Rule2026-10011
Promoting Fair and Open Competitive Bidding in the E-Rate Program; Schools and Libraries Universal Service Support Mechanism
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
May 19, 2026
Effective
June 18, 2026
Issuing agencies
Federal Communications Commission
Abstract
In this document, the Federal Communications Commission (Commission or FCC) takes action to reinforce the success and integrity of the E-Rate program by establishing a competitive bidding portal and document repository to strengthen the E-Rate program's competitive bidding rules as well as other actions to simplify and streamline program processes and procedures for E-Rate participants. In addition, the Commission adopts changes to streamline and simplify the E-Rate program while maintaining the integrity of the program and grant an Order on Reconsideration. These actions will provide greater transparency into the applicants' competitive bidding and bid evaluation and selection processes, and protect the program against waste, fraud, and abuse.
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 96 (Tuesday, May 19, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 96 (Tuesday, May 19, 2026)]
[Rules and Regulations]
[Pages 29051-29071]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-10011]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[WC Docket No. 21-455, CC Docket No. 02-6; FCC 26-30; FR ID 345648]
Promoting Fair and Open Competitive Bidding in the E-Rate
Program; Schools and Libraries Universal Service Support Mechanism
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this document, the Federal Communications Commission
(Commission or FCC) takes action to reinforce the success and integrity
of the E-Rate program by establishing a competitive bidding portal and
document repository to strengthen the E-Rate program's competitive
bidding rules as well as other actions to simplify and streamline
program processes and procedures for E-Rate participants. In addition,
the Commission adopts changes to streamline and simplify the E-Rate
program while maintaining the integrity of the program and grant an
Order on Reconsideration. These actions will provide greater
transparency into the applicants' competitive bidding and bid
evaluation and selection processes, and protect the program against
waste, fraud, and abuse.
DATES: Effective June 18, 2026, except for amendatory instructions 4
and 5 which are delayed indefinitely. The Commission will publish a
document in the Federal Register announcing the effective date for
those sections.
FOR FURTHER INFORMATION CONTACT: For further information, please
contact, Jennifer Mensah, Telecommunications Access Policy Division,
Wireline Competition Bureau, at <a href="/cdn-cgi/l/email-protection#38725d5656515e5d4a16755d564b5950785e5b5b165f574e"><span class="__cf_email__" data-cfemail="105a757e7e797675623e5d757e637178507673733e777f66">[email protected]</span></a> or (202) 418-
1387 or TTY: (202) 418-0484. Requests for accommodations should be made
as soon as possible in order to allow the agency to satisfy such
requests whenever possible. Send an email to <a href="/cdn-cgi/l/email-protection#74121717414440341217175a131b02"><span class="__cf_email__" data-cfemail="167075752326225670757538717960">[email protected]</span></a> or call the
Consumer and Governmental Affairs Bureau at (202) 418-0530.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Report and Order (Report and Order) and Order on Reconsideration in WC
Docket No. 21-455, CC Docket No. 02-6; FCC 26-30, adopted on April 30,
2026 and released on May 1, 2026. The full text of this document is
available at the following internet address: <a href="https://docs.fcc.gov/public/attachments/FCC-26-30A1.pdf">https://docs.fcc.gov/public/attachments/FCC-26-30A1.pdf</a>.
I. Introduction
The Federal Communications Commission (Commission) is committed to
strengthening the integrity of the E-Rate program--formally known as
the schools and libraries universal service support mechanism--and
protecting limited E-Rate funds against waste, fraud, and abuse. We
take action to reinforce the success and integrity of the E-Rate
program by establishing a competitive bidding portal and document
repository to strengthen the E-Rate program's competitive bidding rules
as well as other actions to simplify and streamline program processes
and procedures for E-Rate participants.
Beginning in funding year (FY) 2028, service providers will be
required to respond to applicants' FCC Form 470 requests for services
by submitting their bids into a Universal Service Administrative
Company (USAC)-managed bidding portal, and applicants will be required
to upload all bid evaluation and vendor selection documents, including
contracts, to the portal after they select their service providers. The
E-Rate program's competitive bidding requirements reflect the
Commission's determination that competition is the most efficient and
effective means to ensure that applicants can receive and select the
most cost-effective service offerings. The Commission has long held
that a fair and open competitive bidding process is a cornerstone of
and fundamental to the integrity of the E-Rate program. In addition, we
adopt changes to
[[Page 29052]]
streamline and simplify the E-Rate program while maintaining the
integrity of the program and grant an Order on Reconsideration. These
actions will provide greater transparency into the applicants'
competitive bidding and bid evaluation and selection processes, and
protect the program against waste, fraud, and abuse.
II. Report and Order
In this Report and Order, we take steps to both strengthen the
integrity of the E-Rate program and simplify and improve program
administration. Recognizing the Commission's recent achievements in
addressing and managing fraud risks in the E-Rate program, and mindful
of the need to balance effective oversight of the program with
minimizing unnecessary administrative burdens, the measures we take are
aimed at refining and improving certain aspects of the program, while
tightening our oversight of the competitive bidding process. To that
end, we first adopt our proposal to establish a competitive bidding
portal, which will strengthen program integrity by increasing
transparency and reducing reliance on self-certifications and will be
effective for funding year 2028. Under the competitive bidding portal
rules adopted, we will require: (1) prospective service providers to
respond to applicants' FCC Forms 470 by submitting their bids into the
USAC-managed portal; and (2) applicants to upload their bid evaluation
and vendor selection documentation, including contract(s), after
selecting their service provider(s). In addition, we take steps to
simplify and streamline program rules and administration to improve how
applicants transition services during the funding year; clarify cost
allocation rules and procedures; provide competitive bidding guidance;
eliminate a program form; modify the invoice filing deadline rules; and
update E-Rate program definitions. Each of these issues have caused
challenges for applicants in applying for and receiving funding for
eligible services, and we anticipate that these changes will simplify
E-Rate procedures and processes.
Based on the record and pursuant to our authority under section 254
of the Communications Act, we adopt the Commission's proposal to
require applicants and service providers to use a competitive bidding
portal and document repository during the E-Rate procurement process.
In the Promoting Competitive Bidding NPRM, 87 FR 4182, January 27,
2021, the Commission proposed to ``require prospective service
providers to respond to applicant requests for services and equipment
by uploading bids into a bidding portal managed by USAC, rather than
submitting bids directly to applicants.'' The Commission also sought
comment on whether the competitive bidding portal should be used as a
repository to store documentation associated with the FCC Form 470
requests and competitive bidding process. We discuss these new
requirements.
Specifically, beginning with funding year 2028, we will require
service providers to submit their bids in response to applicants' FCC
Forms 470 into a USAC-managed competitive bidding portal. Applicants,
in turn, will be required to use the bidding portal for bidder
communications and updates during the competitive bidding process and
then must upload bid evaluation and vendor selection documentation with
their FCC Form 471 applications. Applicants will also be required to
upload contracts and award documentation, to the extent that they are
not already doing so. We direct USAC, under the direction and oversight
of the Wireline Competition Bureau (Bureau) and the Commission's Office
of the Managing Director (OMD), to develop and implement the
competitive bidding portal and leverage USAC's existing web-based
account and application management portal, known as the E-Rate
Productivity Center (EPC), for this purpose. We also direct the Bureau,
working with OMD and other Commission staff, to provide clarification
and guidance in the case of any ambiguity that may arise during the
implementation of the competitive bidding portal. Additionally, we
direct USAC to enhance training and outreach materials, under the
oversight of the Bureau, to better assist participants with complying
with the Commission's E-Rate competitive bidding rules, including the
use of the new bidding portal functionality in EPC. We also direct
USAC, at the direction of the Bureau, to add guidance on their website
and seek stakeholder feedback on the technical aspects of portal
functionality during the development via means that will provide
constructive input. Stakeholders proposed multiple methods to provide
feedback and some commenters requested specific portal functionality.
We find directing USAC, under the oversight of the Bureau, to solicit
direct feedback from stakeholders through interactive feedback sessions
to be the most effective approach for implementing the portal and
ensuring its successful use before going live. We agree with commenters
that user testing and training will provide valuable input for
developing and launching the competitive bidding portal. We conclude
that these methods allow USAC to demonstrate portal functionality,
which in turn supports more informed stakeholder discussions and
specific clarification questions. To promote maximum effectiveness and
smooth implementation and administration of the competitive bidding
portal, we also delegate to the Bureau the authority to address and
resolve unforeseen administrative issues or problems, provided that
doing so is not inconsistent with the decisions we reach here.
Benefits to the New Approach. First, we find that a competitive
bidding portal will help ensure a more fair and open competitive
bidding process by increasing visibility and transparency into bidding
information received during the E-Rate competitive bidding process. As
noted in the 2020 United States Government Accountability Office (GAO)
E-Rate report, a competitive bidding portal would strengthen E-Rate
program controls and increase transparency by ``allowing USAC direct
access to obtain and monitor bidding information submitted by bidders
without having to request such information.'' The Commission's Office
of Inspector General (OIG) similarly explained that ``submission of
service provider bids prior to bid selection prevents a service
provider or applicant from submitting an altered bid or contract to
USAC . . . to create the appearance of compliance.'' We agree and
further conclude that this increased transparency will give USAC and
the Commission direct and instant insight into the competitive bidding
process to reduce opportunities for potential bid collusion and the
submission of sham or altered bids, thereby protecting the E-Rate
program from waste, fraud, and abuse. We agree with several commenters
that suggest the portal and the insight gained from having direct
access to this competitive bidding documentation and information could
lead to a more fair and open process and reduce potential waste.
Additionally, we find that the competitive bidding portal and
repository would streamline program administration by providing USAC
and the Commission with direct access to the bids and competitive
bidding documentation, which, in turn, would make reviews more
efficient. Moreover, a competitive bidding portal and an associated
repository will streamline both applicant and service provider document
retention and other requirements, simplifying review in many cases,
while requiring only that
[[Page 29053]]
applicants simply upload documents they are already required to retain
and produce through a portal that is integrated with EPC, a system E-
Rate program participants are accustomed to using. The document
repository will alleviate the burden imposed by recordkeeping
requirements on applicants and service providers by preserving
retrievable documents in the repository. Finally, the competitive
bidding portal will bolster ``more robust enforcement of laws designed
to protect the E-Rate program's public procurement process'' by
preserving the integrity of source documents and ensuring that pre-
award bid and bid selection documents remain ``unaltered and available
to auditors and investigators.''
We disagree with commenters that contend that such a portal or
repository is unnecessary, or that it would not reduce waste, fraud, or
abuse. Some commenters suggest a lack of sufficient justification,
others suggest the current rules provide sufficient protection, while
still others worry that the new requirements will be overly burdensome
for E-Rate program participants. As recent OIG and U.S. Department of
Justice (DOJ) criminal investigations into the program have shown,
fraud remains a problem, and we believe that establishing a portal and
associated repository will reduce opportunities for fraud. As noted by
both OIG and the GAO, the Commission's ability to detect and deter
fraud has historically been limited by its lack of direct access to
underlying competitive bidding documentation. Access to the real-time
submission of competitive bidding documentation will assist in
uncovering fraud, simplifying reviews, ensuring program compliance, and
reducing the potential for waste, fraud, and abuse. Enhanced fraud
detection will also deter program participants from violating the
rules. As stewards of limited universal service funds, we have a
responsibility to identify ways to prevent bad actors from
participating in the E-Rate program and ensure program participants
continue to comply with our rules. We find that the competitive bidding
portal and repository we adopt furthers this objective.
Although how prospective bidders will respond to applicants' FCC
Forms 470 will change based on the actions we take, on balance, we
expect that imposing these new requirements will significantly benefit
program integrity. While requiring applicants and service providers to
submit documentation that they are already required to maintain and
produce pursuant to Sec. 54.516(a)-(b) of the Commission's rules into
a competitive bidding portal changes how and where program participants
are required to submit this information, we find that it will not
impose a substantial burden on program participants. Applicants are
already required to post their FCC Form 470 on USAC's website in
addition to uploading the form to any state bidding portal that may
also be required. Additionally, certain E-Rate participants are already
accustomed to uploading the documentation into an online portal or
repository, and uploading the documentation into the USAC-managed
competitive bidding portal integrated with EPC should not be a
significant burden. We agree with the OIG that ``as service providers
are already required to submit bids and [applicants] are already
required to compile and maintain bid submissions, providing for the
submission of such data to USAC initially should not result in more
than de minimis additional costs or additional burdens to either
service providers or [ ] applicants.'' Moreover, the document
repository will reduce burdens for applicants and service providers
with meeting recordkeeping and production requirements because the
competitive bidding documentation will be available to USAC and the
Commission through the portal. E-Rate participants will no longer need
to separately retain documentation uploaded to the portal, and USAC and
the Commission will be able to obtain competitive bidding documentation
directly through the portal instead of through document requests to
applicants and service providers. We agree with the National School
Board Association (NSBA) that ``[m]aximizing the program's impact on
school and classroom broadband connectivity rates, while ensuring that
bad actors are unable to defraud the program and ratepayers must be a
high priority for policymakers.'' We also agree with commenter Juniper
Networks that a bidding portal ``would lead to a more fair, open, and
competitive bidding process'' and with Infinity Communications &
Consultants, Inc. that it would ``reinforce the bidding process set
forth in the E-Rate rules and lead to lower instances of bid protests
or questions of bid efficacy.'' In weighing the concerns about the
competitive bidding portal against the benefits of limiting the risk
for potential waste, fraud, or abuse, we conclude that the benefits
weigh in favor of creating the competitive bidding portal and
repository.
