Notice2023-14114
Tailoring the Application of the Uniform Guidance to the BEAD Program; Request for Comments
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 5, 2023
Issuing agencies
Commerce DepartmentNational Telecommunications and Information Administration
Abstract
The Broadband Equity, Access and Deployment (BEAD) Program was established in November 2021 through the Infrastructure Investment and Jobs Act, also known (and referred to subsequently herein) as the Bipartisan Infrastructure Law. Under the BEAD Program, the National Telecommunications and Information Administration (NTIA) is responsible for administering $42.45 billion in grants to the States, Territories, and the District of Columbia (Eligible Entities) with the principal focus of ensuring that every American has access to affordable, reliable high-speed internet service. Various stakeholders have requested NTIA to consider exemptions of certain provisions of OMB's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) from application to grants and subgrants awarded under the BEAD Program. In this Notice, NTIA seeks public comment on the issues raised by stakeholders and other questions relating to the relationship between the Uniform Guidance and the BEAD Program.
Full Text
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<title>Federal Register, Volume 88 Issue 127 (Wednesday, July 5, 2023)</title>
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[Federal Register Volume 88, Number 127 (Wednesday, July 5, 2023)]
[Notices]
[Pages 42918-42925]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-14114]
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DEPARTMENT OF COMMERCE
National Telecommunications and Information Administration
[Docket No.: 230622-0154]
Tailoring the Application of the Uniform Guidance to the BEAD
Program; Request for Comments
AGENCY: National Telecommunications and Information Administration,
U.S. Department of Commerce.
ACTION: Notice; request for comment.
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SUMMARY: The Broadband Equity, Access and Deployment (BEAD) Program was
established in November 2021 through the Infrastructure Investment and
Jobs Act, also known (and referred to subsequently herein) as the
Bipartisan Infrastructure Law. Under the BEAD Program, the National
Telecommunications and Information Administration (NTIA) is responsible
for administering $42.45 billion in grants to the States, Territories,
and the District of Columbia (Eligible Entities) with the principal
focus of ensuring that every American has access to affordable,
reliable high-speed internet service. Various stakeholders have
requested NTIA to consider exemptions of certain provisions of OMB's
Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance) from application to
grants and subgrants awarded under the BEAD Program. In this Notice,
NTIA seeks public comment on the issues raised by stakeholders and
other questions relating to the
[[Page 42919]]
relationship between the Uniform Guidance and the BEAD Program.
DATES: Submit written comments on or before 5 p.m. Eastern Standard
Time on August 4, 2023.
ADDRESSES: You may submit public comments on this action, identified by
<a href="http://Regulations.gov">Regulations.gov</a> docket number NTIA-2023-0007, by any of the following
means:
1. Using the Federal e-Rulemaking Portal at <a href="http://www.regulations.gov">http://www.regulations.gov</a> (our preferred method). The docket established for
this opportunity to comment can be found at <a href="http://www.Regulations.gov">www.Regulations.gov</a>, NTIA-
2023-0007. Click the ``Comment Now!'' icon, complete the required
fields, and enter or attach your comments.
2. Mailing a printed submission to National Telecommunications and
Information Administration, U.S. Department of Commerce, 1401
Constitution Avenue NW, Room 4878, Washington, DC 20230, Attention:
BEAD Uniform Guidance RFC.
Please submit your comments in only one of these ways to minimize
the receipt of duplicate submissions.
FOR FURTHER INFORMATION CONTACT: Please direct questions regarding this
Notice to Sean Conway at <a href="/cdn-cgi/l/email-protection#5a293935342d3b231a342e333b743d352c"><span class="__cf_email__" data-cfemail="cfbcaca0a1b8aeb68fa1bba6aee1a8a0b9">[email protected]</span></a>, indicating ``BEAD Uniform
Guidance Request for Comment'' in the subject line, or if by mail,
addressed to Sean Conway, National Telecommunications and Information
Administration, U.S. Department of Commerce, 1401 Constitution Avenue
NW, Washington, DC 20230; or by telephone: (202) 482-1816. Please
direct media inquiries to NTIA's Office of Public Affairs,
<a href="/cdn-cgi/l/email-protection#b6c6c4d3c5c5f6d8c2dfd798d1d9c0"><span class="__cf_email__" data-cfemail="0676746375754668726f6728616970">[email protected]</span></a> or (202) 482-7002.
SUPPLEMENTARY INFORMATION:
I. Background
The Office of Management and Budget (OMB) released the Uniform
Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards (2 CFR part 200) (Uniform Guidance) on December 26,
2013, which consolidated eight existing Federal circulars into a single
guidance document. The Uniform Guidance streamlined and eased
administrative burdens across the Federal Government in the
administration of Federal financial assistance programs, thus
increasing the efficiency and effectiveness of Federal awards, while
also strengthening oversight over Federal funds to prevent waste,
fraud, and abuse. OMB may allow exceptions from the requirements of the
Uniform Guidance, pursuant to 2 CFR 200.102.
