• Services funded by E-rate must be cost-effective and must be competitively bid in a fair and open manner.
• Applicants must be able to demonstrate that price is the most important factor in their bid analysis and vendor selection procedures.

Rule 9: Maintain records for at least five years.

E-rate auditing activity is about to increase dramatically. The FCC is pressing for additional resources to support another 250 audits annually. The SLD has just announced a plan to conduct 1,000 “site visits” annually (which can be viewed as shorter, more targeted, audits). Applicants should assume that sooner or later they will be audited.

The FCC strengthened its rules this year requiring applicants and vendors to maintain records for at least five years. The retention requirements are quite detailed, going well beyond simply keeping copies of E-rate forms. Documentation is required for discount rate calculations, technology plans and budgets, RFPs, all records related to winning and losing bids, inventory, etc. Failure to produce these records can lead, and already has led, to formal actions to recover E-rate funds.

Rule 10: Know when you need help and where to turn for it.

Many applicants are fully capable and willing to manage all aspects of their E-rate applications. However, as the program has become more complex and as more applicants have experienced funding difficulties in one year or another, more and more are using or looking for outside assistance. Here are a few tips for getting help:

• For answers to specific questions, the first place to turn is to the SLD. Questions can be submitted by phone (888-203-8100), by fax (888-276-8736), or by using the Submit a Question feature on the SLD Web site.
• Most states have State E-rate Coordinators which are available to help their school and library applicants (see State Information).
• Many vendors are quite knowledgeable about E-rate, but vendors must be used with the utmost of care. Any vendor involvement in the E-rate process prior to the awarding of bids is highly suspect. The burden of proof is on the applicant and vendor to show how such E-rate support did not unfairly prejudice the bidding process. Once a contract is awarded, however, vendors can be quite helpful in preparing Form 471 Item 21 attachments and in supporting subsequent invoicing activities.
• We are seeing, both in our own business and more broadly, a growing trend to use independent E-rate consultants either to assist on or oversee particular aspects of the E-rate process, or to take over primary responsibility for forms processing (much like a good tax preparer works with its clients). Applicants choosing this approach, however, should make sure that the consultants are truly independent. For E-rate purposes, a consultant with a stake in a particular vendor’s business success has a potential conflict of interest which will be looked at closely by the SLD.

While increasingly complex, the program is worth the effort. We wish you every success in the coming funding year.