Get Smart! Tap Into the Lucrative School & Library Market
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1 Get Smart! Tap Into the Lucrative School & Library Market Shari Phillips President e2e Exchange, LLC
2 Agenda Overview What Is E rate? Program Modernization Strategy Category One Category Two Wrap Up Additional Tips Questions
3 What is E rate? The Objective Universal Service Administrative Company (USAC) administers the program, implemented by the FCC in 1997 E rate provides schools and libraries with discounted access to internet, telecommunication services, and internal connections The goal of the program is help schools and libraries build and sustain internet connectivity USAC offers reimbursements to offset internet and telecommunication costs Need is determined by the number of students eligible for free and reduced lunch programs to calculate the discount percentages for each school or library
4 470 APPLICANT FILES FCC FORM 470 TO NOTIFY THE FCC THAT THE APPLICANT IS SEEKING DISCOUNTS, OPENS 28 DAY BIDDING WINDOW 1. File Form 470 (quasi RFP) 471 FCDL 486 BEAR/SPI AFTER 28 DAYS, APPLICANT SELECTS SERVICE PROVIDER AND NEGOTIATES A CONTRACT, IF NECESSARY. APPLICANT FILES 471 TO REQUEST SERVICES. USAC REVIEWS REQUEST AND ISSUES FUNDING COMMITMENT DECISION LETTERS (FCDLs) TO THE APPLICANT AND SERVICE PROVIDERS APPLICANT FILES FCC FORM 486 TO VERIFY THAT ELIGIBLE SERVICES ARE PROVIDED. USAC REINBURSES THE SERVICE PROVIDER FOR THE DISCOUNT PORTION THROUGH BEAR OR SPI METHODS. Basic E Rate Cycle 2. Wait 28 Days (vendor selection period) 3. File Form 471 (Application) 4. PIA Review and FCDL Issuance 5. File Form 486 (confirmation) 6. Submit Invoices to USAC for Reimbursements (BEAR or SPI)
5 Program Modernization In 2014 USAC adopted modernization orders effective E Rate Funding Year 2015 to shift focus away from telecommunications, allowing the program to concentrate on internet connectivity, seeking to close the Wi Fi gap The goal of the program remains the same, to create avenues of communication and education, but reflects the changes in application and usage of technology in schools and libraries over time The Second Modernization Order increased the E rate spending cap to $3.9 billion This increase in available funding means that access to internal connections funding is now available to all E rate applicants
6 Program Modernization In order to support the changes to the program, funding for voice services is being phased out The discount percentage for each applicant decreases for voice services by 20%, each year, over the course of 3 years At the end of the 3 year phase out period, no funding will be available for voice services Next we will take a look at the current program structure to outline strategies for making the most of the E rate program s increase in funding.
7 Major Changes for Funding Year 2016 New Category 1 fiber eligibility and funding All FY 2016 forms submitted through new EPC portal New Form 470 Requirements RFPs uploaded with Form 470s Category 1 fiber bids must meet strict procurement rules Bear Process will be direct payment
8 Category One Application Strategies Now is the time to focus on increasing internet bandwidth for schools and libraries This is sometimes just an upgrade in internet services, but can also involve an infrastructure project for the school Portions of these projects are supported by Category Two E rate funding
9 Category One Application Strategies Non voice telecommunications services will also remain fully eligible for E rate reimbursements and will not be subject to phasedown Fiber installations and other data transmission telecommunication services are eligible for E rate funding, as well This is an area of Category One services is one that applicants should evaluate their needs for as voice services are phased out
10 Category Two Application Strategies Category Two funding covers Internal Connections, Basic Maintenance, and Managed Internal Broadband. In the past funding for these services was rare and only awarded to applicants with the most need (those with 90% discount percentages) The 2015 E rate Modernization Order Category Two services are extended to all applicants, the E rate Program intention is to Close the Wi Fi gap
11 Category Two Application Strategies All applicants are allocated a five year budget starting FY 2015 for Category Two, in the first year that they apply. Because this budget can be utilized in a variety of ways, applicants could have huge increases in potential funding, which will offset Category One losses
12 Category Two Components Internal Connections Basic Maintenance Managed Internal Broadband
13 Eligible Category Two Equipment and Services Basic Cabling routers switches wireless access points At least through FY 2019: Maintenance of basic LAN equipment Managed Wi Fi Caching servers Ineligible Category Two Equipment and Services Components that do not support broadband distribution are no longer eligible. Servers Circuit Cards Voice/VOIP Components Video Components Newly ineligible All other servers