We reject commenters' views that state and local procurement
requirements alone are sufficient to protect the integrity of the E-
Rate program. Our experience over the years has shown that certain E-
Rate applicants, including private and charter schools and private
libraries, are exempt from, or otherwise not subject to, state and
local procurement rules. Moreover, the Commission, as steward of E-Rate
funding, has both the most direct stake in ensuring that the limited
program funds are protected and not misused, and it has the unique
ability to tailor E-Rate program rules based on insight into how the
program operates across all states and localities. While state and
local procurement requirements play an important role in ensuring that
E-Rate funding is protected, state and local requirements vary among
jurisdictions and are not specifically designed to protect the
integrity of the E-Rate program. Additionally, the Commission has an
independent obligation to safeguard every dollar in the Universal
Service Fund, which cannot be delegated to a variety of state and local
authorities to carry out through their procurement rules.
Many commenters believe that adopting a repository without the
bidding portal would offer several advantages. We disagree and conclude
that adopting only a repository would not achieve the Commission's
goals of protecting the program from waste, fraud, and abuse.
Specifically, we find that implementing a repository without the
bidding portal fails to address OIG's and DOJ's concerns with bid
collusion and bid alteration. Indeed, OIG emphasized that because there
was no upfront collection of bids during the competitive bidding
process, their ability to deter and detect waste, fraud, and abuse was
severely limited. DOJ explained that the bidding portal ``best
preserves the integrity of source documents and any subsequent
investigation'' noting that the ``threat of altered bid documents is
real.'' GAO concurred, reporting that E-Rate participants could
misrepresent facts concerning the competitive bidding processes without
the Commission's or USAC's knowledge. As such, GAO agreed that a portal
``could strengthen program controls by allowing USAC direct access to
obtain and monitor bidding information submitted by bidders without
having to request such information from the applicants or service
providers.'' Failing to adopt the bidding portal would overlook
identified fraud risks in the E-Rate program and prevent law
enforcement officials from being able to identify and stop bad actors
in the program.
[[Page 29054]]
Requiring E-Rate participants to upload bids and competitive bidding
documentation into a repository after the completion of their bid
process does not sufficiently address the risk of applicants and
service providers altering bids during the procurement process nor does
it discourage bid collusion.
We find that implementing a bidding portal and repository is a
prudent method to simplify program integrity reviews, streamline
audits, and ensure program compliance. We observe that commenters raise
concerns regarding the potential costs associated with creating,
implementing and managing the competitive bidding portal, and the
impact it may have on program participation. For example, Arkansas
State Library expresses concern that small and rural libraries do not
have the staff time or expertise to devote to a more complex filing
process. The Council of the Great City Schools also speculates that the
bidding portal could have the ``unintended effect of deterring service
providers from submitting bids'' resulting in weakened competition and
less cost savings. Other commenters argue that requiring participants
to use a federal competitive bidding portal in addition to other
bidding portals would be burdensome and confusing for applicants and
service providers. For example, AASA speculates that districts would
have to rely more on consultants, increasing compliance costs. To
address the cost concerns, we estimate that the cost of creating,
implementing, and managing the competitive bidding portal for the first
year of operation will be under $750,000, followed thereafter by annual
operating costs of $100,000 to $200,000, which together represents a
comparatively low cost to take measures to protect a program where the
funding cap in funding year 2026 is $5.2 billion. These costs are also
markedly lower than the millions of dollars in E-Rate funding that have
been recovered as a result of OIG and DOJ investigations of competitive
bidding violations. As explained, the competitive bidding portal will
be integrated into the EPC system ensuring that E-Rate program
participants will be able to quickly adjust to the new requirements and
minimizing costs to both the Universal Service Fund and stakeholders.
As noted, to address stakeholder concerns regarding the transition to
the competitive bidding portal, the Bureau will work with USAC to
provide training and guidance on its use.
While we acknowledge that there will be a change, we disagree that
using the competitive bidding portal will be significantly more complex
than existing rules requiring the FCC Form 470 to be posted on USAC's
website or that a higher level of expertise will be required. The
proposal we adopt requires applicants to upload documents that they are
already required to retain and produce under our rules and provides a
centralized place for service providers to submit bids and communicate
with applicants about any questions they may have. Currently, to
initiate the competitive bidding process, applicants are required to
complete and upload their FCC Forms 470 and documentation into EPC, for
posting on USAC's website. Under the new rules, our expectation is that
service providers will upload bids and applicants will submit their
evaluation and vendor selection documentation into the competitive
bidding portal. As such, E-Rate program participants already possess
the requisite skills they need to comply with these new requirements.
In other words, other than adjusting how this documentation is
collected and shared with the Commission and USAC, the proposal we
adopt is not intended to change the way applicants conduct their
competitive bidding processes. Consequently, we disagree that the
competitive bidding portal will discourage applicants or service
providers from participating in the E-Rate program. Notably, we observe
that no individual service provider submitted a filing opposing the
bidding portal's implementation.
To the extent that the portal does alter current rules, we expect
that it leans towards a more fair, open, and transparent process,
resulting in more cost-effective service proposals and a reduction of
waste, fraud, and abuse. Indeed, the use of a document repository
should aid smaller entities in complying with recordkeeping
requirements because the required documents would be uploaded and be
available in the portal. Also, we find that many participants are
already utilizing bid portals; as such, being required to upload
similar documentation to a competitive bidding portal should not be
burdensome because it is a familiar process. We also note the potential
streamlining for E-Rate participants, as commenters who use bid portals
for their E-Rate bidding requirements explained that they ``appreciate
the singular place to post, respond, and collect documents.'' We find
that the competitive bidding portal may also assist participants with
complying with state or local requirements by providing a centralized
place for communications and documentation regarding their competitive
bidding processes. As such, although we decline to adopt a one-year
grace period during which applicants would not be denied funding for
procedural-type errors related to the bidding portal's use, we direct
the Bureau to take into account when the new portal was adopted when
considering requests for waiver, particularly for procedural or
administrative errors by smaller or more rural participants.
We acknowledge that commenters express concerns that the proposed
bidding portal is duplicative of existing state and local portals and
could conflict with state and local laws, noting that state and local
procurement requirements are complex, tailored to the needs of
individual states, and are likely to change over time. As an initial
matter, although E-Rate program participants may have to upload
documentation to different portals, we find that the process will be
minimally burdensome as they will already be familiar with utilizing
bidding portals. Also, we conclude that taking this step to upload
documentation into the federal bidding portal will be beneficial as
applicants and service providers will no longer have to maintain this
documentation once uploaded into the portal, and USAC and the
Commission will not need to request this documentation for reviews or
audit purposes. We next find that the competitive bidding portal will
not conflict with state or local laws nor raise any preemption concerns
because the portal will not supplant existing state and local
requirements and instead must be used alongside these requirements. For
example, State E-rate Coordinators' Alliance (SECA) states that
``numerous E-rate applicants are required by state and local laws to
receive printed, signed, and sealed bids. Some require notarized
signatures to be lawful. Paper bids copies would be precluded by the
portal.'' Infinity Communications & Consultants, Inc. notes that some
states ``require wet signatures for contracts, or hard copy responses
not digital.'' Under our adopted rules, E-Rate program participants are
required to comply with state and local rules; however copies of the
bids, bidding documentation and any communication between applicants
and service providers would also need to be uploaded into the
competitive bidding portal. We recognize that state and local
governments have procurement rules aimed at safeguarding against waste,
fraud and abuse, and the federal bidding portal is
[[Page 29055]]
not intended to impact these measures. Accordingly, in addition to
using the new, USAC-managed competitive bidding portal, our expectation
is that applicants and service providers would continue to use existing
state or local bidding portals where required. We clarify that the
submission of bids or questions to other state or local portals would
not violate E-Rate program rules. Specifically, applicants should
include instructions regarding any additional state or local
requirements in their FCC Form 470 or request for proposals (RFP)
document allowing service providers to upload their response to the FCC
Form 470 in the bidding portal, and to comply with other requirements
for submitting a responsive bid. The bidding portal will not replace
other procurement requirements under state or local procurement laws,
including submitting the bid or questions in an additional portal. We
clarify that if a service provider or applicant is submitting different
information to a state/local portal than what is being submitted to the
competitive bidding portal, that may be treated as a competitive
bidding violation and the E-Rate funding requests could be subject to
denial. We direct the USAC, under the direction of the Bureau, to
provide guidance and training on this issue.
We reject commenters' remaining arguments regarding potential
conflicts between the bidding portal and state and local laws. Some
commenters argue that the proposed bidding portal would conflict with
state requirements concerning the publicizing of bid requests. For
example, Infinity notes that California Public Contract Code and Utah's
State Statute both require public advertisement for the submission of
bids. We conclude that the rules we adopt and the competitive bidding
portal requirements do not conflict with rules requiring the
publication of bids--applicants may post advertisements and public
notices soliciting bids to the FCC Forms 470 as required by state
regulations and include instructions that copies of the bids must be
uploaded to the competitive bidding portal as well. We also find that a
public opening of bids would not violate E-Rate program rules. Further,
state rules that require a bid be emailed or hand delivered do not
conflict with the portal, service providers merely need to ensure that
copies of the bids are submitted into the federal competitive bidding
portal. Los Angeles Unified School District (LAUSD) speculates that
``[r]equired bidders' security, in the form of cash, a cashier's check
made payable to the school district, a certified check made payable to
the school district, or a bidder's bond executed by an admitted surety
insurer made payable to the school district, may not be transmissible
through a third-party portal.'' We find that there is no such conflict
between California's procurement laws and the federal competitive
bidding portal as California's Public Contract Code does not prevent E-
Rate program participants from submitting bids to the federal bidding
portal and the rules we adopt place no restrictions on the submissions
of securities required under state law. Additionally, to the extent
there are state or local laws requiring bidder's security and specific
instructions for submitting the security, these laws do not preclude
the creation of a competitive bidding portal, as applicants and service
providers may satisfy the state or local requirements regarding the
bidder's security requirements while also submitting the bids and
competitive bidding documentation to the competitive bidding portal.
Similarly, we disagree with Schools, Health & Libraries Broadband
(SHLB) that Mississippi state procurement law precludes the use of a
federal competitive bidding portal. While the statute states that it
``shall not require any bidder to submit bids electronically,'' service
providers may choose to submit electronic bids. We find that this is
not incongruent with the competitive bidding portal and that service
providers can reply to the applicant's FCC Form 470 using the
competitive bidding portal and be compliant with Mississippi state
procurement requirements. The South Dakota Department of Education
speculates that the portal will interfere with the state's inclusion of
ineligible E-Rate entities into its procurement, which may impact the
bid evaluation process for eligible entities. However, requiring the
bids, questions about the RFP and FCC Form 470, walkthroughs with
vendors, and bid/vendor evaluation documentation related to the E-Rate
supported contract to be uploaded should not interfere with a
procurement that includes ineligible entities. We are not changing the
requirements of the Commission's competitive bidding rules and the
rules that apply to ineligible entities remain in place. Overall, we
note that stakeholders have not provided an example of an actual
conflict with the competitive bidding portal's requirements and instead
have speculated that there could be conflicts. To the extent that there
is a true conflict between the competitive bidding portal and state or
local laws, parties may request a waiver of the Commission's rules.
Communications between Applicants and Service Providers. In the
Promoting Competitive Bidding NPRM, the Commission proposed that
``[s]ervice providers may anonymously submit questions or other
inquiries to applicants through the bidding portal, to which applicants
must respond during the competitive bidding process.'' In addition, the
Commission proposed that ``no communication between service providers
and applicants related to the competitive bid or the competitive
bidding process would be permitted outside of the bidding portal during
the competitive bidding process.'' Commenters raise concerns regarding
this process, asking whether the applicant could set the timeline for
questions and answers in a fair and open manner, and whether this
requirement effectively precludes applicants from holding bidder
conferences or walkthroughs to discuss service needs with potential
bidders and answer any questions. We adopt a modified version of the
proposal prohibiting communication between service providers,
applicants, and any representative thereof outside the bidding portal.
A few commenters requested clarity regarding when the ban on
communication applies, while others expressed concern about the burden
imposed by these new rules. We clarify that bidders and applicants will
use the portal for communications regarding the requested services and
products beginning on the date the applicant files the FCC Form 470
until the contract is awarded, or the contract award date, with limited
exceptions described. New requirements limiting communication between
applicants and service providers is a change, however we find that the
portal will assist participants with complying with these rules as
documentation will only have to be uploaded to the competitive bidding
portal and program participants will not have to separately retain the
uploaded competitive bidding emails and related communication
documentation.
We also adopt the proposal for bidders to be able to submit
anonymous questions in the bidding portal for all participants to view,
and for applicants to answer those questions in the bidding portal. We
direct the Bureau and USAC to create a process for submitting questions
anonymously through the competitive bidding portal and for the
applicant to respond to the questions through the portal. Service
providers may submit their questions regarding
[[Page 29056]]
the competitive bidding process to applicants through the competitive
bidding portal without using the anonymous question format. Applicants
will be required to respond to the bidders' questions through the
portal so all bidders may see the questions asked and the provided
responses. We find that this question and response requirement will not
supplant an applicant's existing ability to set deadlines for questions
and otherwise ensure that all interested bidders are treated fairly and
given access to the same information. However, if an applicant has
already answered a question, they do not need to answer the same
question multiple times. The South Dakota Department of Education
raised concerns that the bidding portal rules could be challenging for
rural applicants who largely receive no bids or one bid. Applicants
that receive no bids are allowed to request quotes or bids from service
providers; however, the solicitation and response must be uploaded to
the portal to demonstrate how the service provider was selected.
Applicants that receive one bid during the competitive bidding process
may use the bid provided it is cost-effective and consistent with the
rules. Additionally, states may withhold confidential information
regarding its internal procurement and evaluation process. However,
documentation on the final bid evaluation and vendor selection process
(i.e., bid matrices or other documentation showing how each bid was
carefully considered and evaluated) must be uploaded to the portal.
After the contract award notice has been issued and uploaded to the
portal, confidential contract negotiation documentation is not required
to be uploaded, but the final contract is required.
