E-rate for Beginners
John Noran
Schools and Libraries Division
Universal Service Administrative Company
Train-the-Trainer Workshop
September 27-29, 2004
Universal Service Administrative Company
Overview
 School and Libraries Support Mechanism
– Provides discounts to eligible schools and libraries
for Telecommunications Services, Internet Access,
Internal Connections, and Basic Maintenance.
– Applicants can be schools, libraries, or consortia, but
only eligible recipients of services can receive
discounts.
– Applicants must apply for discounts each year.
– Funding is capped at $2.25 billion annually.
– From January 1, 1998 through September 7, 2004,
more than $13.7 billion in funding commitments
have been issued to eligible schools and libraries.
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Universal Service Administrative Company
History
 Schools and Libraries Support
Mechanism started providing
discounts as of January 1, 1998
– Telecommunications Act of 1996
• Congress directed the FCC to “establish
competitively neutral rules . . . to enhance, to
the extent technically feasible and
economically reasonable, access to advance
telecommunications and information services
for all public and non-profit elementary and
secondary school classrooms . . . and libraries.”
First Report and Order (FCC 97-157)
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Universal Service Administrative Company
Introduction
 Vendor Assistance
– NSI in New Jersey
• Application review — Program Integrity
Assurance (PIA)
• Invoice review (PIA)
• Appeal process
• Program correspondence, including change and
extension requests
– Pearson Government Solutions in Kansas
• Client Service Bureau (call center)
• Forms processing
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Universal Service Administrative Company
Applicants
Eligibility
 Eligible Entities
– Schools
• Must meet the statutory definition of
elementary or secondary school found in the
No Child Left Behind Act of 2001.
• Must be a non-profit institutional day or
residential school, including a public charter
school, that provides elementary or secondary
education, as determined under state law.
• Must not be operating as a for-profit business.
• Must not have an endowment exceeding $50
million.
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Universal Service Administrative Company
Applicants
Eligibility
 Eligible Entities
– Schools (cont.)
• Pre-kindergarten, Adult Education, Juvenile
Justice
– Must meet state definition of elementary or
secondary education.
– Students and/or facilities may be eligible.
– SLD requests updated information from
state departments of education every two
years.
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Universal Service Administrative Company
Applicants
Eligibility
 Eligible Entities
– Libraries
• Must meet the statutory definition of library or
library consortium found in the Library
Services and Technology Act (LSTA) of 1996.
• Must be eligible for assistance from a state
library administrative agency under LSTA.
• Budget must be completely separate from any
schools.
• Must not be operating as a for-profit business.
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Universal Service Administrative Company
Service Providers
Eligibility
 Service Providers
– Must file Form 498, Service Provider
Information Form
• Request a Service Provider Identification
Number (SPIN)
• Provide/update contact information.
– Must file Form 473, Service Provider
Annual Certification Form, on an annual
basis
• Required for invoices to be paid.
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Universal Service Administrative Company
Service Providers
Telecommunications Carrier
– Providers of Telecommunications Services
• Must contribute to the Universal Service Fund, if
applicable.
• Must provide telecommunications services on a
common carriage basis to be a telecommunications
carrier.
• To be a telecommunications carrier, the carrier must
– (1) allow the customer to transmit information of its
own design and choosing, without change in the form
or content of the information, and
– (2) provide that capability for a fee directly to the
public, or to such classes of users as to be effectively
available to the public (i.e., hold itself out to serve
indifferently all potential users).
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Universal Service Administrative Company
Service Providers
Telecommunications Carrier
– Telecommunications Carriers
• Must file Form 499A on an annual basis and
check at least one box on Line 227 and file
Forms 499Q, if applicable.
• Must revise the Form 498 to reflect Form 499
Filer. I.D.
• SP must be designated eligible in SLD database.
– SP may not provide telecommunications
services if it has not been designated as a
telecommunications carrier.
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Universal Service Administrative Company
Eligibility
 Eligible Services
– Priority 1
• Telecommunications Services
– local and long distance
– wireline and wireless
– voice, data, video
• Internet Access
– Priority 2
• Internal Connections (switches, hubs, routers, wiring)
• Basic Maintenance on Internal Connections
– Priority 1 funded first, then Priority 2 funded
beginning with neediest applicants (90%, 89%,
88%, etc.)
