Gravy train revisited

I recently had reason to explore what percentage of libraries participate in the E-Rate. I found a stat from the ALA that "[a]bout 73% of all public libraries ... receive E-Rate discounts." I followed their link to see where that number came from: Funds for Learning. They're looking at how many library locations are included on E-Rate applications. I'm more interested in what percent of library organizations (library systems or single-site libraries) get funded, towit:

Using the Open Data tool, I found 2,629 unique BENs as applicants on a 471, and 2,343 unique BENs in consortia applications, for a total of 4,972 libraries as applicants. I found an ALA report that has 9,252 central locations (either single-site libraries or the main branch of a library system). So that means about 54% of library organizations apply for E-Rate. I discovered a few branch library locations (instead of the library system) that were consortia members, so 54% is too high. Still, it's over 50%; let's say 52%.

Last time I looked, it was close to 40%, so things are looking up for libraries. Still a long way to go to reach the 96% participation of school districts. Still, lots better than private schools, which FFL has lagging at 32%.

Competition on the wane

 How things have changed. Last time I checked in on the Internet in Alaska, Quintillion was asking for rule changes because they said GCI had an unfair advantage. Now, GCI is buying Quintillion. If you can't beat 'em, join 'em, I guess.

Does GCI have any competitors left in Alaska? The amounts that they charge school districts for Internet access are truly astounding. 

Drafty summer

News from the congressional Universal Service Fund Working Group. A new aide has taken over the telecommunications portfolio for Sen. Fischer, one of the leaders of the Working Group. In his introductory email, he said: "Working Group co-chairs and members are continuing to refine a discussion draft that I hope to share with stakeholders for review in the summer timeframe."

So in a few months, we'll all have something to talk about. I'll be very curious to see what ideas they have for expanding the contribution base. And what they have to say about the E-Rate.

FCC the EPC

OK, on to Part IIIB of the recent Report and Order and Order on Reconsideration: Simplifying the E-Rate Program. I'll just go through the 8 simplifications in order. And for no good reason, I'm going to assign a score to each.

Transition of Services During a Funding Year: This is for the case where you're switching providers (or switching service with the same provider) and the cutover date changes from what you put on the 471. This happens a lot, and in the past, it always meant the applicant lost out on some funding. The FCC's change is kludgy, but it should work OK: 8 out of 10.

Guidance on Cost Allocation: A really minor clarification that if 90% of a telecommunications service is used for eligible purposes, the other 10% is "ancillary" and the whole service is eligible. That's good, but I don't have any clients that will be taking advantage of this. And now the bad news: all off-campus use has to be cost-allocated. So if your library has external wireless access points that extend the signal into the community a bit, that has to be cost-allocated out. Because of that pain in the allocation: 3 out of 10.

Mid-Year Bandwidth Increases: Now if you need to increase your bandwidth mid-year, you can do it with a Service Substitution, though you'll have to pay the full amount of any price increase. I need some clarification on this sentence: "Applicants that can demonstrate that the bandwidth and price increase were covered by an existing FCC Form 470 and competitive bidding process would not need to rebid the service." Are they saying that if the new bandwidth fits within the range of bandwidths requested on the last 470, I can just refer back to that 470 in subsequent funding years? That's nice, but most of the time, the new bandwidth is going to come with a new contract. So I can use the old 470 and create a new contract months later? Yeah, I don't see that sailing through PIA, so I'm going to post a Form 470 and "bless" the contract per the Kalamazoo Reconsideration Order. Not as generous as they could have been, but a good clarification: 8 out of 10.

Spam Bids: Basically, if you want to disqualify bids, you need to put the disqualification criteria on the Form 470. The Commission mentions, but doesn't say how to deal with, the spambids that are basically a price list of everything the vendor offers. The only bids you can just toss are bids with no pricing info ("call for pricing"). And you can't actually toss the bid: you have to retain it for 10 years with an explanation of why you disqualified it. A total PIA (and I don't mean Program Integrity Assurance): 3 our of 10.

Bids Received After 28-day Bid Period: Unless you set a bid deadline, you have to consider all bids that come in before you begin your bid evaluation. Fine. We generally have clients hold off a day or two on starting their bid evaluation to allow tardy bids. But the order tiptoes right up to an existing conundrum, but fails to address it: since the 28th day is the Allowable Contract Date (ACD), how can we consider bids that come in at, say, 9:00 pm on that 28th day, and still sign a contract on that day? The Commission shot down the reasonable suggestion that bids be cut off at 11:59 the day before, but they weren't really clear whether, if I start my bid evaluation at, say, 9:00 am on the 28th day, I can disregard bids that arrive after 9:00 am on the 28th day. It only really matters for applicants who file their 470 at the deadline, but still, it should be clarified. A good minor clarification, but they missed an opportunity to make an important clarification: 4 out of 10.