In addition, under our new rules, applicants can continue to hold
conferences or other meetings with interested bidders. Questions and
answers that were provided during the meeting and are relevant to the
competitive bidding process must be uploaded to the competitive bidding
portal within 72 hours to ensure that all potential bidders have access
to the same information, and the competitive bidding process is fair
and open to all bidders. A summary of the meetings held between the
applicant and any potential bidders must be uploaded to the competitive
bidding portal by the time the FCC Form 471 is filed. We find that this
affords applicants the ability to hold these important conferences and
walkthroughs without raising a concern about certain bidders having
conversations with an applicant in a manner that gives special
treatment. Internal communications between the applicant's bid
evaluation team do not need to uploaded, but the final bid evaluation
results must be uploaded. The documentation included in the portal
should be similar to the documentation applicant and service providers
are already required to retain and produce under the Commission's
rules. We believe this enables applicants to use a variety of methods,
including conferences and walkthroughs, to ensure that interested
bidders have the required information to thoroughly respond to a bid
solicitation, while ensuring that the program is protected against
special treatment, inside information, or other anticompetitive
practices that undermine the integrity of the E-Rate program.
Bid Holding Period. In the Promoting Competitive Bidding NPRM, the
Commission sought comment on ``requiring applicants to wait a specified
amount of time before they can access bids submitted in response to
their FCC Form 470 service requests.'' The Commission discussed the
risk that the current process enables applicants to share bids received
from one service provider with another, perhaps more favored service
provider, in a manner that violates the program rules, and it asked
whether a bid holding period could address this concern. The Commission
further asked whether withholding the bids from applicants until the
deadline for bids has passed would help applicants comply with Sec.
54.503(c) of the Commission's rules, which requires applicants to wait
at least four weeks from the date of posting the FCC Form 470 to USAC's
website before entering into a contract with a service provider.
Consistent with the majority of commenters, we decline to require a bid
holding period for the competitive bidding portal at this time. We
agree with INCOMPAS that prohibiting applicants from reviewing bids
early would prevent them from identifying potential issues and permit
service providers to ``cure their proposal and correct their bid,''
thus leading more service providers to be disqualified, resulting in
higher costs of service for the E-Rate program. We also agree with SHLB
that ``requiring USAC to withhold proposals from applicants for some
period of time would needlessly extend the bidding process.'' Some
commenters express concern that the ``current system of allowing
applicants to open bids on a rolling basis could lead to a lack of
competition because applicants might view earlier bids more favorably
than later bids (or vice versa) based simply on when they are
received.'' However, we conclude that the benefits of a bid holding
period are outweighed by the costs of a holding period. We anticipate
that because of the measures adopted, applicants will be deterred from
viewing earlier bids more favorably and instead will evaluate all bids
fairly pursuant to our rules. We find that the competitive bidding
portal will assist service providers in correcting their bids and
streamlining the competitive bidding process. Accordingly, under the
rules we adopt, applicants will be notified when a bid is uploaded into
the portal and service providers will be able to communicate with
applicants in the competitive bidding portal to modify bids to address
any issues that may be identified during the E-Rate competitive bidding
process and provide documentation of this communication in the portal.
Some commenters note that certain states have sealed bid
requirements, or further require that applicants open bids at a
predefined time. To accommodate this, we direct the Bureau and USAC to
develop controls on who can access bids and an audit log for the
bidding portal that would show a date and time for when a bid is
received, opened, and downloaded, and by whom, along with the IP
address. Applicants will be required to abide by state and local
requirements regarding opening bids. We find that the audit log would
help applicants demonstrate compliance with state and local laws that
may preclude them from opening a bid prior to the bid deadline.
The access controls and audit log will also address OIG's concerns
about bid collusion and improper sharing of bids. OIG recommended that
bids be withheld from the applicant for a 28-day period to help prevent
improper bid sharing or collusion between applicants and service
providers. We note that because there is no mandatory 28-day period for
bids to be submitted in the E-Rate program, holding bids for a 28-day
period would not fully address OIG's concerns about bid collusion and
improper bid sharing activities as there may still be time for parties
to improperly share information and submit a bid to the FCC Form 470
after the 28-day holding period has expired. Applicants may file the
FCC Form 470 to initiate the competitive bidding process up to one year
before the start of the relevant funding year and thus, there could
still be opportunities for bid collusion or improper bid sharing
activities even with a 28-day holding period for each bid submitted. We
[[Page 29057]]
believe an audit log and controls on who can access the bids will be a
better way to address this issue than implementing a 28-day holding
period as the audit controls and logs will indicate who accessed bids,
the date/time when bids were accessed, and the date and time of bids as
they are received. If there was improper bid sharing or bid collusion,
the audit log would help identify these actions allowing USAC and the
Commission to take appropriate actions.
State and Other Master Contracts. In the Promoting Competitive
Bidding NPRM, the Commission sought comment on whether, ``for those
applicants using state master contracts, [there is] documentation that
applicants should be required to upload [to] demonstrate compliance
with the E-Rate rules.'' Some commenters identify challenges that a
bidding portal would create for applicants conducting large
procurements, or those who must comply with unique rules and processes.
For example, commenters note concerns with the use of state master
contracts, in particular state master contracts that result in multiple
awards schedules and require the use of mini-bids. Commenters offer
that, to account for state master contracts, the bidding portal must
have ``considerable flexibility,'' or further, that competitive bidding
processes that result in state master contracts should be exempt from
the bidding portal. We require applicants to upload a copy of a state
master contract and the related bidding documentation to the
competitive bidding portal when filing their FCC Form 471 application
if the state master contract was used as part of an applicant's
competitive bidding process or is the contract that was selected. We
disagree with SECA that the competitive bidding portal is ``unable to
accommodate multi-stage bidding or mini-bids conducted using E-rate
qualified master contracts.'' Instead, we find that the bidding portal
will have sufficient flexibility to accommodate a variety of
competitive bidding processes, including those with multiple stages.
When applicants are required to perform a ``mini-bid'' evaluation based
on a multi-award state master contract, the documents that the
applicant prepared, in connection with the mini-bid process, including
those reflecting how the applicant selected the winning bidder among
the available vendors in the multi-award state master contract, must
also be uploaded to the competitive bidding portal. For consortium
applicants, we require the consortium leader to submit the competitive
bidding and contract documentation related to the consortium's FCC Form
471 on behalf of its members to the competitive bidding portal. We find
that this approach is consistent with the role of a consortium leader
as the entity that takes the lead in responding to USAC inquires
related to the consortium applicant's competitive bidding process.
For multi-stage bidding, we require that applicants use the portal
for each round of the procurement, and that portal functionality will
enable multiple successive rounds in a multi-stage procurement to be
linked or otherwise associated. This functionality will permit
applicants that do multi-stage procurements, or who wish to include a
``Best and Final Offer'' phase of a procurement, to manage the entire
procurement through the bidding portal.
Multi-Year Contracts. For multi-year contracts, we require
applicants to upload the required competitive bidding and contract
documentation to the competitive bidding portal only once in the first
year of the contract, and applicants will not be required to upload
duplicative competitive bidding and contract documentation for the
remainder of the contract's term provided there are not any
modifications that require a new competitive bidding process. For
existing multi-year contracts that are currently being used to support
funding requests, in funding year 2029, applicants will be required to
upload the associated bids, competitive bidding, and bid evaluation
documents for the multi-year contract into the portal by the time the
applicant submits their FCC Forms 471 that rely on that contract. This
is one year after the portal is implemented, giving applicants time to
focus on the funding year 2028 competitive bidding process before
needing to provide past competitive bidding documentation to the
repository.
In the Promoting Competitive Bidding NPRM, the Commission asked
whether applicants and service providers should ``be permitted access
to their stored competitive bidding documents for a period long enough
to be able to comply with recordkeeping requirements.'' The Commission
also asked, ``if E-Rate program participants retain access to their
records, should this access be afforded to them in a way to permit them
to produce the records at the request of any representative (including
any auditor) appointed by a state education department, USAC, the
Commission, or any local, state or federal agency with jurisdiction
over the entity, as is required by Sec. 54.516(b)?'' We answer both
these questions affirmatively. Under our adopted rules, once an
applicant uploads the competitive bidding documentation into the
bidding portal and repository, applicants will be able to access this
documentation when needed and provide it to other local, state, or
federal agencies with jurisdiction over the applicant as necessary.
Thus, by preserving this documentation in the bidding portal and
repository, the portal will assist in ensuring compliance with the
competitive bidding recordkeeping and production requirements set forth
in Sec. 54.516(a)-(b) of the Commission's rules. We agree with the
Illinois Office of Broadband that the bidding portal ``reduces the
burden of complying with the Commission's document retention rules over
the long term.'' In adopting this requirement, we do not make any
modifications to Sec. 54.516(a) of the Commission's rules. However,
applicants and service providers do not need to separately retain
documents that are also uploaded to the competitive bidding portal and
can rely on this documentation to meet their document retention
requirements.
Processing of FCC Forms 471. We expect that USAC will continue to
issue funding commitments in a timely manner according to the standard
that the Commission provided in the First 2014 E-Rate Order, 80 FR 167,
January 5, 2015. There, the Commission directed USAC ``to aim to issue
funding commitments or denials for all `workable' funding requests by
September 1st of each funding year,'' noting that this date would
``provide[ ] USAC with approximately five months beyond the [usual]
application filing window deadline to review all timely filed and
complete funding requests.'' In issuing this direction, the Commission
acknowledged that ``even `workable' funding requests may be time
consuming for USAC to process'' and that USAC should continue to
perform a ``thorough review of each application,'' including by
``contact[ing] applicants to seek additional information concerning a
funding request'' and ``provid[ing] applicants with an opportunity to
respond to [USAC's] questions.''
A few commenters raise concerns about whether the additional data
and documentation submitted to the competitive bidding portal may
result in system issues or delays in reviewing applications and slow
procurement timelines. While these process changes will result in
additional documentation, we find that expecting USAC to maintain the
same processing timelines for issuing funding commitments is
[[Page 29058]]
justified, given the paramount importance of making funding commitments
prior to the start of the typical school year, i.e., in or around early
September. We direct USAC to incorporate data analytics and other tools
to select specific FCC Form 471 applications for additional review and
to detect potential competitive bidding violations during pre-
commitment reviews using the additional documentation that will be
available through the competitive bidding portal. While any additional
pre-commitment reviews may increase processing times in some respects,
we find that USAC's processing times will be lessened in other respects
as it can use the submitted competitive bidding and contract
documentation to resolve potential issues with funding applications
internally, rather than incur delays by reaching out to applicants or
service providers for additional information. We find that asking USAC
to continue to follow existing processing times and review standards
while, at the same time, strategically incorporating this additional
competitive bidding and contract documentation into its review
processes strikes a reasonable balance between ensuring that funding
commitments are issued in time for schools and libraries to purchase
vital broadband services and equipment and ensuring that USAC uses this
additional information to detect rule violations and strengthen program
integrity.
Information Security and Confidentiality. Some commenters raise the
question of whether proprietary and confidential information submitted
to the competitive bidding portal would be kept confidential. For
example, the South Dakota Department of Education notes that the public
availability of bidding information submitted into the competitive
bidding portal could run afoul of state law. Given the possibility that
certain bidding documentation (i.e., non-winning bids) submitted to the
bidding portal may contain confidential financial or proprietary
information, we will treat bids and other pricing data submitted to the
bidding portal as presumptively confidential and will not make the non-
winning bids and submitted pricing data routinely available for public
inspection. This includes bid reviews by applicants and other related
documents which may include or reference information from bids.
However, we are not making any changes to the data that is currently
available for the E-Rate program, and all pricing data included on the
FCC Form 471 will remain publicly available. We direct the Bureau, in
consultation with the Office of General Counsel, to evaluate and
determine whether additional data (e.g., aggregated information for
reporting purposes) could be made publicly available without
compromising the security or confidentiality concerns raised in the
record, including not publicly disclosing any data that is
confidential, like non-winning bids. We direct USAC to retain all
documentation in the portal and repository in accordance with the
applicable federal records schedule for Universal Service Fund-related
records and protect, retain, manage, and use all data and documentation
in accordance with applicable federal information security and privacy
requirements. We also direct that access to the competitive bidding
portal and repository be limited to the applicant's Account
Administrator and up to two other authorized users (including
consultants) and audit logs to be maintained on when, by whom, and what
documentation was accessed in the portal.
Bid Response Template. In the Promoting Competitive Bidding NPRM,
the Commission sought comment on ``whether service providers should be
required to submit information in a manner that enables applicants to
compare competing bids.'' The Commission also asked whether applicants
face difficulty in comparing bids submitted in different formats. Most
commenters did not address this issue. DOJ supports this proposal,
specifically stating that service providers should submit information
``in a manner that enables applicants to compare competing bids.'' In
particular, DOJ supports a requirement that service providers submit a
summary form, which could be a portion of the FCC Form 471, that
contains ``key data points,'' in an effort to allow USAC to better
leverage the data for compliance and investigative purposes, and allow
applicants to ``be confident that they are comparing apples to apples
when selecting a service provider.''
We direct the Bureau, after seeking comment if deemed necessary or
advisable, to develop a standardized bid response template, and make it
available for applicants to use on an optional basis. We find that a
standardized template, made available for service providers to use for
submitting bids, would prove useful to applicants, as it could help
standardize bid responses and make it easier for applicants to compare
bids and ensure compliance with our rules for several reasons. First,
we find that having a standardized bid response template would help
service providers formulate bids in a more uniform manner by making
clear the required information. Second, a standard template would help
applicants in their bid evaluation process because each response would
contain data that could easily and appropriately be compared across
service providers. Third, we find that a bid template could help USAC
better utilize data analytics because it will allow for the data points
to be provided in a uniform manner, making it easier for USAC to
identify areas of concern that warrant further review. Applicants
choosing to use the template can require potential bidders to use the
template bid response form by stating that use of the template is a
requirement for responding to its FCC Form 470. We will determine in
the future whether to require mandatory use of a standardized bid
response form by service providers.