The Uniform Guidance generally sets out requirements for Federal
awards to ``non-federal entities.'' \1\ While commercial entities do
not fall within the definition of non-Federal entities, the Uniform
Guidance provides that ``[f]ederal awarding agencies may apply subparts
A through E'' of these rules to other types of entities, including
``for-profit entities.'' \2\ Federal agencies administering Federal
financial assistance programs may, and often have, adopted standard
terms and conditions (ST&Cs) to implement the Uniform Guidance and
provide additional guidance to subagencies and relevant stakeholders
(e.g., applicants). Federal agencies can, for example, expand
application of the Uniform Guidance to include commercial entities
through (a) the operation of an agency's Federal financial assistance
ST&Cs and/or (b) the ``pass through'' provisions of the Uniform
Guidance when a non-Federal entity issues a subaward to a commercial
entity.\3\
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\1\ 2 CFR 200.102(a)(1); see also 2 CFR 200.1 (defining ``Non-
Federal entity'' to mean ``a state, local government, Indian tribe,
institution of higher education (IHE), or nonprofit organization
that carries out a Federal award as a recipient or subrecipient.'').
\2\ 2 CFR 200.101(a)(2).
\3\ 2 CFR 200.331.
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The Department of Commerce (DOC) adopted the Uniform Guidance and
gave it regulatory effect in December 2014.\4\ The DOC has extended its
application of the Uniform Guidance to commercial entities in its
Financial Assistance Standard Terms and Conditions (DOC ST&Cs), which
governs implementation of DOC financial assistance awards.\5\ Thus,
absent modification of the ST&Cs, the DOC ST&Cs require that DOC's
Federal financial assistance programs apply the Uniform Guidance to
both non-Federal entities and commercial entities.
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\4\ See 2 CFR 1327.101; Federal Awarding Agency Regulatory
Implementation of Office of Management and Budget's Uniform
Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards, 79 FR 75867.
\5\ Department of Commerce, Financial Assistance ST&Cs, Preface
(11/12/20) (``[U]nless otherwise provided by the terms and
conditions of this DOC financial assistance award, subparts A
through E of 2 CFR part 200 and the Standard Terms are applicable to
for-profit entities, foreign public entities and to foreign
organizations that carry out a DOC financial assistance award.'').
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In accordance with the DOC ST&Cs, NTIA has routinely applied the
relevant subparts of the Uniform Guidance to non-Federal entities and
commercial entities in its grant programs that fund last mile and
middle mile broadband deployment, such as the Broadband Technologies
Opportunities Program (BTOP), the Broadband Infrastructure Program, the
Tribal Broadband Connectivity Program, and the Middle Mile Grants
Program established by the Bipartisan Infrastructure Law. Such
application of the Uniform Guidance occurred without significant
opposition, or even significant discussion, from applicants or program
participants or apparent material impact on the programs or the
projects funded thereunder.
Consistent with this approach, the Notice of Funding Opportunity
(NOFO) for the BEAD Program provides that the Uniform Guidance and DOC
ST&Cs will apply to the BEAD Program.\6\
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\6\ NTIA, Notice of Funding Opportunity, Broadband Equity,
Access, and Deployment Program (hereinafter ``NOFO'') at 86, section
VII.D.1-2 (2022).
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II. Request for Comment
Following publication of the NOFO, various stakeholders requested
that NTIA clarify the extent to which the Uniform Guidance applies to
grants and subgrants awarded under the BEAD Program, if at all, and
identified provisions of the Uniform Guidance that they argue will
deter the participation of internet service providers (ISPs) in the
BEAD Program and/or increase the costs that subgrantees will incur--and
the award amounts they will require--to participate in the program
without concomitant benefit. These stakeholders also requested that
NTIA address their concerns by waiving or otherwise modifying the
application of the Uniform Guidance to the BEAD Program.
This Request for Comment affords all interested persons an
opportunity to provide input on any exemptions from the Uniform
Guidance that might help facilitate the implementation of the BEAD
Program. Given the unprecedented amount of funding Congress made
available through the BEAD Program and the scale, scope, and character
of the deployment challenge the Program is designed to resolve, it is
critically important that NTIA operate this program as effectively and
efficiently as possible, while also ensuring a high level of
accountability to prevent waste, fraud, and abuse. This approach will
further the goal of ensuring all Americans have access to affordable,
reliable, high-speed internet service.
The BEAD Program differs from prior Federal broadband funding
programs administered by NTIA, the Federal Communications Commission
(FCC), the United States Department of Agriculture, and other Federal
entities in important ways. First, the BEAD
[[Page 42920]]
Program is the first broadband funding program to require that awardees
ensure the delivery of qualifying broadband service to all unserved
locations, and (to the extent funds are available) all underserved
locations within their jurisdiction. Prior programs have targeted areas
with specific demographic characteristics (e.g., rural areas) or
particular classes of network operators (e.g., rate of return incumbent
local exchange carriers), resulting in significant, but incomplete,
improvements in availability. But Congress mandated that the BEAD
Program ensure universal availability of high-speed internet access,
including to those locations that have not been addressed by prior
programs because they have proven to be the most difficult and
expensive to serve. This unprecedented effort will require that each
Eligible Entity maximize incentives for provider participation.
To meet this challenge, the BEAD Program will provide a historic
level of grant funding, providing significant resources to every State,
Territory, and the District of Columbia. Each of these Eligible
Entities will be required to conduct a ``subgrantee selection process''
to identify subgrantees \7\ that will build and operate networks to
deliver qualifying broadband service to every unserved and underserved
location in its jurisdiction. Subgrantees that receive awards from
Eligible Entities to build broadband networks in many cases likely will
retain ownership of those networks in perpetuity, subject to award
conditions mandating that, for a designated period of time, the
applicable program requirements are met and the public continues to
benefit from this Federal investment.
