Here are several examples of problems you may need to address to fully utilize FY 2002 funding:

Example #1 – You were awarded $10,000 in discounts for telephone service from Carrier A, but switched service to Carrier B in February 2003. If Carrier A did not discount its bills, you will first need to file a BEAR to be reimbursed for all Carrier A service discounts (say, $6,000). Once this BEAR has been approved, (which normally takes at least 20 days) you must file an operational SPIN change to switch the remaining $4,000 in funding to Carrier B. Once the SPIN change is approved, you will have an additional 120 days to file a BEAR covering the remaining service charges for carrier B.

Note that if you wait too long to file the BEAR for Carrier A, you will miss the deadline for requesting a SPIN change. The only way to recover from this situation is to file an invoice extension request; wait for extension approval; file a SPIN change request; wait for change approval; then file a BEAR for Carrier B services.

SPIN change and invoice extension guidance is available on the SLD Web site at: SPIN Change Guidance and Invoice Deadlines.

Example #2 – You were awarded $10,000 in discounts for telephone service from Carrier A, but actually used an additional provider (that had not been on your application) throughout the year. Assuming you were using $6,000 in service discounts from Carrier A and $3,500 in service discounts from Carrier B, you have two options.

If you had recognized the dual usage pattern earlier in the year, the best course of action would be to request a FRN Split. This process, which is initiated just like a SPIN change request, results in the creation of a new FRN associated with Carrier B, with funding split between the original and new FRNs. It requires an estimate of the proportion of funding to be assigned to each vendor’s FRN. (In this case, for example, you might request that the $6,250 in funding remain with the original FRN and $3,750 be assigned to the new FRN.) While the FRN split request is pending, a BEAR can be filed for Carrier A. Once the split is approved, you will receive a new Funding Commitment Decision Letter with the new FRN identifier. You will then have to file a Form 486 for the new FRN before filing a BEAR for Carrier B.

At this stage in of the year for FY 2002 FRNs, a better approach may be to treat this situation just like Example #1 (i.e., file a BEAR for Carrier A, then file a SPIN change request; and then file a BEAR for Carrier B).

Example #3 – An underlying assumption in the two previous examples is that the two carriers were providing equivalent services. If the services were different, a service substitution request may be required. Suppose, for example, that the original funding request contemplated maintenance service from Vendor A on Dell servers, but that maintenance was also provided by Vendor B on Cisco routers. Assuming that the FRN funding was not fully utilized by Vendor A, the SLD might agree that the router service provided by Vendor B was an equivalent Internal Connections maintenance function. In this case, a service substitution request can be combined with either Example #2 option (i.e., a SPIN change or a FRN split).

Service substitution requests, in combination with SPIN change requests, are discussed in subsection #4 for the SLD’s guidance on Operational SPIN Changes at SPIN Change Guidance.

(1) Newly Eligible – Alarm lines, cellular and paging service for virtually all personnel, firewall service or servers, and Web hosting (but not Web creation) are now eligible. Note, however, that this new eligibility is subject to the important disclaimer “Effective for Fund Year 2004 and later years.”

(2) Newly Ineligible – Two services that had been funded in the past will be treated as ineligible, again beginning in FY 2004. The most important one is dark fiber – defined as “fiber optic cable for which the service provider has not provided modulating electronics.” Funding for dark fiber services in FY 2003 and earlier years will be honored, but subsequent year funding – presumably even on multi-year contracts – will not be awarded unless the systems can be restructured into fully eligible WANs. The other newly ineligible service is voice over IP (“VoIP”).

(3) Tightened Eligibility and/or Clarifications – The language on “Maintenance and Technical Support” has been changed to stress that only “[b]asic maintenance services are eligible.” Clarifications have also been made on the eligibility of UPS, storage, and file server products.

The revised ESL contains a new section entitled “Special Eligibility Conditions” (pp. 33-36) that should be reviewed by all applicants. It contains additional discussions of such topics as cost allocation, eligible users and locations, WAN leases, network servers, software, and storage, and technical services.

In reviewing these reports, please note the following:

(1) Unlike most other SLD correspondence, the Quarterly E-Rate Payment Authorization Reports are addressed to the person who signed the associated Form 471 application, not to the person listed as the E-rate contact.

(2) The “Disbursement Authorization Date” shown is not the actual payment date. It is the date on which the invoice was approved by the SLD. In the case of a BEAR reimbursement, the invoice payment to the vendor is usually made about 20 days after the authorization date, and the vendor is then supposed to pass the payment on to the applicant within 10 days of receiving the payment. Thus, the applicant should start looking for a BEAR reimbursement payment from the vendor about one month after the Disbursement Authorization Date.

(3) If the report shows a SPI authorization, it means that the supplier has submitted an invoice for that FRN and is presumably discounting the applicant’s service charges. The applicant should check that its bills are actually being discounted.