We also take steps to streamline or clarify aspects of the E-Rate
program and its administration based on the record received in response
to the 2023 FNPRM, 88 FR 152, August 9, 2023. Specifically, we amend
the E-Rate program rules to improve how applicants transition between
service providers during a funding year and establish a process for
applicants to increase bandwidth within a funding year. We also take
this opportunity to provide guidance on transition of services; clarify
cost allocation rules and procedures; provide guidance on competitive
bidding requirements; eliminate the FCC Form 486; amend the
Commission's invoicing rules; and update E-Rate program definitions.
Each of these issues have caused challenges for applicants in applying
for and receiving discounts on eligible services, and we anticipate
that these changes will result in an overall simplification of E-Rate
procedures and processes.
First, we adopt changes to improve how applicants request funding
when they are transitioning between two service providers (or service
offerings) during the funding year, given the difficulty in determining
the precise cutover date during the application filing window. To
prevent funding duplicative services, E-Rate procedures do not allow
USAC to commit funding to two funding requests for service, to the same
recipients, that overlap in time. At the same time, due to concerns
about exceeding the E-Rate funding cap, the Commission's service
substitution rules require that post-commitment service substitutions
be based on the lower of either the pre-discount price of the service
for which support was originally requested or the pre-discount price of
the new, substituted service. In
[[Page 29059]]
the 2023 FNPRM, the Commission sought comment on the best way to allow
applicants to adjust transition dates during the funding year, such as
requesting twelve months of funding for the higher-priced service and
then filing a post-commitment change request to reduce one of the
requests. Commenters agree that the current process for transitioning
services during the funding year should be streamlined.
Upon review of the record and consideration of the potential impact
on demand, we amend our rules to create a process for applicants that
are transitioning services to file a post-commitment request that
changes the service start and end dates and permits, if the applicants
meet certain criteria, increases in the commitment amount. Applicants
that seek the flexibility to increase a funding commitment, if needed,
will file partial year funding requests for both the old and the new
services, estimating the cutover dates, but not to exceed twelve
months. The applicant must indicate on the FCC Form 471 application
that the services are transitioning. Once the dates are known, the
applicant may file a post-commitment request, which USAC will be
permitted to grant even if the date change results in a higher funding
commitment.
Some commenters support an option mentioned in the 2023 FNPRM to
have the applicant request 12 months of service from the higher cost
service; however, we find that this option would result in more
volatile program demand and a more burdensome review when applicants
want to transition service providers. By requiring applicants to file
partial year funding requests for both services, estimated demand at
the close of the application filing window will be closer to the actual
demand, rather than inflating demand to accommodate the highest
possible cost of every transition. In addition, USAC can review both
funding requests and the associated contract records at the time of the
application review and the amount of time needed for post-commitment
review will be reduced. This will also permit the existing service
provider to be reimbursed for services provided even if the new service
provider has the higher-cost service. Additionally, applicants that
estimated the transition dates correctly will not need to file any
post-commitment requests, giving applicants an added incentive to work
with their service providers to try to determine accurate cutover dates
when transitioning service during a funding year. We expect that, in
total, these changes will enable applicants to be able to more easily
receive approved E-Rate funding when they are transitioning services
even when the transition dates are not known at the time they are
applying for E-Rate funding during the application filing window and
will simplify the process for when they are transitioning services
during the funding year. These changes will be effective in the funding
year application filing window after the Office of Management and
Budget (OMB) approves any necessary program form changes.
To effectuate this change, we direct USAC to approve a post-
commitment increase if the applicant: (1) filed partial funding year
requests for funding from both service providers (or service offerings,
in the case of a transition to a different service from the same
service provider) during the application filing window using the best
estimates of the transition dates; (2) indicated on the FCC Form 471
that the requests were for a transition of service; and (3) there are
available funds below the E-Rate program funding cap. We caution that
if there are no available E-Rate funds when an applicant files the
post-commitment request, USAC will not be permitted to approve an
increase in the funding commitment. We do not expect this to be an
issue in the near future under the current funding cap and demand, but
we direct the Bureau to monitor demand and release guidance on how to
request funding for transitions in future funding years if demand is
nearing the cap. During post-commitment review, the applicant shall
provide details about the transition and dates of actual transition
between the two service providers or offerings, including a showing of
agreement from both service providers about the end date of the first
service provider and the start date of the second service provider. We
disagree with commenters suggesting that USAC should be permitted to
commit funding for both service providers for the transition month and
to resolve the duplicate funding issues during the invoicing review; we
find that the administrative challenges during invoicing and potential
for improper payments to both service providers outweigh any potential
benefits of such an approach.
Finally, we recognize that there are some applicants that have
transitioned services without the benefit of this post-commitment
process and as a result have been unable to obtain reimbursement for
all of the approved services delivered. For pending requests for
waiver/appeals or pending service substitution requests, we direct the
Bureau to review requests based on the new rules, once effective, and
to find good cause for a waiver, if the following conditions are met:
(1) the party indicated it was transitioning to new services during the
funding year; (2) the delay in transitioning services was for reasons
beyond the service providers' control; (3) the party filed an appeal
within a reasonable amount of time after determining there was an issue
with the transition of services; and (4) there is funding available
based on overall program demand and the funding cap. When these
conditions are met, there is good cause to find that applicants have
taken the steps needed to transition between service providers, and it
is appropriate to provide E-Rate support when the transition of service
is delayed for reasons beyond their control.
Next, in response to stakeholder requests, we offer additional
guidance on cost allocation rules and procedures. As part of its
efforts to simplify the E-Rate program, the Commission provided
guidance in the 2023 E-Rate Report and Order, 88 FR 156, August 15,
2023, on several common cost allocation issues that applicants
experienced. Specifically, the Commission provided guidance on when on-
campus internet usage can be considered ancillary and when the use of
shared equipment located in a non-instructional facility requires cost
allocation. In addition, the Commission sought further comment on cost
allocation issues that would benefit from additional guidance.
Several commenters support applying the internet ancillary use
guidance to data transmission services, wide area network services, or
to all category one services. In the 2023 E-Rate Report and Order, the
Commission adopted a presumption that, if at least 90% of an
applicant's requested internet service is being used for eligible
purposes, the remaining ineligible use of the internet service will be
presumed to be ancillary and, therefore, cost allocation is not
required. The 2023 E-Rate Report and Order included guidance regarding
data transmission services, and we agree that if at least 90% of an
applicant's requested recurring category one service, be it a data
transmission service or any other category one service, will be used
for an eligible purpose during the funding year, the remaining
ineligible use of the category one service at eligible locations will
be presumed to be ancillary and, therefore, cost allocation will not be
required. As the Commission stated in the 2023 E-Rate Report and Order,
if an applicant selected the most cost-effective offering to meet its
needs, then the minimal ineligible use of the service should be treated
as ancillary and cost allocation is not required. Category one
services,
[[Page 29060]]
including internet access services, provide connectivity to a location
as a whole, and incidental, ancillary on-premises use beyond that
eligible use should be permissible without additional paperwork
burdens.
Next, American Library Association (ALA) notes that some libraries
may extend their Wi-Fi a short distance into the community and asks
whether the presumption of ancillary use applies. This presumption is
limited to on-premises ancillary use. Each of the examples provided by
commenters to the 2023 E-Rate Report and Order discussed the burden of
attempting to allocate costs associated with in-building school or
library ineligible uses, such as healthcare clinics, childcare
services, or services to a classroom offering services to students
under the age of three. Applicants are required to cost allocate off-
campus use from their E-Rate requests.
As proposed, we adopt a limited exception to our competitive
bidding rules to allow applicants to seek needed bandwidth increases in
between E-Rate funding cycles. The E-Rate program rules require
applicants to competitively bid services using the FCC Form 470. This
process starts at least four weeks before the applicant files its FCC
Form 471 applications during the annual filing window, but can occur
six months before, or--in the case of multi-year contracts--years
before the funding application is submitted. Applicants are encouraged
to seek bids for and sign contracts that include a range of bandwidths
in order to accommodate changes in bandwidth needs in the future, but
applicants are not always able to anticipate all their bandwidth needs.
For example, in 2020, the Bureau opened a second application filing
window in September to address increased on-campus bandwidth needs as a
result of remote learning challenges caused by the COVID-19 pandemic.
However, in other instances, applicants may be unable to increase their
bandwidth mid-funding year without potentially violating the E-Rate
program competitive bidding rules. We therefore agree with commenters
supporting a limited exception to the competitive bidding rules so
applicants can submit a service substitution request to increase
bandwidth during the funding year at the existing commitment amount
(i.e., total price of the current bandwidth service). We clarify that
this exception means applicants will be responsible for any
corresponding increase in price for the increased bandwidth for the
remaining period of the funding year. To request the increased
bandwidth (and a potential increased funding commitment) in subsequent
funding years, applicants would need to file a new FCC Form 470 and
seek competitive bids for the increased bandwidth service for the next
application filing window. Applicants that can demonstrate that the
bandwidth and price increase were covered by an existing FCC Form 470
and competitive bidding process would not need to rebid the service.
By providing this limited exception, we allow applicants
flexibility to work with their service providers to obtain the services
they need without risking unexpected changes in program demand or
program abuse. We disagree with certain alternate proposals in the
comments to the 2023 FNPRM. For example, commenters suggest allowing
for a commitment increase using pricing adjusted from the original bid
or contract or allowing applicants to seek new bids mid-funding year.
The E-Rate program relies on fair and open competitive bidding to
ensure that schools and libraries supported by federal universal
service funds receive the highest-quality services at the lowest
available rates, and we do not intend to introduce unnecessary
complexity to these rules. In general, the program does not allow for
mid-funding year, post-commitment funding increases, and we find this
action appropriately allows applicants to increase bandwidth during the
funding year without affecting program demand.
We expect that the competitive bidding portal will help address the
issue of unsolicited spam bids because the bidder will be required to
use the portal to respond the applicant's FCC Form 470 and the
applicant will not be permitted to consider bids received outside of
the portal. Here, we address the treatment of spam or other automated
bid responses that applicants receive until the portal is fully
implemented. In the 2023 FNPRM, the Commission sought comment on the
types of spam and other automated bid responses that are being
generated and sent to the applicant once or soon after their FCC Form
470 is posted, their frequency and quantity, as well as whether to
consider changes to the FCC Form 470 to simplify how to establish
disqualification factors and deadlines. In considering comments, the
Commission is primarily focused on how to ensure applicants carefully
consider all qualified bids in accordance with program requirements.
We expect applicants to retain all bid documentation, including
those applicants consider to be spam bid responses. Commenters raise
concerns about bid responses received that lacked information requested
on the FCC Form 470, such as pricing or information tailored to the
applicant. These responses often appear as generic email solicitations
with a list of all goods and services and contact information to
receive additional information. Applicants may establish
disqualification factors, such as disqualifying if the bid lacks
pricing and other necessary information, in the FCC Form 470, provided
those factors are consistent with applicable Commission rules, and
document when a bid response is disqualified. Although we recognize
that applicants may face a small burden in documenting why a bid was
disqualified or not considered during the bid evaluation, our current
information concerning the quantity and types of bid responses that
applicants seek to discard is limited, and it would be premature to
determine whether particular bid responses do not need to be retained
and the characteristics of such responses.
We also agree with those commenters that assert that bid responses
that do not include pricing information or require the applicant to
contact the solicitor to request pricing for the sought-after services
for the requested time period can be disqualified as non-responsive
even if the applicant does not state in the FCC Form 470 that pricing
information is specifically required. The Commission's rules require
that price be the primary factor in selecting the most cost-effective
service offering. In the 2011 Baltimore City Order, the Bureau provided
guidance that explained that applicants must provide notice--in either
its FCC Form 470 or its RFP--of any disqualification criteria, but also
made clear that price is required to be the primary factor applicants
must consider. When pricing is not expressly provided in the bid
response, the bid response can be disqualified without the applicant
needing to state that fact in its FCC Form 470 or RFP. The applicant
should still retain the bid response and note why the response was
disqualified and not evaluated. Multiple copies of the same spam bid
need only be disqualified once in a bid evaluation. The Commission
encourages the Bureau and USAC to consider implementing system controls
for spam bids during the design and development of the portal.
We next modify our rules to clarify the bids that applicants must
consider in the evaluation process. Applicants must wait at least four
weeks from the posting of the FCC Form 470 before selecting service
providers. Our rules require applicants to carefully consider all bids
received before the bid
[[Page 29061]]
evaluation process has occurred. Even if the minimum 28-day waiting
period has lapsed, applicants should consider all bids received up
until they begin consideration, unless they provided a specific bid
submission deadline and noted that bids received after the deadline
would be disqualified on the FCC Form 470 or RFP document. Commenters
suggest that the bid response deadline, the point after which a bid
could be disqualified for being late-submitted, should be presumed to
be at 11:59 p.m. E.T. on the day before the allowable contract date
(the day after the 28-day waiting period when applicants may select a
service provider), but some also seek the flexibility to consider bids
received after that deadline. We reject this proposal and revise our
rules to make our current interpretation clear that absent a deadline
in the narrative, applicants should consider all bids received before
the evaluation process, which may occur sometime after the minimum 28-
day waiting period. Considering more bids, rather than fewer, benefits
applicants and the E-Rate program. Stakeholders also acknowledge that
``there may be some instances where the applicant may want to consider
all late submitted bid[s],'' noting that rural or remote applicants may
need additional time to receive bids. The benefits of considering
additional bids that may be meritorious and are received prior to the
bid evaluation far outweigh the burden to applicants of considering
them, and to the extent that an applicant finds the burden to be too
high, it may set a bid response deadline in the narrative section of
the FCC Form 470 or an RFP document that could be used to disqualify
all late-submitted bids.