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Universal Service Administrative Company
Eligibility
 Eligible Services
– Eligible Services List
• Lists services by category
(Telecommunications Services, Internet Access,
Internal Connections, and Miscellaneous)
– Services which are conditionally eligible
– Ineligible services
• Available on SLD web site
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Universal Service Administrative Company
Applicants
Calculating Discounts
 Discount Calculation
– National School Lunch Program (NSLP)
• Individual schools — start with the percentage
of students eligible for NSLP for their school
• School districts — start with the NSLP
percentages of individual schools in the district,
calculate weighted average of all schools
• Libraries — start with the percentage of
students eligible for NSLP for the school
district in which the library is located
• Consortia — calculate simple average of
discounts of members
– Urban or rural status of county in which
school or library is located (from web site)
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Universal Service Administrative Company
Applicants
Calculating Discounts
• Points to Remember:
All discount calculations will involve
percentage of students eligible for NSLP in a
school or school district
determination of Urban/Rural status
discount from Discount Matrix.
Applicant with members or subunits must
calculate an average of those members
School district – individual schools
Library system – library outlets/branches
Consortium – eligible member entities
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Universal Service Administrative Company
Applicants
•
•
•
•
•
Application Process
Technology Plan – What is my plan?
Form 470 – What services do I want?
Form 471 – What services did I order?
Form 486 – When did services start?
Form 472 or Form 474 – How do I
receive reimbursements or discounts?
 Online filing/certification available for
most forms
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Universal Service Administrative Company
Service Providers
Application Process
• Form 498 – What is my SPIN?
• Form 499A for Telecom Carriers – What is
my responsibility to the Universal Service
Fund?
• Form 473 – What am I required to do before
receiving payment on an invoice?
• Form 472 or Form 474 – How do I submit
invoices to USAC?
 Online filing available for most forms
 Online service provider certification under
consideration
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Universal Service Administrative Company
Applicants
Technology Planning
• Technology Plans
• Not required for basic local, cellular, PCS, and/or
long distance phone service and/or voice mail
• Must be written before Form 470 filing
• Must be approved by an SLD-certified approver
before Form 486 filing or start of services,
whichever is earlier
• Must cover five areas:
•
•
•
•
•
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Goals / Strategies for using technology
Professional development
Needs assessment
Sufficient budget
Evaluation process
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Universal Service Administrative Company
Service Providers
Technology Planning
 Service providers may offer NEUTRAL
technical assistance.
 Service providers may not act as
technology plan approvers.
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Universal Service Administrative Company
Applicants
Form 470
• Form 470
• Opens a competitive bidding process
• Applicant responsible for ensuring an open, fair process
and selecting the most cost-effective provider of the
desired services
• Must wait 28 days after POSTING of Form 470 to select
service provider, sign contract, and sign and submit Form
471
• Can be filed once for multi-year contracts, but 470 and
RFP must indicate intent to sign multi-year contract with
extensions
• Make RFP available or list specific service/function and
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quantity/capacity
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Universal Service Administrative Company
Form 470
Applicants
• Competitive Bidding
• Request for Proposal (RFP)
• Not required under the FCC Rules, but a good idea
• Must comply with local and state procurement laws
• Describes your project scope, location, other
requirements in detail
• Competition
• Goal is to have as many bidders as possible
• Promotes better service and lower prices
• Fair and open process
• All bidders treated the same, no advance knowledge of
RFP information
• No secrets in the process, all bidders know what is
required of them
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Universal Service Administrative Company
Service Providers
Competitive Bidding Process
 Service providers must remain
NEUTRAL at all times.
 Service providers may not interfere with
applicant’s affirmative duty to conduct a
fair and open bid process.
 Service providers may not exert undue
influence over an applicant.
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Universal Service Administrative Company
Both
Competitive Bidding Process
• Obligation to Pay Non-discount Share
• Applicants are required to pay their share
of the cost (the “non-discount” portion or
share) — cannot be donated, forgiven or
ignored.
• Service providers cannot waive or credit
the applicant’s share.
• Offers to reduce price must be incorporated
into the “total pre-discount amount.”
• Service provider must bill the applicant for
non-discount share of services.
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Universal Service Administrative Company
Service Providers
Competitive Bidding Process
 FORM 470
– Service providers may offer basic information,
such as timelines and deadlines.
– Service provider or its consultant may not
complete the 470.
– Service provider or its consultant may not sign the
Form 470.
– Service provider or its consultant may not file the
Form 470.
– Service providers may not prepare the RFP.
– Service providers may contribute information on
technical issues.
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Universal Service Administrative Company
Applicants
Form 470
• Points to Remember:
Competitive bidding process must be open
and fair.
