Form 486 OR 120 days after the date of the Funding Commitment Decision Letter whichever is later. If Form 486 is postmarked later than the above deadline, the date 120 days before the Form 486 postmark date will become the start date for discounted services and funding may be reduced. 46 Both

47. Universal Service Administrative Company Slide 47 Form 486 Form 486 Notification Letter Cover page of important reminders and deadlines. Provides confirmation that a Form 486 has been successfully data entered. SLD will accept invoices from applicants and service providers once the Form 486 is successfully processed. 47 Both

48. Universal Service Administrative Company Slide 48 Service Delivery Deadlines Recurring Services June 30 of funding year Non-recurring Services September 30 following the close of the funding year Deadline automatically extended to September 30 of the following year for FCDLs, service substitution approvals, and SPIN change approvals dated on or after March 1 of the funding year. Applicants can also request extension for specific reasons involving difficulties with delivery of services by service provider. See web site for further information. 48 Both

49. Universal Service Administrative Company Slide 49 Form 473 Form 473 – Service Provider Annual Certification (SPAC) Form Service providers are required to file on an annual basis. SLD will only pay invoices for a funding year if a SPAC is on file for that funding year. SPACs are required for both BEARs and SPIs. SPIN Search Tool on SLD web site lists funding years for which a SPAC is on file. 49 Service Providers

50. Universal Service Administrative Company Slide 50 Invoices Invoices — Form 472 or Form 474 BEAR (Billed Entity Applicant Reimbursement) Form 472 is filed by the applicant and certified by the service provider after the applicant receives services and pays for the services in full. OR SPI (Service Provider Invoice) Form 474 is filed by the service provider after providing services and billing the applicant for its non-discount share. 50 Both

51. Universal Service Administrative Company Slide 51 Invoices Points to Remember:  Invoices cannot be used to request SPIN changes or service substitutions.  Invoices are reviewed for program compliance – respond promptly to requests for information.  Service providers are required to reimburse the applicant within 20 days after RECEIPT of the funds from SLD. 51 Both

52. Universal Service Administrative Company Slide 52 Invoices Invoice Deadlines Invoices must be postmarked no later than 120 days after the last date to receive service OR 120 days after the date of the Form 486 Notification Letter whichever is later. If an invoice is postmarked later than the above deadline, payment will be denied. Extensions of invoice deadlines may be requested under certain conditions. See web site for details. 52 Both

53. Universal Service Administrative Company Slide 53 Invoices BEAR Notification Letter Cover page of important reminders and deadlines Provides confirmation that a Form 472 (BEAR) has been successfully data entered. Indicates what amounts are being paid and reason for reductions/denials. SPI Electronic Notification – Invoice Status Report Service provider can receive an electronic notification. 53 Both

54. Universal Service Administrative Company Slide 54 SPIN Changes  Corrective SPIN Change – to correct data entry errors or where the applicant used the wrong SPIN for the service provider selected  Global SPIN Changes – mergers or acquisitions in whole or in part –Considered a Corrective SPIN change  Operational SPIN Change – only available after receipt of FCDL  See web site for more guidance. Both

55. Universal Service Administrative Company Slide 55 Operational SPIN Changes  For changes to a new service provider  Applicant must make three certifications: –Change allowed under local procurement laws –Change allowed under terms of contract –Original service provider notified of intent to change  Can NOT be used for telecommunications services if new SPIN is not a telecommunications carrier Both

56. Universal Service Administrative Company Slide 56 Document Retention  Remember 5-year retention requirement for all documents.  Good recordkeeping is ESSENTIAL.  Keep copies of EVERYTHING.  Keep these documents with E-rate files, or copies, if accounting department keeps its own files. 56 Both

57. Universal Service Administrative Company Slide 57 Document Retention  Types of records to retain include: –Competitive bid documents RFPs, bids, quotes, proposals, etc. –Signed contracts –Service provider bills to customers Detail of services/products and locations Indicate entity(ies) receiving service/products Delivery/installation dates –Applicant payments Cancelled checks Service credits for any reason 57 Both

58. Universal Service Administrative Company Slide 58 Appeals Decisions of the SLD can be appealed to the SLD or to the FCC. Generally, appeal first to the SLD. Can appeal to the FCC if SLD does not grant the appeal. Can be filed electronically or on paper. Must be received or postmarked within 60 days of the SLD decision. See Appeals Procedure in Reference Area for specific guidance. Requests for waivers of rules must be filed with the FCC. 58 Both

59. Universal Service Administrative Company Slide 59 Audits Why do we do audits? To provide data regarding program rule compliance. To identify areas needing education and outreach. To clarify program rules that must be strengthened to prevent waste, fraud and abuse. To enforce accountability for program rule compliance. To deter noncompliance. 59 Both

60. Universal Service Administrative Company Slide 60 Audits Who performs audits? USAC Internal Audit Independent auditors engaged by either USAC or the FCC FCC Office of Inspector General Other agencies 60 Both

61. Universal Service Administrative Company Slide 61 Audits What documents do auditors need? Budget / financial statements Technology Plan and approval letter Documentation of competitive bidding process Documentation of discount level claimed Copies of contracts and contract extensions Copies of service provider bills, cancelled checks, BEAR Forms, BEAR checks, and other supporting documentation Asset inventories or registers 61 Both

62. Universal Service Administrative Company Slide 62 Assistance SLD main page of USAC web site www.sl.universalservice.org Client Service Bureau Use the “Submit a Question” link on the web site Fax toll-free at 1-888-276-8736 Telephone toll-free at 1-888-203-8100 Read the form instructions 62 Both

63. Universal Service Administrative Company Slide 63 http://www.sl.universalservice.org

64. Universal Service Administrative Company Slide 64 http://universalservice.webex.com