Bye-Bye Form 486: Yes! The 486 is going, going, not gone until FY 2028. Why the delay? Some minor edits on forms and we have to wait two years, but the whole bidding portal can go live in 15 months? That delay keeps this reform from getting a perfect score: 9 out of 10.

Invoicing Rules: Forgot to file an Invoice Deadline Extension Request before the Invoice Deadline? Now you have an extra 15-day grace period to file that request. Good. And USAC has to warn you if it's close to the deadline and you have an FRN with no invoices. Better. You still only get one 120-day extension unless you can show "extraordinary circumstances," but that's fair. Filed an invoice and it was denied after the Invoice Deadline? Now you've got a 60-day grace period to file again. [I probably shouldn't point this out, but that creates an ability to get infinite deadline extensions; just file a BEAR with an error, and when it gets rejected, you have 60 days to file another invoice with an error, giving you another 60 days, and so on.] Finally, if you file a Form 500 to reduce an FRN, the subsequent RFCDL does not reset the Invoice Deadline. Fair enough. No complaints: 10 out of 10.

Updating Definitions and Rules: "Internal connections": Clarifies that connections between buildings on a single campus are Category 2. "Consortium": Gets rid of the weird private-entities-if-all-services-are-tariffed exception, adopting the ECF definition of "consortium." Sections 54.503(b) and 54.513(d): Just cleaning up some changes that should have been made when previous rule changes were made. The changes aren't really good news, but they're reasonable: 7 out of 10.

And last, a little grammar curmudgeoning about the use of "the EPC" in paragraph 58 and footnote 118. As I have said before, acronyms are anarthrous, while initialisms require an article. So someone at the FCC (an initialism, though some late-night wag made it an acronym rhyming with "duck") pronounces EPC as "E-P-C" instead of "epic." Since USAC says it's pronounced "epic," and EPC is anarthrous in most of this order, the Commission should change all uses to be anarthrous.

The Cake is a Lie

Thanks to SHLB, I got the Bidding Portal Report and Order that I posted about on Saturday. So let's take a look, shall we? Today's post will only look at the competitive bidding portal. We'll talk streamlining tomorrow.

First issue: timing. Requiring use of the portal starting in FY 2028 seemed reasonable, until I realized that meant applicants would start using it in July 2027. That's too soon. Why not use FY 2028 as a beta test, and go live in FY 2029? Rushing the portal out the door is going to make it kludgy, especially in the first couple of years. I mean, the Commission has taken nine years to respond to the IG's suggestion that they collect all bids, so what's another two or three years? I think it's going to take a year just making sure the portal's process doesn't violate any state or local procurement rules.

Next, the portal requirements: "(1) prospective service providers to respond to applicants’ FCC Forms 470 by submitting their bids into the USAC-managed portal; and (2) applicants to upload their bid evaluation and vendor selection documentation, including contract(s), after selecting their service provider(s)." 

The first requirement will save applicants from having to send bids in later if they go into a Selective Review, but the second requirement will require applicants to upload documents that normally only need to be uploaded in case of a Selective Review. So in total, these requirements do not simplify the application process. It's nice that applicants no longer need to keep copies of those documents for 10 years, since USAC will have all those documents already, but it's easier to keep local copies.

The FCC posits that "a competitive bidding portal will help ensure a more fair and open competitive bidding process by increasing visibility and transparency into bidding information received during the E-Rate competitive bidding process...." But since the FCC "we will treat bids and other pricing data submitted to the bidding portal as presumptively confidential and will not make the non-winning bids and submitted pricing data routinely available for public inspection," the process is only transparent to USAC and the FCC, so I don't see it making the process much more open and fair. Unless USAC is going to hire more selective reviewers to go through all the information.

The FCC claims that "this increased transparency will give USAC and the Commission direct and instant insight into the competitive bidding process to reduce opportunities for potential bid collusion and the submission of sham or altered bids...." USAC and the Commission currently have easy access to all that information and more through Selective Reviews. Are they going to increase the number of Selective Reviews? If not, I don't see how they're going to catch collusion, etc. Again, they need to give applicants and especially service providers access to the bids, etc. Service providers have a strong incentive to check up on any bids they lost, and alert USAC to any irregularities. Of course, service providers would have no incentive to show restraint in alerting USAC to possible irregularities, so I predict an explosion of Selective Reviews, most of them pointless.