List services sought in correct category of
service (Form 471 must match).
Retain worksheets, bid evaluation criteria,
winning AND LOSING bids.
Form 470 must be certified by close of
Form 471 application filing window.
Filing online speeds processing and
reduces errors.
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Universal Service Administrative Company
Applicants
Form 470
• Form 470 Receipt Notification Letter (RNL)
• Cover page of important reminders and deadlines
• Notifies applicant that Form 470 has been posted
to the SLD web site
• System will generate RNL for Forms 470 filed
online after form is submitted but before it is
certified.
• Form MUST be certified before close of Form 471
application filing window.
• Contains Allowable Vendor Selection / Contract
Award Date
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Universal Service Administrative Company
Applicants
Form 471
• Form 471
• Provides specific information on services,
service providers selected, and contracts
• Provides discount calculation information
• Must be filed for each funding year
• Must be postmarked on or before the last
day of the Form 471 application filing
window
• Applicant certifies compliance with rules,
which include securing access to resources
to make effective use of discounts.
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Universal Service Administrative Company
Applicants
Form 471
• Points to Remember:
 WAIT AT LEAST 28 DAYS from the posting of
the Form 470 before
 selecting a service provider
 signing a contract
 signing and submitting a completed Form 471.
 File separate Forms 471 for Priority 1 and Priority
2 services.
 Remove ineligible costs and document or estimate
eligible costs carefully (30% Rule).
 Filing online speeds processing and reduces errors.
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Universal Service Administrative Company
Service Providers
Form 471
•Points to Remember:
 Service providers should always provide
correct SPINs and contact information.
 Service providers are encouraged to
provide guidance to the applicant on its
services and functionality during the
application process.
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Universal Service Administrative Company
Service Providers
Form 471
 Service providers are encouraged to
assist with providing information for the
Item 21 attachment for their services.
– Clear level of detail on the Item 21
attachment may advance the processing of
the invoice.
• An example of such detail would be the
inclusion of the item (model #), quantity, and
unit cost.
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Universal Service Administrative Company
Service Providers
Form 471
 Applicants will not receive support for contracts
that provide only a single price for a package
that bundles both eligible and ineligible services
together.
– Service provider and applicant should work together
to create pricing terms in the contract that separate
eligible services from ineligible services.
 Service providers are also encouraged to assist
in providing applicant with billing account
numbers and contract numbers.
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Universal Service Administrative Company
Applicants
Form 471
• Form 471 Receipt Acknowledgment
Letter (RAL)
• Cover page of important reminders and
deadlines
• Provides confirmation of certain
information entered from Form 471
• Data entry errors may be corrected by
submitting a copy of the RAL with the specific
errors lined out and the correct information
supplied — three-week deadline.
• Funding request reductions may also be
submitted before funding commitment.
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Universal Service Administrative Company
Both
Contract Requirements
 FCC Rules require applicant to sign a contract
prior to the filing of a completed Form 471.
47 C.F.R. §54.504(c).
 Fifth Report and Order requires both the
applicant and service provider to sign the
contract prior to the filing of a Form 471.
– This rule does not apply to tariffed or month-tomonth services.
– Verbal agreements are not acceptable.
– Quotes are not acceptable.
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Universal Service Administrative Company
Both
Contract Requirements
 Service provider and applicant must
comply with state contract law.
 Service provider and applicant must
comply with state and local procurement
laws.
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Universal Service Administrative Company
Both
Contract Requirements
 Applicant must provide signed and
dated contracts for reviews and audits.
– Applicant must be prepared to prove its
contract meets the requirements of state
contract law.
 Applicant certifies that it has signed a
contract on its Form 486.
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Universal Service Administrative Company
Both
Contract Requirements
 Service provider is required to permit the
applicant prior to the submission of the Form
471 to choose the Method of Payment —
BEAR v. SPI — for discounted services.
– FCC Second Report and Order encourages the
applicant and service provider to work together to
determine the method of payment.
– FCC Second Report and Order encourages
including the method of payment in the contract.
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Universal Service Administrative Company
Both
Contract Issues
 Know your legal rights.
 SLD does not intervene in disputes
that are contract-based rather than
program-rule based.
– Contract disputes should be brought
before local and state courts, not the
SLD or the FCC.
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Universal Service Administrative Company
Both
State Master Contracts
 If the state filed a Form 470, then the applicant
may cite the state’s Form 470 on its Form 471.
– The applicant is required to follow the applicable
provisions of the state master contract and local and
state procurement laws.
