Shop Smart for E-Rate Services & Equipment

Amy McLaughlin, Sabrina Carson

ACPE 2016

Presentation Overview

Your takeaways from today – The basic timeline and process for the program

– What types of products and services are eligible for funding

– How to promote 470s and RFPs with ORPIN

– New funding opportunities with e-Rate 2.0

• Applying for C1 Lit/Dark Fiber Special Construction

• Amortization of district share of Special Construction

• Modulating Hardware for C1 Dark Fiber

– A better understanding of the Category 2 Equipment Funding process and best practices

E-Rate Timeline and Process

10,000 foot summary • The e-Rate program was created by the FCC and is administered by

the Universal Service Administrative Company (USAC). • The program provides a discount on Internet Access (Category 1 or

C1) and Networking Equipment/Maintenance (Category 2 or C2) for Schools and Libraries.

• $3.9B funding cap for all services each funding year (July 1 – June 30)

• A district’s discount rate is determined by the percentage of students in the district that qualify for free or reduced price lunch. Rural districts are eligible for an additional 5% to 10% discount compared with urban areas. Discounts range from 20% to 90% of eligible project costs.

E-Rate Timeline and Process

10,000 foot summary cont. • C1 has no limit on funding (aside from funding cap

above). C2 is fixed and based on enrollment and discount rate, which covers a 5 year period (Year 1 was 2015).

• Only certain products and services are eligible in each category.

• Applicants must use specific forms and processes to successfully complete applications.

• Discounts are received either as reimbursements or as discounted service provider bills.

E-Rate Timeline and Process

Form 470 Overview Lists desired products and services and requests bids from service providers.

• Must be open for a minimum of 28 days, but can be open for longer if needed or required by local procurement policy.

• Several specific requirements for bid scoring and vendor selection.

• If local policy requires RFP, it must be filed concurrently with 470 for the 28 day min.

• Service Providers that submit bids are selected based on a bid scoring matrix that is compliant with e-Rate rules.

E-Rate Timeline and Process

Form 470 Overview cont. • Service Providers that submit bids are selected based on a bid scoring

matrix that is compliant with e-Rate rules.

• Fiber/Special Construction projects require additional components, such as additional RFP language and TCO analyses when applying for Dark Fiber.

• The 470 can be filed any time of year, but is most commonly filed in the mid-late fall for services beginning the following July 1.

• Multi-year contracts are allowed. ALL C2 equipment and services require a contract to be eligible for e-Rate.

• Filing of a 470 does not mean that an applicant MUST purchase the products or services. Applicant can abandon project if it doesn’t meet their needs/budget.

E-Rate Timeline and Process

Form 471 Overview Document that formally requests funding assistance. Lists selected service providers, projected costs, and recipients of service.

– May only be filed during the filing window, determined each year by the FCC. Historically starts in late December or early January, and ends in mid-late March for services starting on July 1. The 2016 late filing window is an anomaly.

– Any contracts for services MUST be signed prior to filing the 471, but should ALWAYS include exit clause in the event of funding failure.

– A single Form 471 can include MANY funding requests. Each Funding Request Number (FRN) will be for a single provider for one or more services. It is possible to have multiple FRNs for the same provider for different service types.

E-Rate Timeline and Process

Form 471 Overview – Form 471 must be filed by 8:59:59PM PST on the deadline date to be

considered for funding. Once filed, USAC will review the application for eligibility and accuracy before making a funding decision. There is no set timeline for review/commitment, so applicants must prepare for the possibility that the review will not be timely. Commitment may occur after the start of services, or even after the END of services in rare cases.

– If state match is intended to be used, it must be indicated on the 471. Indicating a state match does NOT require the applicant to use the matching funds, and there is no penalty for choosing not to use the match after the fact.

– Filing of a 471 (and subsequent funding of said form) does NOT in and of itself require the applicant to purchase services. If there is no contract in place, or the contract is severable, the applicant can abandon the application and “return” the allocated funds to USAC for distribution or carry-forward.

Category One

– Fiber (Lit and Dark)

– Self-Provisioned Fiber

– Wireless Service (e.g. microwave)

– Satellite Services

– DS-1, DS-2, DS-3

Eligible Data Transmission Services and Internet Access

• Ethernet

• T-1, T-3, Fractional T-1

• Cable Modem

• DSL

• ISDN

• MPLS

Some examples include:

Category Two

• Access points

• Cabling

• Caching

• Firewalls

• Switches

• Routers

• Racks

• UPS

• Wireless LAN Controllers

• Improvements, upgrades and software necessary to support eligible broadband internal connections components

Eligible Internal Connections

Strategies for Promoting 470s and RFPs

• One of the biggest challenges in recent funding years has been a lack of service providers and viable bids in response to Form 470s.