To reduce the number of forms required to be filed by E-Rate
applicants throughout the funding year, we adopt the proposal to remove
the requirement that applicants file the FCC Form 486 (Receipt of
Service Confirmation and Children's Internet Protection Act (CIPA)
Certification Form) for future funding years, beginning in funding year
2028. We find the notification that an applicant makes that their
services have started to be duplicative and we transfer the remaining
CIPA compliance certifications to the FCC Form 471 funding application.
There was strong support from commenters regarding this proposal and no
opposition.
We agree with commenters that state this proposal would reduce
applicant burden by removing duplicative certifications and reducing
the risk of penalties. Requiring applicants to provide notice to USAC
that services have started is duplicative of certifications made on the
FCC Forms 472 and 474, associated invoicing forms. For example, the FCC
Form 472 currently requires certification that ``The discount amounts
listed in this Billed Entity Applicant Reimbursement Form are accurate
and represent charges for eligible services and/or equipment delivered
to and used by eligible schools, libraries, or consortia of those
entities for educational purposes, on or after the service start date
reported on the associated Form 486.'' We also find the limited
benefits of requiring an applicant to certify that services have
started prior to invoicing are outweighed by the burden of filing the
FCC Form 486. Commenters also note that ``any ministerial or clerical
errors made by applicants in the form [486] can result in reduced or
denial of funding thereby causing additional hardship and burdens
without a corresponding benefit.'' The failure to timely file the FCC
Form 486 has real consequences for applicants and service providers,
resulting in loss of funding or additional time spent filing appeals.
For the CIPA certifications that are collected on the FCC Form 486,
we will move the certifications to the funding application form, or the
FCC Form 471. Commenters support this transfer. We do not expect
applicants to have significant challenges with making this annual
certification of compliance earlier in the calendar year.
In order to move the CIPA certification, beginning in funding year
2028, consortia applicants will need to collect the annual FCC Form
479, the Certification by Administrative Authority to Billed Entity of
Compliance with the Children's Internet Protection Act (CIPA) Form,
prior to the Billed Entity certifying a consortium's CIPA compliance on
the FCC Form 471 application. This aligns the timing of the FCC Form
479 with both the FCC Form 471 application filing window and the
existing timeline for applicant entities to demonstrate that a
consortium billed entity applicant has authorization to file on behalf
of its member entities. We recognize that this will be a shift in the
filing procedures of consortia, but decline to preemptively extend this
new FCC Form 479 filing deadline and encourage consortia leads to start
planning for this timeline change in advance of funding year 2028's
application filing window. Relatedly, we decline to adopt a proposal by
SECA to allow school or library applicants that are part of a
consortium to fill out an FCC Form 479 that certifies to CIPA
compliance for multiple funding years, while the consortium lead is
required to certify annually. We find this proposal inconsistent with
the language of section 254(h) of the Communications Act requiring
schools and libraries to annually certify compliance regarding the CIPA
requirements. Although the statute does not prescribe consortium
requirements, we do not agree that an annual certification by the
consortium lead alone is sufficient to meet the plain language
requirement that a school and library annually certify its compliance
with the CIPA requirements to the Commission.
To align program rules with the elimination of FCC Form 486 for
future funding years, we also amend Sec. 54.514(a) of the Commission's
rules, which codifies the invoice filing deadline, to remove the
reference to the FCC Form 486 and replace it with a deadline based on
the date of the funding commitment decision letter. This change permits
applicants and service providers time to invoice in the limited
instances when a funding commitment decision letter is not issued until
after the last day to receive service. In those instances, we direct
USAC to remind applicants in the funding commitment decision letter of
the last day to receive service and to check that services were
delivered during the appropriate funding period before disbursing funds
in response to requests for reimbursement. We also make further changes
to Sec. 54.520 of the Commission's rules to revise references to FCC
Form 486.
Lastly, we direct the Bureau to take all necessary steps to remove
the FCC Form 486 requirement for future funding years, transfer the
annual CIPA compliance certifications to the FCC Form 471, and update
the FCC Forms 472 and 474 (i.e., the invoicing certifications and
forms). In accordance with this section, we also direct the Bureau to
work with USAC to update the EPC, all program notifications (e.g., the
funding commitment decision letter), and all outreach materials
regarding references to the FCC Form 486 or next steps in the funding
commitment process. Because applicants are required to annually certify
compliance with CIPA, the FCC Form 486 must continue be filed until the
CIPA certifications can be made on the FCC Form 471 and the EPC is
updated to account for the new application and invoicing
certifications, as well as to account for any changes to the invoicing
filing system. Applicants with open commitments or approved appeals
from prior funding years will continue to use the FCC Form 486 to
certify CIPA compliance for the appropriate funding year at issue.
[[Page 29062]]
Next, we amend E-Rate program invoicing rules to ease certain
restrictions around the invoice filing deadline. In 2014, the
Commission codified the invoice filing deadline and adopted an
``extraordinary circumstances'' standard for waiving the rule and
granting extensions to ensure the efficient operation of the program,
provide certainty for program participants, and allow USAC and the
Commission to identify unused E-Rate funds that may be carried forward
to future funding years. The rule met those objectives, but some
commenters suggest that additional leeway is needed for a small number
of applicants and service providers that failed to file their requests
for reimbursement or request an extension by the invoice filing
deadline despite navigating most of the E-Rate funding processes. In
the 2023 FNPRM, the Commission sought comment on a proposal to modify
the invoice filing deadline extension rule to allow applicants and
service providers to seek an extension of the original invoice filing
deadline from USAC if the request is made within 15 days of the
original invoice filing deadline. The Commission also directed the
Bureau to hold any waiver requests that were filed within 15 days of
the original invoice filing deadline and sought further comment on
other potential ways to simplify or streamline the invoicing and
disbursement process, including providing a grace period for applicants
and service providers to re-submit timely filed but rejected requests
for reimbursement.
We now amend our rules and adopt the proposal to permit applicants
and service providers under Sec. 54.514(b) of the Commission's rules
to request the single 120-day extension of the original invoice filing
deadline from USAC if the request is made within 15 days of the
original invoice filing deadline. This change will reduce the number of
waiver requests by providing a small window for applicants and service
providers who missed the invoice filing deadline to request additional
time, while maintaining the codified invoice filing deadline rule.
Commenters are broadly supportive of this proposed rule change, with
the Illinois Office of Broadband pointing out that such a rule change
would ``avert the dire consequences'' of failing to request an
extension before the invoice filing deadline. While one commenter
suggests providing a longer period, we conclude that 15 days provides
an adequate window of time for those who missed the initial deadline to
submit an invoice filing extension request. Fifteen days is also
consistent with the 15-day period provided after the USAC reminder to
file the FCC Form 486. Consistent with this new approach, we direct the
Bureau to grant all of the held waiver requests that are pending and
were filed within 15 days of the missed invoice filing deadline, or
that demonstrate an attempt to file a reimbursement request with USAC
within 15 days of the missed invoice filing deadline.
At the same time, we decline to permit applicants and service
providers to submit requests for more than one 120-day extension of the
invoice filing deadline to USAC because such extensions would be
contrary to our efforts to ensure timely invoicing. To the extent
applicants and service providers can demonstrate good cause for an
additional extension, they may consider seeking an additional extension
through a waiver from the Commission. We also decline to direct USAC to
accept requests for reimbursement from applicants and service providers
that are filed within 15 days of the invoice filing deadline date if
USAC has not granted a request for extension filed by the applicant. We
are concerned that this could lead to confusion or ambiguity over the
invoice filing deadline itself. At the same time, we direct USAC to
develop a mechanism to remind applicants and service providers that
have not filed a request for reimbursement or a request for extension
as of the invoice filing deadline to seek an extension within 15 days
of the deadline. We also direct USAC to include instructions in the
reminder on how to request an extension of the invoice filing deadline
consistent with this Order.
We retain the extraordinary circumstances standard for those
seeking a waiver of the invoice filing deadline rule from the
Commission, and we disagree with those parties suggesting that we
eliminate it. The invoice filing deadline provides certainty to
applicants and service providers, as well as to the Commission and
USAC, which relies on the invoicing filing deadline to de-obligate
committed funds efficiently. The extraordinary circumstances standard
incentivizes parties to meet the invoice filing deadline and reduces
uncertainty regarding extensions. The Bureau has waived the invoice
filing deadline rules when warranted, such as when a service provider
acquisition made invoicing a technical impossibility, when the owner of
a service provider and person responsible for invoicing passed away,
and when weather and other similar disasters impeded applicants'
ability to file requests for reimbursement by the invoice filing
deadline. Taken together, we find that the extraordinary circumstances
standard, the new invoice filing reminder mechanism, and the 15-day
period after the invoice filing deadline to request a one-time, 120-day
extension from USAC strike the right balance between flexibility for E-
Rate participants and certainty to ensure the efficient administration
of the E-Rate program.
Next, we adopt a rule providing for a one-time, 60-day grace period
for applicants and service providers to resubmit corrected versions of
requests for reimbursement that were timely filed before the invoice
filing deadline but rejected by USAC. Requests for reimbursement may be
rejected for a variety of reasons and, while applicants and service
providers have the option to appeal a rejected request for
reimbursement to USAC that was timely filed, submitting an appeal is
more burdensome than refiling a corrected request for reimbursement,
especially for smaller schools and libraries that, as NCTA--The
Internet & Television Association (NCTA) identifies in their comments,
are more ``well-versed'' in refiling corrected requests for
reimbursement than in drafting and submitting an appeal. Commenters are
broadly supportive of this change, claiming that it would increase
program efficiency by removing the appeal review process for those
applicants and service providers who timely filed a request for
reimbursement that was rejected. While the Commission initially sought
comment on a 30-day grace period, some commenters suggest a 60-day
grace period is more consistent with the 60-day appeal period. We agree
that aligning these two time periods is the most streamlined option and
will reduce confusion. This will allow applicants and service providers
that can correct the rejected request for reimbursement to refile,
rather than filing an appeal, waiting for a decision, and then being
given an additional period of time to resubmit the request for
reimbursement. We decline USTelecom--The Broadband Association's
(USTelecom) request to allow for invoice filing deadline extensions for
funding requests that have pending invoices for the total amount,
finding it unneeded based on the other changes adopted in this Order
that permit refiling after an invoice is rejected.
As indicated, applicants and service providers also have the option
to appeal a rejected request for reimbursement to USAC, if for some
reason they are unable to correct the discrepancy or
[[Page 29063]]
deficiency that is causing the rejection. We also clarify that the
applicants and service providers that choose to refile the invoice but
receive another rejection can appeal that subsequent rejection to USAC
within 60 days. If the appeal is granted, our rules provide that the
applicant or service provider will have 120 days from the date of the
revised funding commitment decision letter (RFCDL) to refile the
request for reimbursement. If the appeal is denied, the applicant may
file a request for review and/or waiver from the Commission.
Finally, we provide guidance to applicants, service providers, and
USAC, and modify the rule language regarding post-commitment requests
to extend the invoice filing deadline under Sec. 54.514(a)(3). In
2020, the Commission addressed an issue in the program rules that left
applicants with some pending post-commitment requests or appeals unable
to invoice by the invoice filing deadline. To fix the issue, the
Commission amended the invoicing deadline rules to provide 120 days
from the date of a Revised Funding Commitment Decision Letter approving
a post-commitment request or a successful appeal. Such relief is
limited to approvals of timely filed post-commitment requests that
affect invoicing, like service substitutions filed prior to the service
delivery deadline or service provider changes. Reduction or
cancellation of a portion of a funding request would not, for example,
result in additional time to invoice. We amend the rule now to provide
applicants and service providers with clarity without notice and
comment in accordance with the exception to the Administrative
Procedure Act (APA) for procedural rules.
We next update certain E-Rate program's definitions to better
reflect current technology and to eliminate confusion. We also amend
Sec. 54.503(b) of the Commission's to clean up an incorrect cross-
reference and Sec. 54.513(d) to align the document retention period
for equipment transfers with the overall document retention rule.
Wiring Between Buildings. We first adopt language that should make
it easier for multiple schools that share a campus to use category two
support for cabling. In funding year 2017, the Bureau modified the
eligible services list to provide guidance on the classifications of
connections between buildings of a single school. In that guidance, the
Bureau noted that ``[c]onnections between different schools with
campuses located at the same property (e.g., an elementary school and
middle school located on the same property) are considered to be
category one digital transmission services,'' which have separate
competitive bidding requirements. In funding year 2018, the Bureau
further clarified that connections between two schools in a single
building may be classified as a category two service, but rejected
requests to allow the term ``single school campus'' in the definition
of ``internal connections'' as allowing for a single campus containing
multiple schools.
In order to make this cabling eligible under category two, the
Commission sought comment on a proposal to modify the definitions of
``internal connections'' and ``wide area network'' to allow applicants
to seek funding for wiring between different schools (e.g., a high
school and a middle school) in the same contiguous area as an internal
connection. Commenters agree with the need for a change, and we adopt
language to implement it and permit multiple schools located on the
same property to share a single school campus. We decline to replace
``single school'' with the phrase ``E-Rate eligible site(s)'' because
the rule language already includes references to libraries. In
addition, we remove references to ``voice'' in the definition of ``wide
area network'' because voice services are no longer eligible for E-Rate
support. We received no comments opposing this change.
Definition of Consortium. We also adopt our proposal to amend the
definition of ``consortium'' to align it with the definition of
``consortium'' used in the Emergency Connectivity Fund (ECF) program.
Our E-Rate rules allowed ineligible private sector entities to join
consortia only if the pre-discount prices for interstate services are
at tariffed rates. Given that many services have been de-tariffed, we
find the definition adopted for the ECF program is more appropriate and
do not allow private sector entities to participate in E-Rate
consortia. While the American Library Association suggests that we
should continue to allow private entities to participate in a
consortium, we lack sufficient information to ensure universal service
funds are safeguarded with this practice. We also find the ECF
definition to more clearly ensure that E-Rate eligible entities are in
control of the competitive bidding process and compliance with program
rules. Commenters also support this change.