– No separate bidding documents or contracts are
required by the applicant citing the state’s Form 470,
other than what is required by the state master
contract and local and state procurement laws.
– The signed state master contract between the state
and service providers meets the FCC signed contract
requirement.
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Universal Service Administrative Company
State Master Contracts
Both
 If the applicant files a Form 470 and considers
a state master contract as one of the bids:
– The applicant is required to comply with all
competitive bidding requirements.
 If the applicant selects the state master
contract:
– The applicant is required to follow the applicable
provisions of the state master contract and local
and state procurement laws.
– The signed state master contract between the state
and vendors meets the FCC signed contract
requirement.
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Universal Service Administrative Company
Both
State Master Contracts
 Purchase orders or other state master
contract requirements for applicants
Slide 39
– If a state master contract requires the
issuance of purchase orders or contains
other binding requirements for applicants,
the applicants must follow the applicable
dates set forth in the state master contract.
– For example, if a state master contract
requires the applicant to issue a purchase
order by July 1, then the applicant is
required to meet that deadline.
Universal Service Administrative Company
Applicants
Application Review
• Review of Applications
• Review by PIA, which may include:
Competitive bidding process
Contracts
Discount calculation
Sufficient budget
Establishing Form 470
Technology Plan
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Universal Service Administrative Company
Applicants
Application Review
• Points to Remember:
Provide information requested by
reviewers (PIA) promptly.
If desirable, work with your state coordinator
to comply with information requests.
Ask for more time if you need it.
Retain documentation.
Review Request for Selective Review
Information fax to understand what information
might be requested.
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Universal Service Administrative Company
Funding Commitments
 Commitments vs. Disbursements
– $2.25 billion cap for each funding
year.
– SLD may commit more that $2.25
billion for a funding year if
unused funds from previous
funding years have been rolled
over to that year.
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Universal Service Administrative Company
Funding Commitments
Both
• Funding Commitment Decision Letter
• Cover page of important reminders and
deadlines
• FCDL reports status of individual funding
requests:
Funded
Not Funded
As Yet Unfunded (Internal Connections)
 Service provider does not receive this status
Canceled
• May receive more than one FCDL
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Universal Service Administrative Company
Both
Funding Commitments
• Points to Remember:
Check all entries on the FCDL carefully to
make sure there are no data entry errors.
Applicants use the information on the
FCDL to prepare the Form 486.
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Slide 44
Universal Service Administrative Company
Applicants
Form 486
• Form 486
• Notification that services have started and the SLD
can pay invoices
• Certifies that Tech Plan (if required) has been
approved.
• If Tech Plan has not been approved by SLD-certified
approver, the application is subject to denial and invoices
will not be paid.
• Certifies status under Children’s Internet
Protection Act (CIPA).
• Lead members of consortia may be required to collect
CIPA certifications from consortium members on a
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separate form (Form 479).
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Universal Service Administrative Company
Both
Form 486
Form 486 Deadline
Form 486 must be postmarked no later than
• 120 days after the Service Start Date featured on
the Form 486 OR
• 120 days after the date of the Funding
Commitment Decision Letter
whichever is later.
• If Form 486 is postmarked later than the
above deadline, the date 120 days before the
Form 486 postmark date will become the start
date for discounted services and funding may
be reduced.
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Universal Service Administrative Company
Both
Form 486
• Form 486 Notification Letter
• Cover page of important reminders and
deadlines.
• Provides confirmation that a Form 486 has
been successfully data entered.
• SLD will accept invoices from applicants
and service providers once the Form 486 is
successfully processed.
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Universal Service Administrative Company
Both
Service Delivery Deadlines
• Recurring Services
• June 30 of funding year
• Non-recurring Services
• September 30 following the close of the funding
year
• Deadline automatically extended to September 30
of the following year for FCDLs, service
substitution approvals, and SPIN change approvals
dated on or after March 1 of the funding year.
• Applicants can also request extension for specific
reasons involving difficulties with delivery of
services by service provider.
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• See web site for further information.
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Universal Service Administrative Company
Service Providers
Form 473
• Form 473 – Service Provider Annual
Certification (SPAC) Form
• Service providers are required to file on an
annual basis.
• SLD will only pay invoices for a funding
year if a SPAC is on file for that funding
year.
• SPACs are required for both BEARs and SPIs.
• SPIN Search Tool on SLD web site lists
funding years for which a SPAC is on file.
