1. The initial version of the letter contained an error on an important date. The last possible day for filing a Form 470 is January 20 (not January 21). The SLD has corrected its Web site and is resending earlier letters to applicants.
2. Competitive bids must be accepted and be fairly evaluated (with price being the most important factor). Copies of all bids received and all bid evaluation material should be retained. A sample bid assessment matrix is available on the E-Rate Central Web site (see Bid Matrix).
3. Any applicant choosing a supplier from a state Multiple Award Schedule, listing a number of qualified vendors, must be prepared to show that its choice was the most cost-effective. Often, this requires the assessment of "mini bids" from more than one supplier.
4. A formal Request for Proposal ("RFP") must be accompanied by a corresponding Form 470 referencing that RFP. Both the Form 470 and the RFP must be available to potential bidders for at least 28 days.
5. Except for tariffed or certain month-to-month services, all E-rate services must be provided under contracts that were executed before the associated Form 471s were filed. Valid E-rate contracts must be signed and dated by both parties. If a state recognizes Purchase Orders ("POs") as contracts, those POs must also be signed and dated by both parties, and must be effective for the associated funding year.
6. Technology plans must be written before Form 470s are filed. The plans must cover the funding year in question and must contain all five required elements. Formal plan approval is not required until the start of service date.
7. If an E-rate form is signed by someone other than an employee of the applicant, the authorization of that person should be reflected in a specific Letter of Agency ("LOA").

If, for example, an applicant filed a telephone funding request assuming $500/mo. in charges but, when asked for supporting bills, could only produce $300 worth, the SLD would deny the request because more than 30% of the original request was unsubstantiated.

The FCC's decision indicated that the 30% Rule should apply only to strictly ineligible requests. Unsubstantiated requests should be reduced, but not denied.

This was a major test case, first filed in June 2003. Since that time, the SLD had continued to apply the 30% unsubstantiated rule, but had been holding related appeals pending FCC action. There are approximately 400 such appeals outstanding at the SLD, and a few others at the FCC. We would now expect the SLD to approve those appeals.

The SLD has reportedly already changed its PIA review procedures to reflect the FCC's position. However, applicants who have already been denied based on the old rule, and who didn't appeal, are out of luck. Applicants who were denied on the basis unsubstantiated charges in FY 2005 waves 10 and 11 still have time to appeal, and should do so.

The entire decision is available at Iroquois West Decision. The critical paragraph in the decision reads:

"We find that SLD's actions go beyond the appropriate application of the 30 percent benchmark. We understand SLD's rationale for applying the 30 percent policy to unsubstantiated amounts for eligible services – to create incentives for applicants to request only those amounts that they can justify as reasonable estimates of the costs of eligible services. The 30 percent policy, however, applies to requests for ineligible services, not for unsubstantiated amounts of eligible services. Such an application goes beyond the scope of the 30 percent policy as drafted. Applicants must be aware, however, that if funding requests are submitted in amounts that go beyond what they can substantiate, their funding requests will be reduced to the amount that is substantiated. Accordingly, we remand this case and direct SLD to grant the commitment request ... in accordance with this order, unless SLD identifies other grounds for denial."

E-Rate Entity Numbers:

Since FY 1999, each school and library has been required to be identified by a SLD-assigned Entity Number (and each applicant by a Billed Entity Number). Beginning last year, applicants were also required to obtain Entity Numbers for their Non-Instructional Facilities ("NIFs") such as separate administrative buildings or bus garages. For Form 471 application purposes, each facility is listed on a Block 4 Discount Calculation Worksheet.

If you need a new Entity Number for a new facility - often a NIF - call the SLD's Client Service Bureau (888-203-8100).

NCES Codes:

"NCES" stands for National Center for Education Statistics, the primary federal entity, organized under the U.S. Department of Education, charged with collecting and analyzing education data in the U.S. NCES Codes are provided for public school districts, individual public schools, and private schools. The codes for private schools are sometimes referred to as PSS (Private School Universe Survey) Codes. The equivalent codes for libraries are called FSCS (Federal-State Cooperative System) Codes. As a class, for E-rate purposes, we refer to all these codes as "NCES Codes."

NCES Codes were used to identify entities in the first E-rate funding year, and are being reintroduced this year at the behest of the DOE. Applicants can search for codes in the Online Data section of the NCES Web site (see NCES).

The SLD will pre-populate NCES fields in the online Form 471 whenever possible. Generally, public schools use 12 digit school codes made up of 2 digit state codes, 5 digit district codes, and individual 5 digit school codes. Private schools use 8 character codes, either all numeric or beginning with 1-2 letters. Libraries use 6 or 9 character codes, starting with two character state abbreviations followed by 4 digit system codes, and sometimes by 3 digit branch codes.