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\7\ Subgrantees may be traditional commercial broadband ISPs or
``non-traditional broadband providers,'' meaning ``an electric
cooperative, nonprofit organization, public-private partnership,
public or private utility, public utility district, Tribal entity,
or local government (including any unit, subdivision, authority, or
consortium of local governments) that provides or will provide
broadband services.'' BEAD NOFO at 14, section I.C.(p).
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The relevant provisions of the Bipartisan Infrastructure Law use
the terms ``subgrantee'' and ``subgrant''--rather than ``subrecipient''
or ``subaward'' as used in the Uniform Guidance.\8\ Faithfully
implementing these statutory provisions, the NOFO uses this same
terminology and explains that ``[a]s used herein, the terms
`subgrantee' and `subgrant' herein are meant to have the same meaning,
respectively, as the terms `subrecipient' and `subaward'.'' \9\ While
some have argued that Eligible Entities should be permitted to
structure BEAD Program subgrants as ``contracts,'' NTIA continues to
adhere to the interpretation that awards are made as ``subgrants'' to
``subgrantees,'' and that ``subgrantees'' are not performing BEAD
Program projects as contractors to the Eligible Entity. They are,
instead, subrecipients ``carrying out a portion of a Federal award.''
\10\ This key statutory difference notwithstanding, NTIA below requests
comment on proposals to modify the application of certain provisions of
the Uniform Guidance consistent with the U.S. Department of the
Treasury's (Treasury Department) Coronavirus State and Local Fiscal
Recovery Funds and Capital Projects Fund Supplementary Broadband
Guidance.\11\
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\8\ Infrastructure Investment and Jobs Act of 2021, Division F,
Title I, Section 60104, Public Law 117-58, 135 Stat. (Nov. 15, 2021)
(otherwise known as the Bipartisan Infrastructure Law).
\9\ ``[A]pplicable regulations governing federal financial
assistance generally use the term subrecipient' to refer to what the
Infrastructure Act calls `subgrantees' and the term `subaward' to
refer to what the Infrastructure Act calls `subgrants','' and
concluded that ``the terms subgrantee' and `subgrant' herein are
meant to have the same meaning, respectively, as the terms
`subrecipient' and `subaward' in those regulations and other
governing authorities.'' BEAD NOFO at n 15.
\10\ 2 CFR 200.331(a).
\11\ See SLFRF and CPF Supplementary Broadband Guidance, U.S.
Department of the Treasury, May 17, 2023, <a href="https://home.treasury.gov/system/files/136/SLFRF-and-CPF-Supplementary-Broadband-Guidance.pdf">https://home.treasury.gov/system/files/136/SLFRF-and-CPF-Supplementary-Broadband-Guidance.pdf</a>.
NTIA and the Treasury Department closely coordinated their
respective approaches on this topic. While the proposals in this
Notice are directionally aligned with the Treasury Department's
final guidance, certain statutory and programmatic differences will
likely warrant some variations in the application of the Uniform
Guidance to the BEAD program, on the one hand, and the relevant
Treasury Department programs, on the other hand.
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NTIA Seeks Public Comment on the Following Areas Relating to the
Relationship Between the Uniform Guidance and the BEAD Program
(Inclusive of 15 Questions)
A. Program Income and ``Profit''
The Uniform Guidance defines program income as earned income ``that
is directly generated by a supported activity or earned as a result of
the Federal award during the period of performance.'' \12\ The Uniform
Guidance, together with the DOC ST&Cs, does not permit recipients and
subrecipients to retain program income without restriction, but instead
prescribes three permissible uses during the period of performance: (1)
to offset total allowable costs (i.e., the deduction method), (2) to
satisfy cost sharing or match requirements (i.e., the cost sharing
method), and (3) to add to the total allowable costs for a project
(i.e., the addition method).\13\ Relatedly, the Uniform Guidance states
that recipients and subrecipients ``may not earn or keep any profit
resulting from Federal financial assistance unless explicitly
authorized by the terms and conditions of the award.'' \14\
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\12\ See 2 CFR 200.1.
\13\ See 2 CFR 200.307(e); DOC ST&Cs at section B.05. The
``deduction'' method is the default rule when ``the Federal awarding
agency does not specify in its regulations or the terms and
conditions of the Federal award, or give prior approval for how
program income is to be used.'' 2 CFR 200.307(e).
\14\ 2 CFR 200.400(g).
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In the context of broadband projects in the Capital Projects Fund
(CPF) and State and Local Fiscal Relief Fund (SLFRF) programs, the
Treasury Department is allowing CPF and SLFRF subrecipients to retain
program income for use without restriction, including keeping it as
profit.
NTIA tentatively agrees with the Treasury Department's approach to
program income. In creating the BEAD Program, Congress established
competitive subrecipient selection processes as the principle means for
disbursing BEAD subawards.\15\ The NOFO includes a number of provisions
aimed at implementing this statutory directive, and it recognizes that
robust competition holds ``the potential to offer consumers more
affordable, high-quality options for broadband service.'' \16\ Further,
the Biden-Harris Administration has made competition a priority across
the economy, recognizing in the Executive Order on Promoting
Competition in the American Economy that competition means ``better
service[,] and lower prices'' for consumers.\17\
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\15\ 47 U.S.C. 1702(e)(3)(A)(i)(IV).