• Many C2 providers had all but given up on e-Rate because of the difficulty in obtaining the needed funding.

• The new rules allow for more security around funding, so more and more applicants are soliciting bids for C2 equipment and services.

• All potentially eligible vendors should be made aware of this increased funding availability.

Strategies for Promoting 470s and RFPs

• What if you could: – Reach a broader audience for your RFP/470

– Identify a list of possible providers and target them with the announcement of your RFP?

– Post your RFP in a central location watched daily by providers?

– Instruct vendors on how to become e-Rate service providers?

• If only there was a way you could do this easily online…

The ORCPP Program

• https://dasps.adobeconnect.com/p9dibwkqmn7/

The Cost to Districts

ORCPP Contacts

• Adam Helvey, Procurement Analyst Department of Administrative Services 503.373.2106 Adam.L.Helvey@oregon.gov

• Kelly Stevens-Malnar, Procurement Analyst Department of Administrative Services 503.378.3976 Kelly.A.Stevens-Malnar@oregon.gov

Some Things to Remember

• Follow your district’s procurement process • ORS 279A.010 requires school districts to follow the

State’s contracting laws only if the contracting agency (school district) has not adopted its own set of rules and procedures.

• USAC uses the term “RFP” to describe ANY supporting documentation. You must indicate that there is an “RFP” even if the document is just a spec sheet or list of entity addresses.

• Due to issues with the new e-Rate Productivity Center (EPC) application portal the filing deadlines have been extended to May 26th2016 (for districts and schools) and July 21st (for consortia and libraries)

New Funding Opportunities

• The e-Rate Modernization Order introduced some new funding opportunities, particularly related to Special Construction of Fiber Broadband networks and Category 2 (C2) funding for Networking Equipment.

• FY2015 was the first year of the 5 year Category 2 budget allocations. USACs available funding was sufficient to potentially fund all properly filed and eligible C2 applications.

• FY2016 is the first year that Special Construction funding will be available, but there is very limited training and information about how to properly file for it. What has been released is vague and underdeveloped

Dark/Lit Fiber Special Construction

Best Practices for the Form 470/RFP • When filing for dark fiber, you must also accept bids for

leased lit fiber.

• You must also do a Total Cost of Ownership (TCO) analysis. While a TCO is not technically required if you plan to renew an existing lease for dark fiber strands it will likely be requested.

• You must ask the service providers to separate the special construction costs up to the premise demarc (not the property line but all the way into the demarc) from any on-site installation or monthly costs of the service.

Dark/Lit Fiber Special Construction

Best Practices for the Form 470/RFP • You should outline minimum maintenance specifications for the

fiber in your supporting documentation/RFP, so that vendors can accurately quote on them. This is to determine what the cost will be for maintaining the fiber line past the demarc. These costs should be included in your TCO.

• If you bid a managed service for your dark fiber (a third party that buys and installs the modulating electronics, routing, and switching gear and manages the service over your dark fiber) then you have to add the monthly recurring or annual recurring cost of this service to your TCO.

• We should notify service providers that the e-Rate discounted share of special construction costs can be paid upfront in year one, even if the applicant paying the non-discounted share in installments.

Dark/Lit Fiber Special Construction

Best Practices for the Form 470/RFP • When applying for lit and dark fiber, you will need a line item for each in

the Form 470. The line item “functions” to use are as follows: – Dark Fiber – For leased dark fiber – Lit Fiber – Leased Lit – Self-Provisioned – fiber to own. – Other – Modulating electronics for fiber already owned (more on this later)

• Prior to filing the 470, make sure your Bid Matrix includes the appropriate criteria for scoring these types of bids.

• RFP/Supplemental documents containing the afore mentioned information are REQUIRED for Fiber projects.

• Any contract that results from a Fiber project filing (or any e-Rate filing for that matter) should include an exit clause in the event of funding failure.

Amortization of Special Construction Costs

Make your money work for you. • You must indicate that you wish to amortize the district

share on your Form 470. • If you REQUIRE amortization and do not wish to work

with vendors that will not amortize, this must be clearly identified as a disqualifying factor on your 470 and bid matrix.

• Remember that the discounted portion that is committed by USAC can be paid in full upon completion of the project. Only the district’s share of the cost is amortized.