Check out footnotes 75 to 78 to see the E-Rate heavy hitters who think this portal is unlikely to reduce fraud, and will create an administrative burden.  To see who's in favor of the bid portal, check out footnote ... uh .... Did any commenters think this was a good idea? The IG and GAO said "the Commission’s ability to detect and deter fraud has historically been limited by its lack of direct access to underlying competitive bidding documentation...," but there's no specifics on how collecting all that info is going to help, instead of just collecting info on cases that USAC intends to investigate. As Socrates might have said: Unexamined information is not worth collecting.

The FCC finds no problem with complying with state and local laws and using the portal. If state law requires a hard copy of the bid, perhaps notarized, or some kind of bidder's security, they can just submit that in addition to what gets submitted to the portal. But service providers who are required by state law to submit paper bids can just ignore the E-Rate portal; the applicant will be forced to award the contract based on the paper bids, and will have to forego E-Rate funding, since there's no corresponding bid in the portal. The Commission says that in such cases, applicants can request a waiver. And if the Commission doesn't grant the waiver promptly, the applicant is out of luck.

I like the idea of all questions going through the portal; we waste a lot of time fending of service providers who say they have a question, but are really just looking for an opportunity to work their sales magic. Walkthroughs and bidders' conferences will still be allowed. There may be unforeseen problems here, but it seems to me that this won't be a problem in most cases. 

Uh oh. "We also direct that access to the competitive bidding portal and repository be limited to the applicant’s Account Administrator and up to two other authorized users (including consultants)...." If the Account Administrator changes, will the new one automatically get access? What about the other two users? Can they be changed? This restriction is going to create headaches for applicants and especially for consultants.

That's all for now.

Another portal, another fiasco?

 This could be good news, but I'm afraid it won't be. In the agenda for the next meeting, the FCC says it "will consider a Report and Order and Order on Reconsideration that would strengthen the integrity of the E-Rate program by establishing a competitive bidding portal and adopt several proposals aimed at streamlining and simplifying E-Rate program procedures."

First, let's talk about "streamlining and simplifying." I'm all for that, even if the complexity of the program is what keeps consultants like me employed. But when I hear "simplify," I remember the last time the Commission acted to simplify the program. We were at an E-mpa™ conference, and we were all a little worried about our jobs, but when the Order came out and we read it, the reaction was: "Full employment for consultants!" Still, hope springs eternal in my heart, so here's hoping that they really do simplify the program.

But let's go back to the "competitive bidding portal." Again, it could be an improvement, but I'm not confident it will be. Here's the first step I'd like to see in the creation of the portal: compile all state and local procurement rules into one document, so that the portal can be developed to comply with all those rules. Will that happen? No. Instead, we'll end up with a kludgy portal that gets bits pasted onto it as the developers try to shoehorn in all state rules after the fact. Just like EPC, which took years to get right, and is still an amalgam of kludges.

I'll withhold judgement until I see the Order and the eventual portal, but my hope is strained. 

It only took 6 years

 The FCC has announced that they're planning to make some new rules around suspensions and debarments at their next meeting. Oh, goody, more rules. These rules are in response to a Notice of Proposed Rulemaking (NPRM) that was released late in 2019.

I generally like the new rules. Mostly, they're just changing the rules to follow the OMB guidelines. And creating a Suspension and Disbarment Officer (SDO) who would be responsible for dishing out suspensions and debarments. The SDO would have more flexibility in dealing out consequences than the FCC has currently. They're also making some common-sense changes like allowing debarments when there is sufficient evidence of wrongdoing, rather than having to wait for criminal convictions.

The order also has an NPRM. Ugh, the first proposed rule is to put a new certification on one of the forms, demanding applicants certify that they have read this Report and Order and complied with the rules. As the FCC points out, applicants are already required to certify that they are in compliance with program rules. And the rules in this Order are not actions that applicants have to take; it's all stuff that will happen to them if they commit fraud. So out of all the rules in the program, why make us double-certify on this Order? Also, if you want applicants to follow all the rules, create a rulebook. As I've said before,  aside from the obvious benefit of making it easier for applicants to access program rules, the creation of a rulebook would: 1) show just how massive and complex the rules are for this program; and 2) show how quickly the rules shift in this program.