\16\ NOFO at 50, section IV.C.1.a.
\17\ Executive Order on Promoting Competition in the American
Economy, July 9, 2021, <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/">https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/</a>.
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As discussed above, maximizing provider participation in the BEAD
Program is a key to ensuring its success. Broad participation
facilitates competition, and the opportunity for providers to retain
program income to support their business case and to avoid the
transaction costs of tracking income generated on Program-funded
network assets separate from other operating income will help stimulate
participation.
Internet service is provided by a multitude of types of entities,
including cooperatives, nonprofit organizations, public-private
partnerships, utilities, public utility districts, local governments,
and, most commonly, private companies. While some of these
[[Page 42921]]
provider types may not need to earn profit to justify infrastructure
investment, a profit opportunity will improve the business case for all
providers, and thereby create incentives for others to participate.
Moreover, as discussed above, incentives for broad participation
are needed to address the unique challenges for which the BEAD Program
was created to solve. Unserved and underserved areas present
significant barriers for service, as evidenced by the lack of existing
high-speed internet infrastructure even after decades of the Federal
efforts to expand broadband deployment in these areas. Indeed, the lack
of a sustainable business case--namely a business case that generates a
reasonable return on investment--is a core problem the BEAD Program is
designed to address. The program income rules will in many cases
prevent providers from earning a reasonable return on investment during
the period of performance, and would not address the economic
conditions that have stunted investment in these areas.
The increased incentive for providers to participate in the BEAD
Program and compete for grant funding may also help extend the benefits
of the BEAD Program to more Americans. Competition for a given set of
locations will reduce the level of grant funding required on a per
location basis. Efficient funding levels will in turn create
opportunities for Eligible Entities to ensure that broadband network
facilities are deployed to all unserved and underserved locations
within their jurisdiction, and potentially pursue eligible access-,
adoption-, and equity-related uses.\18\
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\18\ See NOFO at 7, section I.B.1.
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For these reasons, the program income provisions of the Uniform
Guidance and DOC ST&Cs may be counterproductive in this specific
context.
Question 1: The Uniform Guidance allows Federal awarding agencies
to adjust requirements to a class of awards when approved by OMB.\19\
Pursuant to this authority, NTIA proposes to seek from OMB an exemption
from the Uniform Guidance's requirements for recipients and
subrecipients to retain program income without restriction, including
retaining program income for profit.\20\ NTIA would also seek
conforming changes to the award terms in light of Section B.05 of the
DOC ST&Cs. NTIA seeks comment on this proposal.
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\19\ See 2 CFR 200.102(c).
\20\ 2 CFR 200.307(e); 2 CFR 200.400(g).
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In responding to Question 1, commenters should take into account
NTIA's interpretation of Section V.H.2.b. of the NOFO.\21\ Section
V.H.2.b. states that a profit, fee, or other incremental charge above
the actual cost incurred by a subrecipient is not an allowable
cost.\22\ This provision prohibits subrecipients from charging profit
as an allowable cost under its grant. In other words, the subrecipient
should not expect that the Federal Government will pay the subrecipient
a profit from the grant amount for the subrecipient's performance. This
NOFO language does not prohibit program income derived from the
servicing and use of supported networks and connections (e.g.,
wholesale revenues, end-user subscription revenues, etc.) for such
subgrants. Program income is ordinarily encouraged in financial
assistance awards, and the only difference presented by the proposal in
Question 1 would be expanding the permissible use of program income.
NTIA plans to otherwise apply the program income provisions of 2 CFR
200.307 and Section B.05 of the DOC ST&Cs.
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\21\ See NOFO at 82, section V.H.2.b.
\22\ See id.
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B. Fixed Amount Subawards and Cost Principles
The Uniform Guidance defines fixed amount subawards as those in
which a ``pass-through entity provides a specific level of support
without regard to actual costs incurred under the [subaward].'' \23\
This type of subaward reduces some of the administrative burden and
record-keeping requirements for both subrecipients and the pass-through
entities.\24\ Section 200.201 of the Uniform Guidance permits pass-
through entities to use fixed amount awards only if the project scope
has measurable goals and objectives, and if adequate cost, historical,
or unit pricing data is available to establish a fixed amount award
based on a reasonable estimate of actual cost.\25\ The Uniform Guidance
prohibits the use of fixed amount subawards in programs requiring
mandatory cost sharing or match,\26\ and generally limits pass-through
entities from providing fixed amount subawards exceeding the Simplified
Acquisition Threshold, which is $250,000.\27\
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\23\ 2 CFR 200.1.
\24\ See id.
\25\ 2 CFR 200.201(b).
\26\ 2 CFR 200.201(b)(2).
\27\ See 2 CFR 200.333; see also 48 CFR part 2, subpart 2.1.
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The Federal Government's cost principle rules do not apply as
compliance requirements to fixed amount subawards. Instead, the cost
principles are used as a guide when budgeting for the work that will be
performed. The Treasury Department is allowing CPF and SLFRF pass-
through entities to structure broadband infrastructure subawards as
fixed amount subawards. The cost principle rules thus will not apply as
compliance requirements to subrecipients of those subawards.