Finally, we amend Sec. 54.503(b) of the Commission's rules to
correct a cross reference to the competitive bidding exemptions in
Sec. 54.503(e). We also amend Sec. 54.513(d) of the Commission's
rules to remove the reference to five years in order to eliminate
confusion and align the document retention period with Sec. 54.516(a),
which requires retention of documents relating to compliance with the
equipment transfer rules for ten years.
III. Order on Reconsideration
Finally, we address SECA's petition for reconsideration and/or
clarification regarding the Commission's discussion in the 2023 E-Rate
Report and Order of whether the shared use of a category two piece of
equipment by a non-instructional facility must be cost allocated from
the request for E-Rate funding for that piece of equipment. The
Commission provided that if the applicant is choosing the most cost-
effective offering for the shared equipment without regard for the non-
instructional facility's use, the applicant is not required to cost
allocate the non-instructional facility's use of the shared equipment.
SECA asserts that the 2023 E-Rate Report and Order and associated
regulation, Sec. 54.502(d)(6), are ambiguous and could be construed to
limit relief only to those non-instructional facilities where the
equipment is physically located, and not to other non-instructional
facilities that use the equipment. We now clarify that the use of
shared equipment by other non-instructional facilities also does not
require cost allocation ``[a]s long as the applicant is choosing the
most cost-effective offering for the shared equipment (e.g., a district
switch) without regard for the [non-instructional facility's] use.'' In
a district-wide budget, we find this cost allocation is unnecessarily
burdensome given the need for shared equipment within school or library
networks to serve their students and library patrons. Accordingly, we
grant SECA's petition and amend Sec. 54.502(d)(6) of the Commission's
rules to make clear that shared equipment does not require cost
allocation of a non-instructional facilities' use.
IV. Procedural Matters
Regulatory Flexibility Act. The Regulatory Flexibility Act of 1980,
as amended (RFA), requires that an agency prepare a regulatory
flexibility analysis for notice and comment rulemakings, unless the
agency certifies that ``the rule will not, if promulgated, have a
significant economic impact on a substantial number of small
entities.'' Accordingly, the Commission has prepared a Final Regulatory
Flexibility Analysis (FRFA) concerning the possible impact of the rule
changes
[[Page 29064]]
contained in this Report and Order on small entities.
As required by the RFA, an Initial Regulatory Flexibility Analyses
(IRFAs) in the Promoting Fair and Open Competitive Bidding in the E-
Rate Program NPRM, released December 2021 and in the Schools and
Libraries Universal Service Support Mechanism, et al., Report and Order
and Further Notice of Proposed Rulemaking, released in July 2023. The
Commission sought written public comment on the IRFAs. No comments were
filed addressing the IRFAs. This FRFA conforms to the RFA and it (or
summaries thereof) will be published in the Federal Register.
The Commission is required by section 254 of the Communications Act
of 1934, as amended, to promulgate rules to implement the universal
service provisions of section 254. On May 8, 1997, the Commission
adopted rules to reform its system of universal service support
mechanisms so that universal service is preserved and advanced as
markets move toward competition. Specifically, under the schools and
libraries universal service support mechanism, also known as the E-Rate
program, eligible schools, libraries, and consortia that include
eligible schools and libraries may receive discounts for eligible
telecommunications services, internet access, and internal connections.
The E-Rate program thus plays an important role in expanding digital
equity and closing the digital divide. Taking steps to close the
digital divide is a top priority for the Commission. The Commission's
E-Rate program provides vital support to schools and libraries allowing
them to obtain affordable, high-speed broadband services and internal
connections, which enables them to connect students and library patrons
to critical next-generation learning opportunities and services.
In the Report and Order, we enhance the E-Rate program's
competitive bidding rules by establishing the bidding portal. Starting
in funding year 2028 (FY 2028), service providers will be required to
respond to applicants' FCC Form 470 by uploading their bids into the
Universal Service Administrative Company (USAC)-managed portal and
applicants will use the portal to finalize their competitive bidding
process. We also create a competitive bidding documentation repository
to store applicants' competitive bidding and contract documentation,
along with the submitted bids. After applicants complete their bid
evaluation process, the evaluation and contract award documentation
must be uploaded into the bidding portal. If there is a delay in
implementing the portal by FY 2028, applicants are required to upload
all competitive bidding documentation (i.e., bids, correspondence with
bidders, evaluation documentation, contracts) when they submit the FY
2028 FCC Form 471 applications. This will ensure the competitive
bidding documentation is collected with the FCC Form 471 beginning in
FY 2028 and stored in the repository should any delays with
implementation occur.
For multi-year contracts, the applicant needs to upload the
contract during the first year of the contract, and then reference the
existing contract record for the multi-year contract for the subsequent
funding years relying on that contract. For existing multi-year
contracts that are currently being used to support funding requests, in
funding year 2029, applicants will be required to upload the associated
bids, competitive bidding, and bid evaluation documents for the multi-
year contract into the portal by the time the applicant submits their
FCC Forms 471 that rely on that contract. For state master contracts,
applicants are required to upload a copy of the state master contract
and the related bid documentation to show how they selected the winning
bidder. When applicants are required to perform a ``mini-bid''
evaluation, based on a multi-award state master contract, the documents
that the applicant prepared, considered, executed or relied on in
connection with the mini-bid process, including those reflecting how
the applicant selected the winning bidder among the available vendors
in the multi-award state master contract, must also be provided to
USAC. For consortium applicants, the consortium lead needs to provide
to USAC the competitive bidding and contract documentation related to
the consortium's FCC Form 471 application on behalf of its members.
The Report and Order establishes (after seeking comment, if
necessary) a bid response template that can optionally be used by
service providers when submitting their bids to an applicant's FCC Form
470. This template will allow applicants to more quickly review and
evaluate bids from service providers and allow applicants to conduct an
apples to apples bid evaluation. This template could also help service
providers formulate bids in a more uniform manner and help USAC better
utilize data analytics as part of its investigative function. In
addition, the bid template can be incorporated into the applicant's FCC
Form 471 application to further streamline the time for completing this
form.
In addition, the Report and Order adopts proposals from the 2023
FNPRM for streamlining the E-Rate program. The Report and Order refines
the process for applicants requesting funding when they are
transitioning from one service provider to another during the funding
year and provide further guidance on cost allocation rules and
procedures in response to stakeholder requests. In the Report and
Order, we also make changes and clarifications to the E-Rate
competitive bidding requirements, including guidance on mid-year
bandwidth increases; when competitive bidding must be restarted;
clarifications around spam bids and bids received after the 28 day
waiting period. We amend our E-Rate invoicing rules to provide greater
flexibility to applicants and service providers that failed to file
requests for reimbursements or extensions by the invoice filing
deadline and provide a streamlined way to refile requests for
reimbursement that were filed timely, but rejected after the invoice
filing deadline. We also adopt the proposal to remove the requirement
that applicants file the FCC Form 486 (Receipt of Service Confirmation
and Children's Internet Protection Act (CIPA) Certification Form) for
future funding years, beginning in FY 2028. We find the notification
that services have started to be duplicative and we transfer the
remaining CIPA compliance certifications to the FCC Form 471 funding
application. In order to move the CIPA certification, beginning in
funding year 2028, consortia applicants will need to collect the annual
FCC Form 479, the Certification by Administrative Authority to Billed
Entity of Compliance with the Children's Internet Protection Act (CIPA)
Form, prior to the Billed Entity certifying a consortium's CIPA
compliance on the FCC Form 471 application. This aligns the timing of
the FCC Form 479 with both the FCC Form 471 application filing window
and the existing timeline for applicant entities to demonstrate that a
consortium billed entity applicant has authorization to file on behalf
of its member entities. Lastly, we update several E-Rate program
definitions.
These actions allow the Commission and USAC to improve efficiencies
in the E-Rate competitive bidding process, thus better ensuring that
limited E-Rate funds are more effectively used by schools and libraries
to connect students and library patrons to critical next-generation
learning opportunities and services. The requirements in the
[[Page 29065]]
Report and Order will allow the Commission and USAC to better identify
and remediate instances of waste, fraud, and abuse associated with the
E-Rate competitive bidding, improve transparency and competition
associated with E-Rate bidding processes, and ensure that limited E-
Rate funds are spent efficiently, including by reducing the number of
denials, rescissions, and recoveries of funding, and audit findings
based on an applicant's failure to retain or otherwise produce
competitive bidding documentation after receiving E-Rate program
funding commitment(s). The requirements will also promote greater
accountability and enhance program integrity as USAC will have timely
access to the competitive bidding and contract documentation associated
with each FCC Form 471 application.
These actions are expected to lessen the burden on applicants in
responding to requests from USAC and auditors for applicants' contract
related documentation, as this documentation will be uploaded into the
bidding portal at the time the applicants have completed their
competitive bid process and signed contracts with their service
providers. As part of the Report and Order, we also direct USAC to
prepare training and outreach materials that will enable applicants and
service providers to successfully participate in the E-Rate program and
avoid common errors that lead to audit findings and improper payments.
This action is also expected to lessen burdens on E-Rate applicants by
ensuring that they have the information and tools they need comply with
program rules and requirements. We also direct USAC, at the direction
of the Bureau, to add guidance on their website and seek stakeholder
feedback on the technical aspects of the development of the portal via
means that will provide constructive input, such as user testing.
Comments expressed concerns that a bidding portal may increase
burden, costs and discourage small schools, libraries, and vendors from
participating. The proposals adopted in this Report and Order, require
applicants to upload documents that they already are required to retain
and produce under our rules and provides a centralized place for
service providers to submit bids and communicate with applicants about
any questions they may have. Currently, to initiate the competitive
bidding process, applicants are required to complete and upload their
FCC Form 470 applications and documentation into EPC. As such, E-Rate
program participants already possess the requisite skills they need to
comply with these new requirements and other than adjusting how this
documentation is shared with the Commission and USAC, the proposals
adopted are not intended to change the way applicants or service
providers conduct their competitive bidding processes. Therefore, we
disagree that the competitive bidding portal will discourage applicants
or service providers from participating in the E-Rate program and that
the burden of the adopted changes will be substantial. To the extent
that the portal does alter the rules, we expect that it leans towards a
more fair, open, and transparent process, resulting in the cost
effectiveness of the proposed services and reduction of waste. The use
of the document repository will aid smaller entities with compliance
with recordkeeping requirements because all the required documents
would be uploaded and available in the portal.
Pursuant to the Small Business Jobs Act of 2010, which amended the
RFA, the Commission is required to respond to any comments filed by the
Chief Counsel for the Small Business Administration (SBA) Office of
Advocacy, and also provide a detailed statement of any change made to
the proposed rules as a result of those comments. The Chief Counsel did
not file any comments in response to the proposed rules in this
proceeding.
The RFA directs agencies to provide a description of, and where
feasible, an estimate of the number of small entities that may be
affected by the adopted rules. The RFA generally defines the term
``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. A ``small business concern'' is one which: (1) is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the SBA. The SBA
establishes small business size standards that agencies are required to
use when promulgating regulations relating to small businesses;
agencies may establish alternative size standards for use in such
programs, but must consult and obtain approval from SBA before doing
so.
Our actions, over time, may affect small entities that are not
easily categorized at present. We therefore describe three broad groups
of small entities that could be directly affected by our actions. In
general, a small business is an independent business having fewer than
500 employees. These types of small businesses represent 99.9% of all
businesses in the United States, which translates to 34.75 million
businesses. Next, ``small organizations'' are not-for-profit
enterprises that are independently owned and operated and are not
dominant in their field. While we do not have data regarding the number
of non-profits that meet that criteria, over 99 percent of nonprofits
have fewer than 500 employees. Finally, ``small governmental
jurisdictions'' are defined as cities, counties, towns, townships,
villages, school districts, or special districts with populations of
less than fifty thousand. Based on the 2022 U.S. Census of Governments
data, we estimate that at least 48,724 out of 90,835 local government
jurisdictions have a population of less than 50,000.
The rules adopted in the Report and Order will apply to small
entities in the industries identified in the chart by their six-digit
North American Industry Classification System (NAICS) codes and
corresponding SBA size standard. Based on currently available U.S.
Census data regarding the estimated number of small firms in each
identified industry, we conclude that the adopted rules will impact a
substantial number of small entities. Where available, we also provide
additional information regarding the number of potentially affected
entities in the identified industries.
Table 1--2022 U.S. Census Bureau Data by NAICS Code
----------------------------------------------------------------------------------------------------------------
Regulated industry (footnotes
specify potentially affected SBA size Total small
entities within a regulated NAICS code standard Total firms firms % small firms
industry where applicable)
----------------------------------------------------------------------------------------------------------------
Telephone Apparatus 334210 1,250 employees. 155 136 87.74
Manufacturing.
Radio and Television 334220 1,250 employees. 155 136 87.74
Broadcasting and Wireless
Communications Equip
Manufacturing.
Wired Telecommunications 517111 1,500 employees. 3,403 3,027 88.95
Carriers.
[[Page 29066]]
Wireless Telecommunications 517112 1,500 employees. 1,184 1,081 91.30
Carriers (except Satellite).