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Universal Service Administrative Company
Both
Invoices
• Invoices — Form 472 or Form 474
• BEAR (Billed Entity Applicant Reimbursement)
Form 472 is filed by the applicant and certified by
the service provider after the applicant receives
services and pays for the services in full.
OR
• SPI (Service Provider Invoice) Form 474 is filed
by the service provider after providing services
and billing the applicant for its non-discount share.
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Universal Service Administrative Company
Both
Invoices
• Points to Remember:
Invoices cannot be used to request SPIN
changes or service substitutions.
Invoices are reviewed for program
compliance – respond promptly to requests
for information.
Service providers are required to reimburse
the applicant within 20 days after
RECEIPT of the funds from SLD.
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Universal Service Administrative Company
Both
Invoices
Invoice Deadlines
Invoices must be postmarked no later than
• 120 days after the last date to receive service OR
• 120 days after the date of the Form 486
Notification Letter
whichever is later.
• If an invoice is postmarked later than the
above deadline, payment will be denied.
• Extensions of invoice deadlines may be
requested under certain conditions.
• See web site for details.
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Universal Service Administrative Company
Both
Invoices
• BEAR Notification Letter
• Cover page of important reminders and
deadlines
• Provides confirmation that a Form 472
(BEAR) has been successfully data entered.
• Indicates what amounts are being paid and
reason for reductions/denials.
• SPI Electronic Notification – Invoice
Status Report
• Service provider can receive an electronic
notification.
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Universal Service Administrative Company
Both
SPIN Changes
 Corrective SPIN Change – to correct data
entry errors or where the applicant used the
wrong SPIN for the service provider
selected
 Global SPIN Changes – mergers or
acquisitions in whole or in part
– Considered a Corrective SPIN change
 Operational SPIN Change – only available
after receipt of FCDL
 See web site for more guidance.
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Universal Service Administrative Company
Both
Operational SPIN Changes
 For changes to a new service provider
 Applicant must make three certifications:
– Change allowed under local procurement laws
– Change allowed under terms of contract
– Original service provider notified of intent to
change
 Can NOT be used for telecommunications
services if new SPIN is not a
telecommunications carrier
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Universal Service Administrative Company
Both
Document Retention
 Remember 5-year retention requirement
for all documents.
 Good recordkeeping is ESSENTIAL.
 Keep copies of EVERYTHING.
 Keep these documents with E-rate files,
or copies, if accounting department
keeps its own files.
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Universal Service Administrative Company
Both
Document Retention
 Types of records to retain include:
– Competitive bid documents
• RFPs, bids, quotes, proposals, etc.
– Signed contracts
– Service provider bills to customers
• Detail of services/products and locations
• Indicate entity(ies) receiving service/products
• Delivery/installation dates
– Applicant payments
• Cancelled checks
• Service credits for any reason
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Universal Service Administrative Company
Both
Appeals
• Decisions of the SLD can be appealed to the
SLD or to the FCC.
• Generally, appeal first to the SLD.
• Can appeal to the FCC if SLD does not grant the
appeal.
• Can be filed electronically or on paper.
• Must be received or postmarked within 60
days of the SLD decision.
• See Appeals Procedure in Reference Area for
specific guidance.
• Requests for waivers of rules must be filed
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with the FCC.
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Universal Service Administrative Company
Both
Audits
• Why do we do audits?
• To provide data regarding program rule
compliance.
• To identify areas needing education and
outreach.
• To clarify program rules that must be
strengthened to prevent waste, fraud and
abuse.
• To enforce accountability for program rule
compliance.
• To deter noncompliance.
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Universal Service Administrative Company
Both
Audits
• Who performs audits?
• USAC Internal Audit
• Independent auditors engaged by either
USAC or the FCC
• FCC Office of Inspector General
• Other agencies
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Universal Service Administrative Company
Both
Audits
• What documents do auditors need?
• Budget / financial statements
• Technology Plan and approval letter
• Documentation of competitive bidding
process
• Documentation of discount level claimed
• Copies of contracts and contract extensions
• Copies of service provider bills, cancelled
checks, BEAR Forms, BEAR checks, and
other supporting documentation
• Asset inventories or registers
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Universal Service Administrative Company
Both
Assistance
• SLD main page of USAC web site
• www.sl.universalservice.org
• Client Service Bureau
• Use the “Submit a Question” link on the
web site
• Fax toll-free at 1-888-276-8736
• Telephone toll-free at 1-888-203-8100
• Read the form instructions
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Universal Service Administrative Company
http://www.sl.universalservice.org
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Universal Service Administrative Company
http://universalservice.webex.com
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