NCES Codes for newer schools and libraries may not be available. The most recent comprehensive data is from 2002-2003. New codes are assigned by NCES based on information provided from the state education and/or library departments, but the process is a bit lengthy.

Non-instructional facilities do not have NCES Codes. When listing a NIF on Block 4 of a Form 471, either online or on paper, the NCES field should be left blank. It can also be left blank for schools and libraries listings if no code has yet been assigned (or an online applicant has trouble having a code accepted).

FCC Registration Numbers:

Beginning this year, all entities listed on a Block 4 are required to have FCC RNs, even though the current version of the Form 471 does not have fields for these numbers. Presumably, the FCC RNs will be required by the time an application is reviewed. This means that applicants should not delay filing their Form 471s if FCC RNs have not been obtained, but that they should start obtaining them as soon as possible.

FCC RNs must be obtained online, either through the SLD or FCC Web sites. Each has its advantages and disadvantages.

1. To obtain FCC RNs through the SLD site, go to FCC Registration Number. The SLD offers an option to request numbers either individually or by uploading a file listing multiples entities. Requests processed through the SLD are forwarded to the FCC which, in turn, will send the FCC RN assignments back to the SLD. The advantage of this process is that the SLD will have the FCC RNs in its database and will not have to ask the applicants for the information. The disadvantage is that the process takes time. Requests made before February 25 (the last day on which the SLD will accept requests) are scheduled to be processed by mid-March.

   The file upload process on the SLD site will be the most convenient for larger applicants, but its use requires some care. The file must be prepared according to a specific record layout. (Note: Excel can be used to prepare the data, but the Excel file must be saved in CSV format for submission.) Applicants using this process need to know that:

   1. The required "BEN" field is meant to refer to each entity's own Entity Number, not to the applicant's Billed Entity Number; and
   2. The address information should relate to the contact person who will be sent the FCC RN assignments. Thus, in a multi-record file, the BEN field will be different for each record, but the contact information will likely be the same.

2. To obtain FCC RNs through the FCC site, go to CORES System. Numbers obtained from the FCC must be requested on a one-by-one basis, but are assigned on the spot. Applicants using this process should know that:
   1. The information requested and/or required in the FCC application process does not precisely match the information required by the SLD. It requires a Business Type and Subtype (which for public school districts can be "State or Local Agency" and "State or Local Commission," respectively), and includes an Organization field (such as the district name). Some of the contact information (including an actual name) required in the SLD's format, is optional for the FCC.
   2. Each FCC RN must be associated with a federal tax identification number ("EIN" for a business entity). A public school district will typically have only a single EIN. When applying for multiple FCC RNs, the FCC system will post two warnings each time a new FCC RN requested is associated with an existing EIN. These warnings can, and must, be overridden to obtain multiple FCC RNs.
   3. The FCC registration system does not require E-Rate Entity Numbers, nor does it report FCC RN assignments back to the SLD. FCC RNs obtained through the FCC process will eventually have to be reported to the SLD, either as an attachment to a Form 471 or during the PIA review process.

In November, the SLD awarded a consulting contract to BearingPoint, Inc. to conduct these audits, and indicated that they would begin in January. The first group of applicants selected for visits are now being notified. Based on reports of early notifications and trial visits, several points should be noted:

1. Applicants do not have a lot of flexibility on the scheduling. A typical call announcing a visit specifies a date, then asks, "Would 8:00 or 8:30 a.m. be most convenient?" If the date selected is truly inconvenient for an applicant, we expect it can be changed, but don't expect an extended postponement (e.g., until after the Form 471 deadline).
2. The SLD hopes that any visit can be completed in one day. The focus of each visit is supposed to be to check on one invoice (or, perhaps, one set of invoices). Expect the auditor(s) to ask for competitive bid and assessment documentation, the associated contract, proof of applicant payment, and an inventory record. The actual installation will need to be confirmed.
3. Checks will also be made on the availability of supporting resources (as per Item 25 certifications). Teachers and staff may be questioned as to how the equipment is being used and on staff development.
4. There is nothing wrong with serving tea, but these are not social visits. Negative reports can lead to more in depth audits and/or repayment demands. If information is requested that cannot immediately be provided, offer to provide it later. Document everything - questions and answers.
5. Applicants using consultants to help them with the E-rate process should have those consultants help them prepare for these visits and should have them present for the visits themselves.