In This Week's Issue:
»	FY 2006 and FY 2005 Funding Status
»	FY 2007 Form 470 Planning

E-Rate Central News for the Week
October 2, 2006

The E-Rate Central News for the Week is prepared by E-Rate Central. E-Rate Central specializes in providing consulting, compliance, and forms processing services to E-rate applicants and service providers. To learn more, contact us by phone (516-832-2880) or e-mail. Additional E-rate information is located on the E-Rate Central Web site.

FY 2006 and FY 2005 Funding Status
Wave 24 for FY 2006 is scheduled to be released on October 3rd for about $46 million. Cumulative national FY 2006 funding is now $942 million. Funding is still being provided only for Priority 1 services.

The special Hurricane Katrina application window for FY 2006, providing an additional opportunity for Katrina-affected applicants to file for discounts on replacement equipment, closes on Monday, October 2nd. Once these applications are data entered and tabulated, the SLD will be able to estimate final funding demand totals for the year which, in turn, will lay the groundwork for setting Priority 2 funding thresholds.

Wave 59 for FY 2005 is scheduled to be released on October 4th. This will be a small wave, probably less than a million dollars. The Internal Connections funding threshold remains at 81%.

Two appeal waves (A18 and A19) for FY 2005 totaling $8.3 million were released in September. Appeal wave-specific data is best found using the SLD's Data Retrieval Tool (see DRT).

FY 2007 Form 470 Planning
Now is the time to begin planning to file your Form 470(s) for the upcoming FY 2007 funding year. The most important point to remember is that the Form 470 must be posted at least 28 days before vendors can be selected, contracts can be signed, and the associated Form 471 application(s) can be filed. Since the last day to file a Form 471 application is expected to be in early February, this means that the Form 470 must be filed by early January. To provide sufficient time for vendor selection, contract signing, and application preparation, however, it is a good strategy to file the Form 470 in the fall.

From a program compliance viewpoint, there are two other important 470 issues that the SLD has been stressing in their 2006 training sessions and in other recent reviews.

Technology Planning:
The SLD is stressing the requirement that an applicant must have "created" a "written" (but not necessarily an "approved") technology plan covering the prospective funding year before filing its Form 470. The underlying premise is that an applicant should have decided what services are needed, and how they are to be financed, before requesting bids on those services.

Until recently, the only time the SLD might actually check on a plan's pre-Form 470 status was during a Selective Review, site visit, or audit. In July, the SLD began to randomly (or selectively) check Form 486 technology plan certifications. Applicants are being asked to provide copies of their technology plans and their associated approval letters. The following request, however, is also included:

• Please specify in writing the creation date(s) (month/year) of each Technology Plan submitted. [The technology plan creation date is the month and year the technology plan was written, not the date when you began to develop or draft it. The technology plan must be created in sufficient detail to support the services requested on your Form 470, and the creation date must be prior to the date your Form 470 is posted.]

Any applicant who has a technology plan that has already been formally approved through at least June 30, 2008, should be in pretty good shape. Presumably, the plan already covers all of FY 2007. Nevertheless, the applicant must still make sure that the plan covers all services (including any non-basic telephone services) that will be listed in its Form 470(s). The most recent SLD News Brief (9/29/2006) provides a number of technology planning FAQs, including:

Q. Do I need a new technology plan if I want to get something that's not in my current plan?

A. It depends. If the products, services, or other technologies that you want are really just add-ons to your current plan, you should just update your plan as appropriate. However, if you are planning a new initiative - something that moves you in a new direction that is not contemplated in your current plan - you should amend your plan and submit it to your Technology Plan Approver for review and approval.

If the currently approved plan expires on (or before) June 30, 2007, however, the applicant must make sure that an updated plan is written before the Form 470 is filed. For documentation purposes, the applicant should retain a dated copy of the written plan as it existed at that time - even if the plan is subsequently revised prior to its submission for formal approval.

Request for Proposal ("RFP"):
For each category of service, the Form 470 includes checkboxes indicating whether the applicant has released or intends to release an RFP for these services. E-rate rules do not require the use of RFPs (unless required by state and/or local law, as is often the case), but the disclosure of existing RFPs is critical. If the applicant checks "YES" or "NO," and the opposite turns out to be true, all FRNs associated with that service category will be denied. The denial reason will state either:

Applicant failed to advise bidders that an RFP was issued. An RFP was issued and the Form 470 advised potential bidders that no RFP existed.

or, conversely:

Your Form 470 indicated that you had an RFP describing the services that you sought on this funding request. However, since you failed to provide RFPs that were requested in order to review the bidding process, the funding is denied.

There are a few subtleties that should be understood when using, or not using, an RFP.

One is a Form 470 format restriction. Within any single service category, you must select either RFP or no RFP. If you list multiple services within any category, all must be treated the same. If, for example, you're requesting local and long distance telephone service without an RFP, but will be using an RFP for a fiber optic WAN, you will need to file two Form 470s - a non-RFP version for the first service and an RFP version for the second.

It is important to note that the E-rate rules do not include a precise definition of an "RFP." We have seen several instances in which an applicant checked "NO" RFP, but subsequently ran into a problem by providing supplemental bid specifications to potential bidders. The SLD treated these specifications as an RFP and denied the associated FRNs.

We personally believe that it is often useful - perhaps even a "best practice" - to supplement the rather brief descriptions of service needs in the Form 470. But care must be taken to make sure that additional information is not formatted to resemble an actual RFP. Any document given to prospective bidders should be clearly labeled as a supplement to the Form 470, and should avoid any reference to a "request for bid" or a "request for proposal." We suggest that the document not specify a specific bid submission deadline, but more simply reference the Form 470's Allowable Contract Date.

If an RFP is used, the timing of its release and the bid due date are very important. Recent SLD training stresses that both the Form 470 and the RFP must be available for 28 days, but it is not precisely clear what the SLD means by "available."

As with any gray E-rate rule, it pays to be conservative and to pay attention to the spirit of the rule. What is "gray" today may be "black" tomorrow. We suggest the following:

1. Treat the Form 470 Allowable Contract Date ("ACD") as a bid acceptance date. Allow any potential vendor the full 28 days to find and respond to your Form 470.
2. Ideally, try to align the Form 470 posting and RFP release dates and the Form 470 ACD and RFP bid submission dates.
3. If the RFP is issued before the Form 470 is posted, extend the bid submission date, if necessary, to the Form 470 ACD date.
4. If the RFP is issued after the Form 470 is posted, make sure the bid submission date is at least 28 days later. Note, that for E-rate purposes, this means that the true Allowable Contract Date will be determined by the RFP, not the Form 470. The bidder should not be selected, the contract should not be signed, and the Form 471 application should not be signed and submitted until this later date. We believe that this timing scenario is the primary basis for the recent SLD warning on the 28-day availability of the Form 470 and RFP.
5. Be careful of scheduling a "mandatory" bidders meeting (or "walk through) within the 28-day period. Although the SLD has informally indicated that such a practice is permitted, any restriction placed on a potential bidder before 28 days has elapsed may ultimately prove problematic.

Recent SLD training has also provided guidance for imposing restrictions on which bids will be accepted. The SLD understands that applicants may need to set certain requirements on what bidders or proposed solutions are acceptable. "For example, applicants may require service providers to provide services that are compatible with one kind of system over another (e.g., Apple vs. Windows)." But the SLD warns that applicants "must inform all bidders of any requirements that could lead to disqualification" and "must be prepared to explain if and how they disqualified bids." Although such requirements can often be better described in a formal RFP, similar information can usually be conveyed in a non-RFP Form 470 in the service description and/or in the Item 13a textbox.