• The terms of the amortization (interest rate, etc.) must be reported on the Form 471.

Amortization of Special Construction Costs

Example: • Applicant has a fiber project with special construction

costs of $100,000, has an 80% discount rate, and plans to amortize their share for 2 years.

• Applicant and vendor negotiate the terms of the amortization during the contracting phase.

• The service provider will receive the bulk of the total cost of the construction, in this case $80,000.

• The applicant pays their $20,000 non-discounted share over time per the terms negotiated during the creation of the contract.

*Note that the actual process for invoicing USAC has not yet been released. This timeline may change.

Purchasing Modulating Hardware

Hardware funding available under Category 1 • Modulating hardware for leased or self provisioned dark fiber

can now be purchased under C1. • Only hardware that will be used at the point of demarcation

or beyond is eligible as C1. • You must include a line item for this hardware in the form

470. Use the “Other” function and then indicate the needed equipment in the space provided.

• If you currently own, or are leasing dark fiber under a multiyear contract, it is possible to purchase this hardware if a bandwidth increase is needed.

• Because this equipment is covered under C1, it does NOT affect C2 budgets.

Category 2 Equipment Funding

Internal Connections equipment and maintenance

• The Modernization order allowed for a set C2 budget for each SCHOOL based on population and discount rate.

• To estimate your schools’ total maximum budgets, you multiply the number of students at the school by $150. This is your maximum PRE-DISCOUNT budget.

• Multiply this number by your C2 discount percentage to estimate your maximum reimbursement amount from e-Rate.

Example for 80% discount school:

100 Students * $150 = $15,000 maximum pre-discount budget.

$15,000 * 80% = $12,000 maximum e-Rate reimbursement amount.

Category 2 Equipment Funding

Internal Connections equipment and maintenance • Networking hardware that is inside the demarc is

considered C2. • C2 hardware applications ALWAYS require a contract. • If you require licenses or maintenance plans for

equipment, it must be indicated on the form 470. Note that not all types of maintenance plans are eligible for e-Rate.

• Some equipment may serve more than one purpose or have multiple functions. Equipment that has some eligible and some ineligible functions will need to have the portion of the cost that is ineligible allocated out of the funding request.

Category 2 Equipment Funding

Internal Connections equipment and maintenance • ESDs, District Offices, and other Non-Instructional

Facilities (NIFs) do not have their own budgets. • Hardware installed at a NIF must have its cost deducted

from the budgets of the eligible school(s) that it serves. • ESDs should proceed carefully when planning to

purchase C2 hardware. You must communicate with the affected Districts and Schools to avoid both entities applying for the same funding.

• You can allocate the cost of these devices in any way you see fit, so long as it is quantifiable and reasonable. You may be asked to explain your calculations.

Category 2 Equipment Funding

Internal Connections equipment and maintenance • C2 hardware must be carefully tracked in an asset register. • Each piece of hardware should be labeled with the Funding year,

471 number and FRN to assist with tracking.

• Three years after the date of purchase, equipment can be transferred to other eligible entities but CAN NOT receive money or other items of value in return.

• If a school closes, that equipment can be moved to another eligible school location, but USAC must be notified of the move and you CAN NOT receive money or other consideration.

• Obsolete equipment can be disposed of for payment or other consideration ONLY after five years from the date of installation.

Contact Info and Resources

Amy McLaughlin, M.A.

Director of Network System and Information Security

Office of Information Technology | Oregon Department of Education

Office: 503.947.5771 | Fax: 503.378.5156 | amy.mclaughlin@state.or.us

Sabrina Carson e-Rate Coordinator | Willamette ESD Office: 503.540.4495 | Fax: 503.540.2962 sabrina.carson@wesd.org

Contact Info and Resources

INSTITUTIONS DATABASE LOOKUP TOOL http://www.ode.state.or.us/instid/ STATE CERTIFIED NSLP REPORTS http://www.ode.state.or.us/sfda/reports/r0061Select.asp E-RATE PRODUCTIVITY CENTER (EPC) https://portal.usac.org/suite/ FAQ AND INSTRUCTIONS FOR EPC http://usac.org/sl/tools/e-rate-productivity-center/default.aspx LEGACY E-RATE APPLICATION PORTAL FOR FY2015 AND PRIOR http://www.sl.universalservice.org/menu.asp USAC'S MAIN E-RATE HOMEPAGE http://www.universalservice.org/sl/

Questions

THANK YOU!!