All Other Telecommunications.. 517810 $40 million..... 1,673 1,007 60.19
Libraries and Archives........ 519210 $21 million..... 2,030 1,891 93.15
Schools....................... 611110 $20 million..... 14,088\1\ 14,087 99.99
----------------------------------------------------------------------------------------------------------------
Table 2--Telecommunications Service Provider Data
----------------------------------------------------------------------------------------------------------------
2024 Universal service monitoring report telecommunications SBA size standard (1500 employees)
service provider data (data as of December 2023) -----------------------------------------------
----------------------------------------------------------------- Total number
FCC form 499A Small firms (%) Small
Affected entity filers entities
----------------------------------------------------------------------------------------------------------------
Wired Telecommunications Carriers............................... 4,682 4,276 91.33
Wireless Telecommunications Carriers (except Satellite)......... 585 498 85.13
Wireless Telephony.............................................. 326 247 75.77
----------------------------------------------------------------------------------------------------------------
Table 3--E-Rate Funding Data
------------------------------------------------------------------------
Number receiving E-Rate
Affected Entity funding commitments
------------------------------------------------------------------------
Schools.................................. 101,522
Libraries................................ 11,671
------------------------------------------------------------------------
The RFA directs agencies to describe the economic impact of adopted
rules on small entities, as well as projected reporting, recordkeeping
and other compliance requirements, including an estimate of the classes
of small entities which will be subject to the requirement and the type
of professional skills necessary for preparation of the report or
record.
The purpose of the Report and Order is to strengthen the
competitive bidding rules for the E-Rate program by requiring
applicants to submit their competitive bidding and contract related
documentation into the competitive bidding portal, and also to
streamline the E-Rate administrative process, as detailed in section A.
Small entity applicants are already required to retain this
documentation under Sec. 54.516(a) of the Commission's rules.
Therefore, we expect that the burden of uploading the documentation
will not be substantial. Under our adopted rules, once an applicant
uploads the competitive bidding documentation into the bidding portal,
applicants will be able to access this documentation when needed and
provide it to other local, state, or federal agencies with jurisdiction
over the applicant as necessary. Thus, by preserving this documentation
in the bidding portal and repository, the portal will assist in
ensuring compliance with the competitive bidding recordkeeping and
production requirements set forth in Sec. 54.516(a)-(b) of the
Commission's rules. In adopting this requirement, we do not make any
modifications to Sec. 54.516(a) of the Commission's rules. However,
applicants and service providers do not need to separately retain
documents that are also uploaded to the competitive bidding portal and
can rely on this documentation to meet their document retention
requirements. Moreover, the new process reduces the likelihood that
small entity applicants will receive, and respond to, outreach
communications from USAC and its auditors, related to their compliance
with E-Rate program's competitive bidding rules.
Under our new rules, applicants can continue to hold conferences or
other meetings. Questions and answers that were provided during the
meeting and are relevant to the competitive bidding process must be
uploaded to the competitive bidding portal within 72 hours to ensure
that all potential bidders have access to the same information, and the
competitive bidding process is fair and open to all bidders. A summary
of all meetings held between the applicant and any potential bidders
must be uploaded to the competitive bidding portal by the time the FCC
Form 471 is filed. This affords applicants the ability to hold these
important conferences and walkthroughs without raising a concern about
certain bidders having conversations with an applicant in a manner that
gives special treatment. Internal communications between the
applicant's bid evaluation team do not need to uploaded, but the final
bid evaluation results must be uploaded. The documentation included in
the portal should be similar to the documentation applicant and service
providers are already required to retain and produce under the
Commission's rules.
We estimate that the cost of creating, implementing, and managing
the competitive bidding portal for the first year of operation will be
under $750,000, followed thereafter by annual operating costs of around
$100,000 to $200,000, which together represents a comparatively low
cost to take measures to protect a program where the funding cap in
funding year 2026 is $5.2 billion. Notably, the competitive bidding
portal will be integrated into the existing EPC system, minimizing
costs to both the Universal Service Fund and stakeholders, while
ensuring that E-Rate program participants will be able to quickly
adjust to the new requirements.
Further, the creation of a standardized bid template will reduce
the burden on small applicants to compare bids as compared to existing
E-Rate processes.
[[Page 29067]]
We also direct USAC to enhance its E-Rate training and outreach
materials for use by applicants that will help applicants avoid common
errors that lead to audit findings and improper payments. Also, the
improvements made in the Report and Order to streamline the E-Rate
administrative process may result in new or reduced reporting,
recordkeeping, and compliance obligations for small entities. The
Commission's rule modifications will simplify the E-Rate application
and reimbursement process for small entities. For example, if a small
entity wishes to transition service during a funding year, the
applicant may request a funding commitment for a partial year of both
services and then file a request for a post commitment change once the
applicant knows the cutover dates. We also amend our rules to allow
small applicants and service providers to request a single 120-day
extension of the original invoice filing deadline if the request is
made within 15 days of the original invoice filing deadline. We also
adopt the proposal to remove the requirement that applicants file the
FCC Form 486 for future funding years, beginning in FY 2028. The
Commission anticipates these modifications will not require small
entities to hire professionals to comply with the new rules, will have
modest cost implications and should reduce compliance requirements for
small entities that may have smaller staff and fewer resources. As
such, we expect that the Commission's rule modifications will reduce
the economic impact of current compliance obligations on small
entities.
The RFA requires an agency to provide, ``a description of the steps
the agency has taken to minimize the significant economic impact on
small entities . . . including a statement of the factual, policy, and
legal reasons for selecting the alternative adopted in the final rule
and why each one of the other significant alternatives to the rule
considered by the agency which affect the impact on small entities was
rejected.''
In the Report and Order, we take steps to minimize the economic
impact on small entities through the rule changes that we have adopted.
In considering whether to establish a competitive bidding and
repository portal, we disagree with commenters that believe the portal
will be unnecessary or substantially burdensome. Though the portal will
require new or additional document submissions, we find that these
obligations are outweighed by the Commission's goals of strengthening
the E-Rate program by reducing the potential for waste, fraud, and
abuse. As an initial matter, we expect that any burden on applicants to
upload documentation as specified by the new rules will be offset, in
part or in full, by the lessened burden on applicants to consider and
prepare responses to outreach communications from USAC, and its
auditors, related to their compliance with the E-Rate program's rules.
Moreover, we take a number of additional steps in the Report and Order
to provide small entity E-Rate applicants with maximum flexibility in
reducing their potential costs of compliance with the document upload
requirements. For multi-year contracts, our rules require to applicants
to provide the required competitive bidding and contract documentation
only once, thus avoiding additional burdens on applicants for uploading
duplicative competitive bidding and contract documentation for the
remainder of the contract's term. This approach minimizes burdens on
these applicants as compared to an alternative potential requirement
that they upload this documentation with each year's funding cycle. For
existing multi-year contracts that are currently being used to support
funding requests, in funding year 2029, applicants will be required to
upload the associated bids, competitive bidding, and bid evaluation
documents for the multi-year contract into the portal by the time the
applicant submits their FCC Forms 471 that rely on that contract. For
consortium applicants, we only require that the consortium leader
upload the competitive bidding and contract documentation related to
the consortium's FCC Form 471 application on behalf of its members,
thus avoiding an additional burden on each member to perform a similar
upload. Removing the requirement that applicants file the FCC Form 486
will also lessen the burden on applicants.
In the Report and Order, we considered the alternative proposal to
adopt a repository without the proposed competitive bidding portal.
However, implementing a repository alone would fail to address Office
of Inspector General's and the United States Department of Justice's
concerns with bid collusion and bid alteration. Additionally, in the
Report and Order, we also consider a number of alternatives designed to
streamline the E-Rate administrative process, many of which result in
rule changes that will minimize the economic impact for small
applicants to the E-Rate program. For example, the Commission aims to
alleviate burdensome cost allocation by not requiring an applicant to
cost allocate the non-instructional facility's use of shared equipment.
This provision should eliminate unnecessary burden for small entities,
given the need for shared equipment within school or library networks
to serve their students and library patrons. We clarify our cost
allocation rules to limit the burden on all applicants, including small
entities, clarifying that if at least 90% of an applicant's requested
category one data or internet service is being used for eligible
purposes, the remaining ineligible portion is presumed to be ancillary
and, therefore, cost allocation is not required. We also update our
invoicing rules to provide a 15-day period after the original invoice
filing deadline for applicants and service provides to request a single
120-day extension of the original invoice filing deadline, instead of
allowing multiple extensions because many requests are filed in a
timely manner, and providers with special circumstances may request a
waiver from the Commission. Such a change will provide small entities
that miss the deadline by a short period of time with the opportunity
to still receive E-Rate funding if they fail to file their requests for
reimbursement by the deadline.
Moreover, in the Report and Order, we direct USAC, with oversight
from the Wireline Competition Bureau (WCB) and the Office of the
Managing Director (OMD), to create a bid response template (after
seeking comment, if necessary) for service providers to use when
responding to applicants' FCC Forms 470. The optional use of this bid
response template by service providers will standardize bid responses
that applicants receive and make it easier for applicants to compare
bids, thus reducing their burdens for conducting competitive bidding as
required by E-Rate rules. Applicants choosing to use the template can
require potential bidders to use the template bid response form by
stating that use of the template is a requirement for responding to its
FCC Form 470. We will determine in the future whether to require
mandatory use of a standardized bid response form by service providers.
We also direct USAC to enhance its training and outreach materials to
better assist E-Rate participants with complying with the Commission's
competitive bidding rules. These enhanced training and outreach
materials will reduce applicant confusion thus reducing burdens on
applicants for complying with E-Rate rules. We also direct USAC, at the
direction of the Bureau, to add guidance on their website and seek
stakeholder feedback on the technical aspects of the
[[Page 29068]]
development of the portal via means that will provide constructive
input, such as user testing. Further, we direct the Bureau to take into
account when the new portal was adopted when considering requests for
waiver, particularly for procedural or administrative errors by smaller
or more rural participants.
Finally, to the extent that these rules introduce new compliance
burdens on applicants in some respects, those burdens are outweighed by
the benefits to applicants. These rules will better ensure that
applicants receive and retain funding from the E-Rate program by
reducing the number of denials, rescissions, and recoveries of funding,
as well as by reducing audit findings based on an applicant's failure
to retain or otherwise produce competitive bidding documentation after
receiving E-Rate program funding commitment(s).
The Commission will send a copy of the Report and Order, including
this Final Regulatory Flexibility Analysis, in a report to Congress
pursuant to the Congressional Review Act. In addition, the Commission
will send a copy of the Report and Order, including this Final
Regulatory Flexibility Analysis, to the Chief Counsel for the SBA
Office of Advocacy and will publish a copy of the Report and Order, and
this Final Regulatory Flexibility Analysis (or summaries thereof) in
the Federal Register.
Paperwork Reduction Act. This Report and Order contains new
information collection requirements subject to the Paperwork Reduction
Act of 1995 (PRA), Public Law 104-13. It will be submitted to the
Office of Management and Budget (OMB) for review under section 3507(d)
of the PRA. OMB, the general public, and other Federal agencies will be
invited to comment on the revised information collection requirements
contained in this proceeding. In addition, we note that pursuant to the
Small Business Paperwork Relief Act of 2002, Public Law 107-198, the
Commission previously sought specific comment on how it might further
reduce the information collection burden on small business concerns
with fewer than 25 employees. We provide guidance to applicants,
service providers, and USAC, and modify the rule language regarding
post-commitment requests to extend the invoice filing deadline under
Sec. 54.514(a)(3). In 2020, the Commission addressed an issue in the
program rules that left applicants with some pending post-commitment
requests or appeals unable to invoice by the invoice filing deadline.
To fix the issue, the Commission amended the invoicing deadline rules
to provide 120 days from the date of a Revised Funding Commitment
Decision Letter approving a post-commitment request or a successful
appeal. Such relief is limited to approvals of timely filed post-
commitment requests that affect invoicing, like service substitutions
filed prior to the service delivery deadline or service provider
changes. Reduction or cancellation of a portion of a funding request
would not, for example, result in additional time to invoice. We amend
the rule now to provide applicants and service providers with clarity
without notice and comment in accordance with the exception to the APA
for procedural rules. The updated rule will become effective upon
publication in the Federal Register.
Congressional Review Act. The Commission has determined, and the
Administrator of the Office of Information and Regulatory Affairs,
Office of Management and Budget, concurs that the rules are non-major
under the Congressional Review Act, 5 U.S.C. 804(2). The Commission
will send a copy of this Report and Order and Order on Reconsideration
to Congress and the Government Accountability Office pursuant to 5
U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of
the Report and Order and Order on Reconsideration, including the FRFA,
to the Chief Counsel for Advocacy of the Small Business Administration
pursuant to the Small Business Regulatory Enforcement Fairness Act of
1996.
V. Ordering Clauses
Accordingly, it is ordered, that pursuant to the authority
contained in sections 1 through 4, 201-202, 254, 303(r), and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-202,
254, 303(r), and 403, this Report and Order and Order on
Reconsideration IS ADOPTED and effective thirty (30) days after
publication in the Federal Register.
It is further ordered, that pursuant to the authority contained in
sections 1 through 4, 201 through 202, 254, 303(r), and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-202,
254, 303(r), and 403, Part 54 of the Commission's rules, 47 CFR part
54, is AMENDED, and such rule amendments shall be effective thirty (30)
days after publication in the Federal Register, except for Sec. Sec.
54.503(c)(4)-(6) and 54.504(d)(1)(iv), which contains information
collection requirements that are not effective until approved by the
Office of Management and Budget. The FCC will publish a document in the
Federal Register announcing the effective date for these sections.
It is further ordered, pursuant to the authority contained in
section 405 of the Communications Act of 1934, as amended, 47 U.S.C.
405, and Sec. 1.429 of the Commission's rules, 47 CFR 1.429, that the
Petition for Reconsideration and/or Clarification of the State E-rate
Coordinators' Alliance on September 6, 2023, IS GRANTED.
List of Subjects in 47 CFR Part 54
Communications common carriers, Hotspots, Internet, Libraries,
Reporting and recordkeeping requirements, Schools, Telecommunications,
Telephone.
Federal Communications Commission.
Aleta Bowers,
Federal Register Liaison Officer, Office of the Secretary.
Final Rules
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR part 54 as follows:
PART 54--UNIVERSAL SERVICE
0
1. The authority citation for part 54 continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220,
229, 254, 303(r), 403, 1004, 1302, 1601-1609, and 1752, unless
otherwise noted.