NTIA tentatively agrees with the Treasury Department's approach in
this area. Competitive subrecipient selection processes, as directed by
Congress in the Bipartisan Infrastructure Law, are likely to result in
fixed amount broadband infrastructure subawards that have measurable
goals and objectives.\28\ Moreover, the NOFO's implementing provisions
requiring that such selection processes are fair and open will help
deliver adequate cost data necessary to establish fixed amount
subawards that are based on a reasonable estimate of actual costs.\29\
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\28\ See 47 U.S.C. 1702(f).
\29\ See NOFO at 35, section IV.B.7.
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In addition, under the BEAD NOFO, the total amount of grant funding
requested is among the criteria that Eligible Entities must give the
greatest weight in deciding among competitive projects covering the
same location or locations, which gives potential subgrantees
significant financial incentive to estimate their costs
conservatively.\30\ We also note that NTIA is developing in
coordination with the FCC a broadband deployment cost model to
determine high-cost areas, a model that will provide agency staff an
additional tool for evaluating whether a potential subgrantee's cost
estimates are reasonable estimates of actual costs.
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\30\ See id. at 43, section IV.B.7.b.2.i.
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For the reasons above, we believe the structure of the BEAD program
and certain program features justify treating BEAD subgrants as fixed
amount subawards. We expect this classification will result in fewer
administrative burdens on Eligible Entities and subgrantees which
should result in the more efficient administration of the BEAD program
and more efficient use of program funding.
At the same time, it is important to minimize the risk of waste,
fraud, and abuse. We therefore propose requiring Eligible Entities as a
condition of their BEAD grants to monitor the costs of their
subrecipients using reasonable and appropriate accounting
methodologies. An Eligible Entity, for example, could require
subgrantees to periodically report their expenses for grant-funded
[[Page 42922]]
projects using the recipient's existing accounting methodology so long
as it meets Generally Accepted Accounting Principles or other standard
accounting practices.\31\ By imposing measures to validate that fixed
amount awards reasonably approximate the actual cost of broadband
infrastructure deployment or other BEAD Program projects, we will
minimize the risk of misuse of taxpayer resources.
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\31\ See Accounting Standards Codification, Financial Accounting
Standards Board, <a href="http://FASB.org">FASB.org</a>.
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Question 2: As further addressed below, NTIA proposes to seek from
OMB the necessary exceptions to the Uniform Guidance rules to allow
Eligible Entities to issue fixed amount BEAD Program subawards of any
amount for broadband infrastructure projects. Is it reasonable to
assume that the subgrantee selection process, as specified in the
Bipartisan Infrastructure Law and BEAD NOFO, will ensure that each
project has ``measurable goals and objectives'' and provide ``a
reasonable estimate of actual cost''? \32\
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\32\ See 2 CFR 200.201(b)(1).
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Question 3: The Uniform Guidance prohibits the use of fixed amount
awards or subawards in programs requiring mandatory cost sharing or
match, as is the case in the BEAD Program.\33\ NTIA thus proposes to
seek from OMB an exemption for the class of subawards identified in
sections 60102(f)(1), (2), and (4) of the Bipartisan Infrastructure Law
from the prohibition on the use of fixed amount awards in programs
requiring mandatory cost sharing or match.\34\ As previously addressed,
the Uniform Guidance allows Federal awarding agencies to adjust
requirements to a class of awards when approved by OMB.\35\ NTIA seeks
comment on this proposal.
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\33\ 2 CFR 200.201(b)(2).
\34\ The class of subawards identified in sections 60102(f)(1),
(2), and (4) of the Bipartisan Infrastructure Law is that which
would be used for internet infrastructure projects. Consistent with
the Treasury Department's approach to provide exceptions from the
Uniform Guidance to internet infrastructure projects, NTIA is
proposing to provide this exception to the class of subawards that
would support internet infrastructure projects.
\35\ See 2 CFR 200.102(c).
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Question 4: The Uniform Guidance generally limits pass-through
entities from providing fixed amount subawards exceeding the Simplified
Acquisition Threshold, which is $250,000.\36\ Many BEAD subgrants
related to broadband deployment and connections will exceed $250,000.
NTIA thus proposes to seek from OMB an exemption of the class of
subawards identified in Sec. 60102(f)(1), (2), and (4) of the
Bipartisan Infrastructure Law from the rule limiting pass-through
entities from providing subawards on fixed amounts exceeding the
Simplified Acquisition Threshold.\37\ NTIA seeks comment on this
proposal.
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\36\ See 2 CFR 200.333; see also 48 CFR part 2, subpart 2.1.
\37\ 2 CFR 200.333.
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Question 5: In the case of fixed amount subawards, the Uniform
Guidance provides that payments are based on meeting specific
requirements of the subaward. It further offers some ways in which the
subaward may be paid.\38\ Options include, but are not limited to, (1)
in several partial payments, the amount of each agreed upon in advance,
and the ``milestone'' or event triggering the payment also agreed upon
in advance, and set forth in the award; (2) on a unit price basis, for
a defined unit or units, at a defined price or prices, agreed to in
advance of performance of the Federal award and set forth in the
Federal award; and (3) in one payment at award completion. NTIA seeks
comment on whether to specify through guidance or a special award
condition the form in which fixed amount subawards by Eligible Entities
should be paid.