14 Category Two Budgets Each eligible school shall be eligible for support for Category 2 services up to a pre discount price of $150 per student over a five year funding cycle Library Category 2 funds limited to $2.30 per square foot Minimum pre discount funding per school or library is $9,200 (floor) Budgeting mechanism replaces two in five rule for those funded in FY 2015 through FY2019 Budget is per school or library summed over all applications The allowable funding can be budgeted over a span of five years Districts or library systems may not average their costs across multiple school or library budgets
15 Revised Discount Matrix Top C2 discount rate now 85% instead of 90%
16 Procurement and Contracts What you need to know when securing your services
17 Data Collection and Pricing Transparency Item 21s have been revised to be part of the Form 471 not a separate document as in past years Item 21 information will be made public after posting the Form 471 Service providers can reference this information while preparing next year s bids Greater enforcement expected on Lowest Corresponding Price ( LCP ) rule
18 Contract Rule Changes Multi year contracts will only be required to submit a complete 471 for first year of contract as long as: The contract is for no longer than 5 years Any changes in requested services are within the scope of original 470 and multi year contract Having a signed contract in place prior to filing a Form 471 is no longer required, but there must be a legally binding agreement in place Acceptable: Bid with all terms & conditions and an accepting the bid is acceptable, but signatures are recommended in the case of future audits or reviews Not Acceptable: Verbal offer or acceptance
19 2015 Category 2 Challenges Vendor Cooperation Getting quick movement / response from service providers on Category 2 needs Getting Contract / LOI signatures from vendors before submission of 471s All C2 471s must be filed as contract Getting cost itemization, makes, models, separated maintenance Budget Issues Quotes / Projects that exceed Category 2 budgets Schools then have to choose what ends up on their application. May be determined by: Prices of each component choose enough to maximize budget Project Plan: Which items need to be purchased first? Make a list according to project plan timelines Ultimately becomes the school s responsibility in an already stressful process its like choosing which of your kids you want to keep! Quotes separated by school C2 is based on individual school budgets not having quotes parted out by school means ALL schools on the district have money come out of their C2 budget regardless of where the project takes place in the district
20 2015 Category 2 Obstacles to Funding Intensive Review process Itemization detail of Item 21 must match highly detailed and intricate quotes Review of open and fair bidding window procedures Happens frequently will large dollar mount requests Many small rules / regulations that that can get funding denied Budget approval Projects have been secured before schools budgets are approved for the year the project will take place Program demand At what discount will USAC really fund schools? The goal is everybody, but that is VERY ambitious. If not worked into an agreement, countless schools could be locked into projects they don t have the money for While schools are always supposed to be able to pay out of pocket, most don t know / understand this. Even if they can, the school board may not approve this project in upcoming budget season.
21 2015 Category 2 Any other struggles our team has experienced in the new Erate Modernization. Dealing with inexperienced providers, sellers & re sellers if Internal Connections equipment and suppliers of basic Maintenance Providers who do not have SPINs, have international locations, are small local electric companies, may not have the resources, knowledge, or know how can slow down and inhibit the E rate process By not providing itemized quotes / contracts up front Signing contracts before a 471 submission Not having a SPIN delays the application process and can delay the review process if the Interim SPIN is used ( interim SPIN issued 3 days before deadline closing) That provider may also NOT qualify for a SPIN i.e. a local electrician who installs cable may not meet the criteria of a USAC provider. If you used the interim SPIN and they re not issued a SPIN you re stuck without a provider to place on your 471
22 Additional Application Tips Category Two Understand Needs Apply Early E rate s new focus on broadband connectivity and the expansion of Category Two funding make it vital that applicants carefully consider their application strategies Weighing the Category Two Strategic options will involve a deep understanding of their organization s broadband and telecommunication needs, and the ability to outline a strategy well in advance of all application windows With increased demand and more complex applications to process, the sooner an application is filed the sooner funding is likely to be committed
23 Questions?
24 Shari Phillips (315)
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