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Tuesday, September 30, 2008

Another reason to appeal

Another Semi-Annual Audit Recovery Report has been sent from USAC to the FCC. Not exactly a page-turner, but here are some factoids which might be of interest to E-Rate geeks (and let's face facts, if you are reading this blog, you are an E-Rate geek):
  • Of the almost $1.9 billion audited, $89 million was to be recovered. $2 million of that was overturned on appeal, so $87 million is still collectable. That's less than 5%. And $63 million of it is still under appeal. So only about $24 million has been finally determined to have been improperly paid. That's 1.3%.
  • The FCC currently has appeals totaling more than $15 million which pertain to Funding Year 2002 or earlier. Now it does take time for audits to be finalized, but c'mon!
  • At present, USAC is collecting on only $5 million. The rest is on hold while USAC decides appeals and waits on policy guidance. Not that any of those applicants are complaining.

So I'm wondering: what percentage of COMADs demand payment only from applicants, how many demand payment only from service providers, and how many demand payment from both.

Thursday, September 11, 2008

USAC training roundup

All in all, I'm giving the USAC training in DC last week a passing grade. I think it's worth attending, no matter what level you're at.

My only gripe: my company name wasn't on my name tag. But then again, maybe some of the school district folks would have avoided me if they'd known I wasn't one of them.

The idea of a separate "advanced" session in the beginning was excellent, and the topics were pretty good. For next year, maybe they should ask for topic suggestions.

The Audit session was informative, especially for old hands. I think it must have been frightening for first-timers, though. And since most of us never need that info, I think the main goal should have been to assuage fears for newcomers.

Program Compliance didn't introduce much that was new, but it is information that bears repeating every year.

The Cost Effectiveness Review session was completely unsatisfying, because all the information about the review that really matters (how you get picked for one, what you need to do to pass one, etc.) is all secret. But I was able to restrain myself from getting too snitty, so it was a success for me.

Calculating Discounts seemed to me to be a better session for the Beginners track, although I suppose USAC needs to say "You can't extrapolate percentages based on NSLP form returns" to as many people as possible.

The Eligible Services session was interesting: it focused in on a few rules, rather than trying to cover the whole topic. Since there was an "Eligible Services for Beginners" session, that was just right. I have to say, though, that the info on the 67% rule was probably way over the head of 67% of the people there.

I don't want to give any spoilers concerning items not on the agenda, so I'll just say that E-Rate Bingo can't have been easy to prepare: given the rules in this program, it must be difficult to think up questions to which the answer is not, "It depends."

So far, so good

Here's my first report from the USAC training in DC: We're off to an excellent start.

Nice breakfast spread, including fresh blueberries and cans of Pepsi for those of us who like our caffeine cold. Unfortunately, we apparently can't look forward to any skits during the Advanced session, but I suppose a little comic relief would be more welcome in this afternoon's session on audits.

The session on audits gets a whole afternoon, which I'm back and forth about. More information about audits will certainly help reduce the fear that applicants feel, but from a practical side, even with the new wave of IPIA audits, probably fewer than 300 applicants will get a full audit. So only a small percentage of attendees will actually put the information to use.

I don't see so many familiar faces this morning. Could it be that the DC training has lost its cachet as the place to be?

Tuesday, September 09, 2008

CER obfuscation

Oh, man, I'm going to have to moderate my caffeine intake on Friday morning so I don't lose my composure during the Cost Effectiveness Review presentation. Here's what the slides say about why CERs are conducted:

FRNs are reviewed to determine:
  • Whether the costs of the products and services are significantly higher than the costs generally available in the applicant’s marketplace for the same or similar products or services;
  • Whether equipment is priced two or three times greater than the prices available from commercial vendors; and
  • Whether there are extenuating circumstances that warrant the products or services costs.
  • Whether the most cost-effective bid was selected with price of the eligible products or services being the primary factor
  • Whether the applicant used applicant’s evaluation criteria during the vendor selection process
From the CERs I've seen, none of those reasons cause a CER, and from the denials I've seen appeal, CER denials are not for any of the reasons above. The only reason I've seen for starting a CER or for denial after a CER is:
  • Whether the solution proposed by the service provider and accepted by the applicant has a cost/student significantly higher than the norm.

I'm happy to see some light shed on the CER process, but that part of the slide show seems very misleading to me. The FCC's definition of "cost effective" does not include anything about cost/student, so I can understand USAC's reluctance to put it on a slide, but if it's the main reason for CERs, then tell us. Also, following the precedent in the Caldwell Parish order, if USAC puts it in a slide, it becomes a program rule, without any need for FCC approval.

Another gripe: the presentation doesn't have the two pieces of information I requested last year, but never got:

  1. How many CERs are conducted annually?
  2. How many (or what percentage) of CERs result in denial?

The presentation doesn't cover what applicants really need to know, like"what to do when your application is found not to be cost-effective" or "which extenuating circumstances we pay attention to." But if they gave away those answers, there would be one less reason for E-Rate consultants.

Latest rulebook addenda released

USAC is calling them "training materials," and to the untrained eye they look like a bunch of PowerPoint slides. But since the FCC held in the Caldwell Parish decision that something that appeared in a slide shown in a 2001 training was therefore a rule, we have to treat each slide as an addendum to the chaotic, contradictory, ill-defined set of E-Rate rules.

I don't have time to really tear through these now, but here's one that jumped out at me: "You should not renegotiate the pricing with your vendor during PIA review. This is a competitive bidding violation."

Huh? So Joe's Network Hut gives me a bid for a switch for $500, and I select him as the most cost-effective bid, then later Joe lowers his price to $400, that makes him not the most cost-effective bid? I can see how allowing higher prices after the contract is signed could result in abuse, but I don't see how lowering prices can do anything but improve the program.

So now my question is, does renegotiating pricing before or after PIA also constitute a competitive bidding violation? If not, what makes the PIA time so special? If so, it means that equipment purchased under the program will be even more overpriced than it is now, since applicants won't be able to take advantage of the constantly dropping prices on data and voice equipment.

If the FCC is going to treat these slides as rules, shouldn't there be an NPRM on them every year?