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\38\ 2 CFR 200.201(b)(1).
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Question 6: While the Federal Government's cost principle rules do
not apply as compliance requirements to fixed amount subawards, the
Uniform Guidance requires fixed subaward amounts to be negotiated using
the cost principles (or other pricing information) as a guide.\39\ As
discussed above, the BEAD Program's competitive subaward selection
process must, by statute, be fair and open and will help deliver
adequate cost data necessary to establish fixed amount subawards that
are based on a reasonable estimate of actual costs. Is the information
that Eligible Entities will obtain from the subgrantee selection
process sufficient ``other pricing information?'' Are there
circumstances under which NTIA should issue a special award condition
instructing subrecipients of fixed amount subawards to use as a guide
the cost principles that would otherwise apply, such as the Eligible
Entity's extremely high cost per location threshold? \40\
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\39\ See 2 CFR 200.201(b).
\40\ See NOFO at 13, section I.C.(k) (defining ``extremely high
cost per location threshold''); id. at 81, section V.H.1 (applying
the cost principles in 2 CFR part 200, including subpart E, to
States and non-profit organizations, and the cost principles in 48
CFR part 31 to commercial organizations).
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Question 7: NTIA seeks comment on the nature and scope of any
related adjustments to the requirements of the Uniform Guidance that
may be required if broadband infrastructure subgrants are treated as
fixed amount awards. For example, what additional steps, if any, should
NTIA take to ensure that BEAD Program funds are used solely for the
purposes intended? What additional steps, if any, should NTIA take to
ensure that Eligible Entities are issuing awards at levels reasonably
related to provider costs? What additional steps, if any, should NTIA
take to ensure that other programmatic requirements (e.g., that a
subgrantee provide matching funds of not less than 25 percent of
project costs) are met by Eligible Entities and subgrantees?
NTIA plans to otherwise apply the fixed amount award provisions of
2 CFR 200.201(b) and the cost principle provisions of 2 CFR part 200,
subpart E to State, Territorial, local or federally-recognized Indian
Tribal Governments and 48 CFR part 31 to commercial organizations.
C. Procurement
The Uniform Guidance generally imposes procurement rules on
recipients and subrecipients that use federal assistance funds to
obtain property or services.\41\ The underlying objective of these
rules is to ensure that procurement processes sufficiently guard
against waste, fraud, and abuse.
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\41\ See 2 CFR 200.318-327.
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The Treasury Department is allowing pass-through entities in the
CPF and SLFRF programs to waive the procurement rules for subrecipients
of fixed amount broadband infrastructure subawards. An awarding agency
may provide less restrictive requirements when making fixed amount
awards.\42\ In determining whether the procurement rules of the Uniform
Guidance should apply to BEAD Program subgrants, it is worth noting
that many broadband providers already utilize competitive procurement
processes that align with the spirit, if not the specific provisions,
of the Uniform Guidance's procurement rules. The risk of waste, fraud,
and abuse is further diminished by the congressional directive that
Eligible Entities ``competitively award'' such subgrants.\43\
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\42\ See 2 CFR 200.102(c).
\43\ See 47 U.S.C. 1702(f).
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Question 8: If NTIA chooses to seek the exceptions necessary to
allow Eligible Entities to issue fixed amount BEAD Program subawards,
NTIA further proposes to issue a special award condition authorizing
Eligible Entities to provide subrecipients an exception from the
procurement requirements codified in 2 CFR 200.318-320 and 200.324-326
when using fixed amount subawards. The special award condition
[[Page 42923]]
excepting procurement requirements also would require the Eligible
Entity to obtain certifications from subrecipients that the
subrecipient used competitive procurement processes in executing the
project. NTIA seeks comment on this proposal.
NTIA plans to otherwise apply the procurement provisions of 2 CFR
200.318-327.
D. Property Standards
The Uniform Guidance's property standards, in conjunction with the
DOC ST&Cs, provide NTIA with a framework for holding subrecipients
accountable and ensuring that BEAD investments deliver for the American
people.\44\ This framework provides standards and procedures for
ownership, title, use, management, and disposition of property acquired
with DOC financial assistance. In applying this framework to BEAD-
funded networks, NTIA's overarching goals are to ensure that BEAD
subawards are used for their intended purposes; to prevent the unjust
enrichment of subrecipients; and to minimize administrative burdens
that could materially impact the incentives of traditional and non-
traditional broadband providers to participate in the program.
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\44\ See 2 CFR 200.310-316; DOC ST&Cs at section C.02.
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1. Useful Life of BEAD-Funded Equipment
The Uniform Guidance requires real property and equipment acquired
or improved with a subgrant to be held in trust for the beneficiaries
of the BEAD Program.\45\ The DOC ST&Cs further provide that this trust
relationship exists throughout the duration of the property's estimated
useful life (the Federal Interest Period).\46\ Subrecipients must
comply with all ownership, title, use, management, and disposition
requirements as set forth in 2 CFR 200.310 through 200.316, as
applicable, and in the terms and conditions of the Federal award
throughout the Federal Interest Period.\47\ The duration of Federal
Interest Period is determined by the grants officer in consultation
with the program office.\48\
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\45\ See 2 CFR 200.316.
\46\ See DOC ST&Cs at section C.02.