0
2. Amend Sec. 54.500 by revising the definitions of ``Consortium,''
``Internal connections,'' and ``Wide area network'' to read as follows:
Sec. 54.500 Terms and definitions.
* * * * *
Consortium. A ``consortium'' is any local, statewide, regional, or
interstate cooperative association of schools and/or libraries eligible
for support under this Subpart that seeks competitive bids for eligible
services or funding for eligible services on behalf of some or all of
its members. A consortium may also include health care providers
eligible under subpart G of this part, and public sector (governmental)
entities, including, but not limited to, state colleges and state
universities, state educational broadcasters, counties, and
municipalities, although such entities are not eligible for support.
* * * * *
Internal connections. A service is eligible for support as a
component of an institution's ``internal connections'' if such service
is necessary to transport or distribute broadband within one or
[[Page 29069]]
more instructional buildings of a single school campus or within one or
more non-administrative buildings that comprise a single library
branch. Multiple schools with the same billed entity may share a single
school campus.
* * * * *
Wide area network. For purposes of this subpart, a ``wide area
network'' is a data network that provides connections from one or more
computers within an eligible school or library to one or more computers
or networks that are external to such eligible school or library.
Excluded from this definition is a data network that provides
connections between or among instructional buildings of a single school
campus or between or among non-administrative buildings of a single
library branch.
0
3. Amend Sec. 54.502 by revising paragraph (d)(6) to read as follows:
Sec. 54.502 Eligible services.
* * * * *
(d) * * *
(6) Non-instructional buildings. Support is not available for
category two services provided to or within non-instructional school
buildings or separate library administrative buildings unless those
category two services are essential for the effective transport of
information to or within one or more instructional buildings of a
school or non-administrative library buildings, or the Commission has
found that the use of those services meets the definition of
educational purpose, as defined in Sec. 54.500. When applying for
category two support for eligible services shared with or within a non-
instructional school building or library administrative building, the
applicant shall not be required to deduct the cost of a non-
instructional building's use of the category two services or equipment.
* * * * *
0
4. Delayed indefinitely, amend Sec. 54.503 by revising paragraphs (b)
and (c)(4) and adding paragraphs (c)(5) and (6) to read as follows:
Sec. 54.503 Competitive Bid Requirements.
* * * * *
(b) Competitive bid requirements. Except as provided in paragraph
(e) of this section, an eligible school, library, or consortium that
includes an eligible school or library shall seek competitive bids,
pursuant to the requirements established in this subpart, for all
services eligible for support under Sec. 54.502. These competitive bid
requirements apply in addition to state and local competitive bid
requirements and are not intended to preempt such state or local
requirements.
(c) * * *
(4) After posting on the Administrator's website an eligible
school, library, or consortium FCC Form 470, the Administrator shall
send confirmation of the posting to the entity requesting service.
Providers of services shall not respond to a request for services
directly to the requesting entity and shall not reveal responses to
other parties, including other providers of services, but shall submit
responses through a secured website portal (``bidding portal'' or ``bid
portal'') managed by the Administrator. The eligible school, library,
or consortium shall then wait at least four weeks from the date on
which its description of services is posted on the Administrator's
website before making commitments with the selected providers of
services. The confirmation from the Administrator shall include the
date after which the requestor may sign a contract with its chosen
provider(s). The entity must consider all bid responses received prior
to their bid evaluation, unless it has set a specific bid deadline
within the controlling FCC Form 470 or any associated Requests for
Proposal.
(5) Service providers shall respond to requests for services
through a secured website portal (``bidding portal'' or ``bid portal'')
managed by the Administrator, by submitting bids into the portal.
Service providers will not have access to the bids of other service
providers. If permitted under state/local law, service providers may
anonymously submit questions or other inquiries to applicants through
the bidding portal, to which applicants must publicly respond during
the competitive bidding process. Applicants may hold meetings or
conferences with interested bidders, so long as applicants post new
questions and answers from the meeting/conference relevant to the
competitive bidding process no later than 72 hours after the meeting. A
summary of all meetings and conferences held with interested bidder(s)
must be submitted by the time the FCC Form 471 is filed. Otherwise,
communications between service providers and applicants or any
representative thereof related to the services and products requested
or the competitive bidding process must be conducted in the bidding
portal from the date the FCC Form 470 is posted to the contract award.
This requirement does not prohibit service providers from submitting
bids or having communications with the applicant that are required
under state/local law. The bids must be identical and copies of such
communications must be submitted to the bidding portal by the time the
FCC Form 471 is filed. All potential program bidders and service
providers must have access to the same information and must be treated
in the same manner throughout the entire procurement process.
(6) After making commitments with the selected providers of
services, eligible schools, libraries, or consortia shall upload the
following before submitting an FCC Form 471 for the services:
(i) Competitive bidding documents. Applicants must submit
documentation to support their certifications that they have carefully
considered and selected the most cost-effective bid with price being
the primary factor considered, including the bid evaluation criteria,
and the following documents (as applicable, and to the extent not
already captured and stored as part of competitive bidding process):
Completed bid evaluation worksheets or matrices; explanation for any
disqualified bids; a list of people who evaluated the bids (along with
their title/role/relationship to the applicant), memos, board minutes,
or similar documents related to the service provider selection/award;
copies of notices to winners; and any correspondence with the service
providers during the competitive bidding (i.e., from the date the FCC
Form 470 is filed to the contract award date), evaluation, and award
phase of the process that occurred outside of the bidding portal.
(ii) Contracts or other documentation. All applicants must submit a
contract or other documentation, as applicable, that clearly identifies
the service provider(s) selected; costs for which support is being
requested; and the term of the service agreement(s) if applicable
(i.e., if services are not being provided on a month-to-month basis).
For services provided under contract, the applicant must submit a copy
of the contract signed and dated after the Allowable Contract Date
established pursuant to paragraph (c)(4) in this section by the
applicant. If the services are provided by another legally binding
agreement or on a month-to-month basis, the applicant must submit a
bill, service offer, letter, or similar document from the service
provider that provides the required information.
* * * * *
0
5. Delayed indefinitely, amend Sec. 54.504 by revising paragraphs
(d)(1)(iv) and adding paragraph (g) to read as follows:
[[Page 29070]]
Sec. 54.504 Requests for Services.
* * * * *
(d) * * *
(1) * * *
(iv) The applicant certifies that the requested change is either
within the scope of the controlling FCC Form 470, including any
associated Requests for Proposal, for the original services, or is the
result of an unanticipated need for additional bandwidth and the
applicant will seek competitive bids prior to the next funding year if
the applicant plans to continue to receive the additional bandwidth.
* * * * *
(g) Transition of services during a funding year. (1) The
Administrator shall grant a request by an applicant to modify the
service start and end dates, including in the event that a service
start and end date modification results in an upward change in the pre-
discount price for the supported service provided during the funding
year for the transitioning recurring services identified on its FCC
Form 471, where:
(i) The applicant filed partial funding year requests for the
supported service from both providers (or service offerings, in the
case of a transition to a different service from the same provider)
during the application filing window using the best estimates of the
transition dates, provided there is no overlap in dates,
(ii) The applicant indicated on the FCC Form 471 that the requests
were for a transition of service, and
(iii) There are available funds below the schools and libraries
universal service support program funding cap.
0
6. Amend Sec. 54.513 by revising paragraph (d) to read as follows:
Sec. 54.513 Resale and transfer of equipment.
* * * * *
(d) Eligible services and equipment components of eligible services
purchased at a discount under this subpart shall not be transferred,
with or without consideration of money or any other thing of value, for
a period of three years after purchase, except that eligible services
and equipment components of eligible services may be transferred to
another eligible school or library in the event that the particular
location where the service originally was received is permanently or
temporarily closed, or is part of the same eligible school district or
library system as the location receiving the eligible services or
equipment components of eligible services. If an eligible service or
equipment component of a service is transferred pursuant to this
paragraph, both the transferor and recipient must maintain detailed
records documenting the transfer and the reason for the transfer.
0
7. Amend Sec. 54.514 by revising paragraphs (a) and (b) to read as
follows:
Sec. 54.514 Payment for discounted services.
(a) Invoice filing deadline. Invoices must be submitted to the
Administrator by the latest of:
(1) 120 days after the last day to receive service;
(2) 120 days after the date of the Funding Commitment Decision
Letter;
(3) 120 days after the date of the Revised Funding Commitment
Decision Letter approving a post-commitment request made by the
applicant or service provider or a successful appeal of a previously
denied or reduced funding request that is impacting requests for
reimbursement, whichever is latest; or
(4) 60 days after the date of the first notification of a denial or
reduction of a timely filed request for reimbursement.
(b) Invoice filing deadline extension. Service providers or billed
entities may request a one-time extension of the invoicing filing
deadline if such request is filed before, or within 15 days after, the
deadline calculated pursuant to paragraph (a) of this section. The
Administrator shall grant a 120-day extension of the invoice filing
deadline calculated in paragraph (a) of this section if it is timely
requested. The Commission may find good cause for a waiver of the
invoice filing deadline extension rule and a one-time extension of 120
days from the original invoicing deadline for requests for waiver where
the Petitioner can demonstrate that they attempted to file for an
extension within 15 days of the original invoice filing deadline.
* * * * *
0
8. Amend Sec. 54.520 by revising introductory text of paragraph
(c)(1), paragraph (c)(1)(iii), introductory text of paragraph (c)(2),
paragraphs (c)(2)(iii), (c)(3)(ii) and (iii), and (g) to read as
follows:
Sec. 54.520 Children's internet Protection Act certifications
required from recipients of discounts under the federal universal
service support mechanism for schools and libraries.
* * * * *
(c) * * *
(1) Schools. The billed entity for a school that receives discounts
for internet access or internal connections must certify on FCC Form
471 that an internet safety policy is being enforced. If the school is
an eligible member of a consortium but is not the billed entity for the
consortium, the school must certify instead on FCC Form 479
(``Certification to Consortium Leader of Compliance with the Children's
internet Protection Act'') that an internet safety policy is being
enforced.
* * * * *
(iii) A school must satisfy its obligations to make certifications
by making one of the following certifications required by paragraph
(c)(1) of this section on FCC Form 471:
(A) The recipient(s) of service represented in the Funding Request
Number(s) on this Form 471 has (have) complied with the requirements of
the Children's internet Protection Act, as codified at 47 U.S.C. 254(h)
and (l).
(B) Pursuant to the Children's internet Protection Act, as codified
at 47 U.S.C. 254(h) and (l), the recipient(s) of service represented in
the Funding Request Number(s) on this Form 471, for whom this is the
first funding year in the federal universal service support mechanism
for schools and libraries, is (are) undertaking such actions, including
any necessary procurement procedures, to comply with the requirements
of CIPA for the next funding year, but has (have) not completed all
requirements of CIPA for this funding year.
(C) The Children's Internet Protection Act, as codified at 47
U.S.C. 254(h) and (l), does not apply because the recipient(s) of
service represented in the Funding Request Number(s) on this Form 471
is (are) receiving discount services only for telecommunications
services.
(2) Libraries. The billed entity for a library that receives
discounts for internet access and internal connections must certify, on
FCC Form 471, that an internet safety policy is being enforced. If the
library is an eligible member of a consortium but is not the billed
entity for the consortium, the library must instead certify on FCC Form
479 (``Certification to Consortium Leader of Compliance with the
Children's internet Protection Act'') that an internet safety policy is
being enforced.
* * * * *
(iii) A library must satisfy its obligations to make certifications
by making one of the following certifications required by paragraph
(c)(2) of this section on FCC Form 471:
(A) The recipient(s) of service represented in the Funding Request
Number(s) on this Form 471 has (have) complied with the requirements of
the Children's internet Protection Act, as codified at 47 U.S.C. 254(h)
and (l).
(B) Pursuant to the Children's internet Protection Act, as codified
at 47 U.S.C. 254(h) and (l), the recipient(s) of service
[[Page 29071]]
represented in the Funding Request Number(s) on this Form 471, for whom
this is the first funding year in the federal universal service support
mechanism for schools and libraries, is (are) undertaking such actions,
including any necessary procurement procedures, to comply with the
requirements of CIPA for the next funding year, but has (have) not
completed all requirements of CIPA for this funding year.
(C) The Children's Internet Protection Act, as codified at 47
U.S.C. 254(h) and (l), does not apply because the recipient(s) of
service represented in the Funding Request Number(s) on this Form 471
is (are) receiving discount services only for telecommunications
services.
(3) * * *
(ii) The billed entity for a consortium, as defined in paragraph
(a)(3) of this section, must make one of the following two
certifications on FCC Form 471: ``I certify as the Billed Entity for
the consortium that I have collected duly completed and signed Forms
479 from all eligible members of the consortium.''; or I certify ``as
the Billed Entity for the consortium that the only services that I have
been approved for discounts under the universal service support on
behalf of eligible members of the consortium are telecommunications
services, and therefore the requirements of the Children's internet
Protection Act, as codified at 47 U.S.C. 254(h) and (l), do not
apply.''; and
(iii) The billed entity for a consortium, as defined in paragraph
(a)(3) of this section, who filed an FCC Form 471 as a ``consortium
application'' and who is also a recipient of services as a member of
that consortium must select one of the certifications under paragraph
(c)(3)(i) of this section on FCC Form 471.
* * * * *
(g) Funding year certification deadlines. For Funding Year 2003
through Funding Year 2027, billed entities shall provide one of the
certifications required under paragraph (c)(1), (c)(2) or (c)(3) of
this section on an FCC Form 486 in accordance with the prior existing
program guidelines established by the Administrator. For Funding Year
2028 and for subsequent funding years, billed entities shall provide
one of the certifications required under paragraph (c)(1), (c)(2), or
(c)(3) of this section on an FCC Form 471.
* * * * *
[FR Doc. 2026-10011 Filed 5-18-26; 8:45 am]
BILLING CODE 6712-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on May 19, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.