I certify that I posted my Form 470 and (if applicable) made my RFP available for at least 28 days before considering all bids received and selecting a service provider. I certify that all bids submitted were carefully considered and the most cost-effective service offering was selected, with price being the primary factor considered, and is the most cost-effective means of meeting educational needs and technology plan goals.

Despite this, service providers are reporting that they continually encounter applicants who appear to be treating the competitive bidding requirements of E-rate as a mere technicality. These applicants know which vendors they want to use, and view any bids and/or inquires from competing vendors as annoyances that can be ignored. However, doing so is a violation of the E-rate rules and is increasingly risky.

Competitive bidding has always been a linchpin of the E-rate program and is designed to help assure that funding is provided only for cost-effective services. It has received considerably more attention recently as a result of the FCC's focus on waste, fraud, and abuse. This has led to procedures to tighten certifications, as indicated in part above, and to increase Selective Reviews and audits.

Ignorance and/or violations of the E-rate competitive bidding rules often seem to be based on two myths.

Myth 1: Applicants purchasing goods and services off state master contracts are not required to consider competing bids.

In one limited sense, this is true. If the state properly filed a Form 470, and competitively bid and negotiated a contract itself, applicants are free to cite that Form 470 and use the contract without re-bidding it themselves.

Many state contracts, however, have not been competitively bid. They are simply lists of authorized vendors who may have agreed to a set of terms and conditions, and/or who may have met minimum pricing targets. In many cases, these state contracts require users to undertake "mini-bids" to select among competing state vendors. In such cases, E-rate rules require applicants to consider bids from vendors on or off the state contracts. If state contracts are ultimately used, applicants must be careful to comply with all state procurement procedures.

Myth 2: If state laws permit schools to sign procurement contracts with Educational Service Agencies ("ESAs") without bids, no competitive bidding is required for E-rate purposes.

This is never true. The E-rate rules do not include any exemptions for goods and services obtained without competitive bidding. There may be procedural and/or financial advantages to using ESA services, but bids from competing vendors must be considered.

Here are a few suggestions for successfully dealing with the E-rate competitive bidding rules:

1. Not every service listed in an applicant's Form 470 may generate a bid. E-rate rules do not require a minimum number of bids (unless required for compliance with a state contract). If no bids are received for a service, this fact should be documented in a simple "memo for file." If an applicant is considering the use a current provider, who may not have bothered to re-bid, the vendor's existing rates and terms may be considered a "bid."
2. Many vendors appear to be collecting e-mail addresses from posted Form 470s, and are adding applicants to their general product advertising e-mailing lists. Advertisements generated through this process are not necessarily actual bids. One strategy for identifying real bids or requests for additional bidding information is to require vendors to reference the Form 470 to which they are replying.
3. If competing bids are received for a specific service, each must be evaluated within the context of a rational set of criteria. Price need not be the only consideration, but it must be the heaviest weighted component. A useful bid assessment matrix is available on our Web site (see Bid Assessment Matrix).
4. Document every bid or request for bidding information received, every response to each, and every competitive bid assessment. This information will be required if an applicant is subjected to a Selective review or audit. The information must be retained for five years after the last day of service.
5. If, for any specific service, an applicant is unwilling to abide by the E-rate competitive bidding rules, we strongly encourage the applicant not to apply for discounts on that service so as not to place the entire application in jeopardy.

A year long study conducted by the School Nutrition Association, involving 100,000 students and 146 schools, showed a 1.5% increase in lunch program participation at the elementary level and - more importantly for E-rate - a 4.4% increase at the secondary level.

Although it may be too late to affect NSLP eligibility and E-rate discount levels for FY 2005 applications, it is not too late to start planning for FY 2006. The best article we've seen on the subject is from the October 2004 issue of the American School Board Journal, available online (see Nutrition Article).