\47\ Id.
\48\ Id.
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Question 9: The Treasury Department is assigning one uniform period
of time for all funded broadband infrastructure property in its SLFRF
and CPF. NTIA proposes to take a similar approach in the BEAD program.
Specifically, NTIA proposes a Federal Interest Period of 20 years,
which is consistent with the expected useful life of fiber optic
cable.\49\ NTIA seeks comment on this proposal. Alternatively, NTIA
seeks comment on whether to issue a schedule defining the Federal
Interest Period as the useful life for different categories of BEAD-
funded personal property. If commenters favor the development of such a
schedule, what are the relevant categories, types, and estimated useful
life of BEAD-funded equipment and property?
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\49\ ``Planning and Flexibility Are Key to Effectively Deploying
Broadband Conduit through Federal Highway Projects,'' Government
Accountability Office, at 4, June 27, 2012, <a href="https://www.gao.gov/assets/gao-12-687r.pdf">https://www.gao.gov/assets/gao-12-687r.pdf</a> (``Industry documentation estimates that the
expected useful life of fiber cables is between 20 and 25 years and
that the expected useful life of underground conduit is between 25
and 50 years.'').
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2. Use of Real Property and Equipment
The Uniform Guidance establishes use requirements on real property
and equipment acquired under a Federal award or subaward during the
Federal Interest Period. One such requirement is that the real property
and equipment must be used in the program or project for which it was
acquired as long as needed, whether or not the project or program
continues to be supported by the Federal award.\50\ Another such
requirement is for the recipient or subrecipient to make equipment
available for use on other projects or programs currently or previously
supported by the Federal Government, provided that such use will not
interfere with the work on the projects or program which it was
originally acquired.\51\ The Uniform Guidance also provides that
equipment may be used in other activities supported by the Federal
awarding agency.\52\ The Treasury Department is applying a modified
version of these use requirements to broadband infrastructure fixed
amount subawards in its CPF and SLFRF programs.
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\50\ 2 CFR 200.311(b); 2 CFR 200.313(c)(1).
\51\ 2 CFR 200.313(c)(2).
\52\ 2 CFR 200.313(c)(1).
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Question 10: The Uniform Guidance allows Federal awarding agencies
to apply less restrictive requirements when making fixed amount
subawards.\53\ Should NTIA employ this authority with respect to any of
the previously described use requirements? If so, explain why.
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\53\ See 2 CFR 200.102(c).
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NTIA plans to otherwise apply the real property and equipment use
provisions of 2 CFR 200.311(b) and 2 CFR 200.313(c)(1)-(2).
3. Equipment Management Requirements
The Uniform Guidance provides specific procedures for managing
equipment (including replacement equipment) acquired in whole or in
part under a Federal award or subaward.\54\ The Treasury Department
guidance requires broadband infrastructure subrecipients in the SLFRF
and CPF programs to comply with the requirements in section 200.313(d)
of the Uniform Guidance, which may be satisfied by applying the ISP's
commercial practices for meeting such requirements in the normal course
of business (e.g., commercial inventory controls, loss prevention
procedures, etc.), provided that such inventory controls indicate the
applicable Federal interest.
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\54\ See 2 CFR 200.313(d).
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Question 11: Do existing commercial practices for managing
equipment deployed as part of a broadband network contemplate the same
or similar activities as those identified in section 200.313(d) of the
Uniform Guidance (e.g., maintenance of property records, regular
physical inventories, commercial inventory controls, maintenance
procedures, and resale procedures)? NTIA recognizes that inventory
controls indicating the applicable Federal interest are critical tools
for guarding against waste, fraud, and abuse. Inventory Controls are
also particularly important for tracking and, to the extent necessary,
enforcing the Federal Government's reversionary interest in BEAD
equipment. Would commercial inventory controls indicate the Federal
interest in equipment? Commenters should provide detailed analyses
comparing existing commercial practices to the requirements identified
in section 200.313(d). If such commercial practices do contemplate the
same or similar activities, should NTIA provide an exception to the
equipment management requirements in section 200.313(d) for those
broadband infrastructure subrecipients that certify that they use
commercial practices for managing equipment deployed as part of a
broadband network? Should any such exception be conditioned on the
subrecipient's obligation to make the records available pursuant to
those commercial practices available to the Eligible Entity and to NTIA
for review on request?
NTIA plans to otherwise apply the equipment management provisions
of 2 CFR 200.313(d).
[[Page 42924]]
4. Equipment Upgrades and Network Evolution
The Uniform Guidance and DOC ST&Cs contain specific provisions
regarding the replacement of equipment and the disposition of equipment
no longer needed for the original project or program.\55\ With respect
to acquiring replacement equipment, the Uniform Guidance provides that
subrecipients may use the equipment to be replaced as a trade-in or
sell the property and use the proceeds to offset the cost of the
replacement property.\56\ When equipment acquired under a Federal
subaward is no longer needed for the original project, subrecipients
must request disposition instructions from the Federal awarding
agency.\57\ The Treasury Department is allowing broadband
infrastructure subrecipients in its SLFRF and CPF programs to dispose
of equipment in the ordinary course of business when no longer needed
to operate the network, subject to the conditions that the subrecipient
provide notice to the Treasury Department, the same level of service
provided by the network is maintained, there is no material
interruption to service, and the upgraded property is subject to the
same property requirements are the original property.
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\55\ See 2 CFR 200.313(c)(4), 200.313(e).
\56\ 2 CFR 200.313(c)(4).
\57\ 2 CFR 200.313(e).
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The equipment replacement and disposition requirements play an
important role in safeguarding the Federal interest in real property
acquired or improved under a Federal award. At the same time, requiring
subrecipients of internet infrastructure subawards to sell older
equipment in every instance of equipment upgrades, or obtain
instructions for every instance of equipment disposition, may prove
impractical given the scale and duration of the BEAD Program. Moreover,
it may unintentionally chill efforts by BEAD subrecipients to upgrade
and evolve networks during the Federal Interest Period.
Question 12. NTIA proposes to issue a special award condition
providing subrecipients clarity as to the flexibilities that BEAD
subrecipients have under the Uniform Guidance to upgrade and evolve
BEAD-funded networks. Specifically, this special award condition would
clarify that for purposes of the BEAD Program: ``Subrecipients
acquiring replacement equipment under 2 CFR 200.313(c)(4) may treat the
equipment to be replaced as `trade-in' even if the subrecipient elects
to retain full ownership and use over equipment. As with trade-ins that
involve a third party, the subrecipient will have to record the fair
market value of the equipment being replaced in its Tangible Personal
Property Status Reports to the Department of Commerce to ensure
adequate tracking of the Federal percentage of participation in the
cost of the project. The subrecipient also is responsible for tracking
the value of the replacement equipment, including both the Federal and
non-Federal share.'' NTIA seeks comment on this proposal.
NTIA plans to otherwise apply the equipment replacement and
disposition provision of 2 CFR 200.313(c)(4) and 200.313(e).
5. Lien Requirements
The Uniform Guidance defers to the Federal awarding agency
regarding whether to require the recording of liens or other notices of
record on real property and equipment acquired or approved under a
Federal subaward.\58\ In turn, the DOC ST&Cs permit--but do not
require--the imposition of a lien or other notice of record requirement
on subrecipients. Notwithstanding the recording of a lien or other
notice of record on property, the Federal Government retains beneficial
title to the grant-funded equipment or property to ensure it is used
for the intended public purposes.
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\58\ 2 CFR 200.316.
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The Treasury Department is requiring subrecipients to record liens
only in those instances in which the subrecipient encumbers the project
property. These liens must reflect the Treasury Department's shared
first lien position in the project property such that, if the project
property were foreclosed upon and liquidated, Treasury would receive
the portion of the fair market value of the property that is equal to
Treasury's percentage contribution to the project costs.
Question 13. NTIA proposes the same approach as the Treasury
Department is requiring. Specifically, NTIA would require subrecipients
to record such liens for any encumbered equipment and real property
acquired or improved using the class of subgrants defined in section
60102(f)(1), (2), and (4) of the Bipartisan Infrastructure Law. NTIA
would not otherwise require liens for equipment and real property
acquired or improved using this same class of subgrants. NTIA seeks
comment on this proposal.
E. Audits
While the NOFO establishes default audit requirements, it affords
NTIA authority to prescribe different requirements for commercial
entities via the terms and conditions of awards.\59\ Rather than apply
any specific audit requirements to subrecipients in its SLFRF and CPF
programs, the Treasury Department is allowing pass-through entities to
determine the form and frequency of commercial subrecipient audits, so
long as such audits can be used by pass-through entities to satisfy the
terms and conditions of their award. This approach is consistent with
the construct of the BEAD Program, which vests significant decision-
making authority in Eligible Entities.
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\59\ See NOFO at 93, section VII.G.
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Question 14. NTIA thus proposes to issue a special award condition
vesting authority in Eligible Entities to determine the form and
frequency of audits from commercial subrecipients. Under such an
approach, each Eligible Entity can prescribe and enforce any such audit
requirement it deems sufficient for its own compliance requirements as
recipients of BEAD awards. NTIA seeks comment on this proposal.
NTIA plans to otherwise apply the audit requirements specified in
section VII.G of the NOFO and 2 CFR part 200, subpart F.
F. Revision of Budget
The Uniform Guidance requires recipients to report, and request
prior approvals from Federal awarding agencies for, budget and program
plan revisions.\60\ While such a requirement may help to reduce the
risk of waste, fraud, and abuse in certain award constructs, it may not
be as critical in the context of fixed-amount BEAD subawards.
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\60\ See 2 CFR 200.308(b).
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Question 15. Assuming that NTIA permits Eligible Entities to
proceed with fixed amount subaward frameworks, what flexibility, if
any, should NTIA allow an Eligible Entity to provide to subrecipients
of fixed-amount subawards with respect to budget revision? If NTIA does
allow an Eligible Entity to provide flexibility with respect to budget
revisions, how can NTIA and Eligible Entity ensure that subrecipients
provide sufficient notice and seek approval where there is a
significant change in project scope/objective or inability to complete
project without additional Federal funds?
[[Page 42925]]
NTIA plans to otherwise apply the budget revision provisions of 2
CFR 200.308(b).
Sean Conway,
Acting Deputy Chief Counsel, National Telecommunications and
Information Administration.
[FR Doc. 2023-14114 Filed 7-3-23; 8:45 am]
BILLING CODE 3510-60-P
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