Gifts

E-rate Gift Rules

• E-rate Gift Rules• Charitable Donations• Conferences and Training Sessions• Representation on Boards• Timing• Questions

Agenda

Overview

• FCC Rules - 47 C.F.R. § 54.503(d)

• Federal Gift Rules - 5 C.F.R. § 2635.201-205

• FCC Sixth Report and Order - 25 FCC Rcd 18762 (2010)

• FCC Clarification Order - 25 FCC Rcd 17324 (2010)

• (d)(1): General Rule“…an eligible school, library, or consortium that includes an eligible school or library may not directly or indirectly solicit or accept any gift, gratuity, favor, entertainment, loan, or any other thing of value from a service provider participating in or seeking to participate in the schools and libraries universal service program. No such service provider shall offer or provide any such gift, gratuity, favor, entertainment, loan, or other thing of value except as otherwise provided herein. Modest refreshments not offered as part of a meal, items with little intrinsic value intended solely for presentation, and items worth $20 or less, including meals, may be offered or provided, and accepted by any individuals or entities subject to this rule, if the value of these items received by any individual does not exceed $50 from any one service provider per funding year. The $50 amount for any service provider shall be calculated as the aggregate value of all gifts provided during a funding year…”

Disclaimer: The most restrictive of FCC, local & state rules applies in terms of E-rate!

FCC Gift Rules – 47 C.F.R. § 54.503(d)

E-rate Gift Rules

N.C.G.S. 133-32http://www.ncga.state.nc.us/gascripts/statutes/statutelookup.pl?statute=133-

32

• Solicitation or receipt of gifts by applicants from service providers and potential service providers and vice versa is a competitive bidding violation.

• Rules apply to everyone participating in the E-rate whether public or private, and whether operating at the local, state or federal level.

• Must always follow FCC rules. May also need to comply with additional state/local requirements. If those provisions are more stringent than federal requirements, failure to comply with them will be a violation of FCC rules.

Gift Rules

E-rate Gift Rules

• Gift prohibitions are applicable year-round, not just during the competitive bidding process

Gift Prohibitions

E-rate Gift Rules

• Food, refreshments, instruction and documents given to all attendees at Widely Attended Gatherings are permissible.

• Trainings offered by state, regional or local government bodies or non-profits or trade associations that include those bodies are not considered vendor promotional training– Vendor promotional training means training provided by any

person for the purpose of promoting its products or services. See 5 C.F.R. § 2635.203(g)

Conferences – Permissible Actions

Conferences and Training Sessions

• Service providers can host, sponsor, or conduct E-rate training, as long as they do not provide any gift that exceeds the gift exceptions– Service providers cannot provide demonstrations of, or

help with preparation or completion of forms, or determining the services listed on the FCC Form 470 and/or RFP.

Conferences – Permissible Actions

Conferences and Training Sessions

• Training or conference regarding one or few vendors services would not meet the definition of a Widely Attended Event even if many people attended. – Travel expenses, lodging, meals, and entertainment associated

with the event would be considered gifts and therefore violations.

– Free attendance when it would otherwise cost to attend is also a violation.

• Meals at a Widely Attended Gatherings not provided to all attendees would be subject to gift limits

Conferences – Impermissible Actions

Conferences and Training Sessions

• Requirement for fair and open competitive bidding has always been in effect.

• Rules from 6th Report and Order went into effect January 3, 2011.

• New applicants, or applicants that are applying for the first time for a category of service, must be in compliance with rules six months prior to the posting of their first FCC Form 470.

• Dollar limits of $20/$50 are calculated per funding year

Timelines for Compliance

Timing

Questions?

Competitive Bidding

E-rate Guidance

Issues in Competitive Bidding

15

Overview

• 28 Day Rule• Communicating with Bidders• Multi-tiered vendor selection• Sham Bidding• Piggyback Clauses

16

Competitive Bidding

• Fair and open competitive bidding process• Avoid conflicts of interest

– Independent consultant Service Provider– Applicant Service Provider

• Open competition and bid evaluation• Follow all rules – FCC and state/local• Read the contract fine print• Retain your documentation

– Retain, retain, lessen your pain…

N.C.G.S. 143-129http://www.ncga.state.nc.us/gascripts/statutes/statutelookup.pl?statute

=143-129

N.C.G.S. 143-131http://www.ncga.state.nc.us/gascripts/statutes/statutelookup.pl?statute=143

-131

Contracting method

FormalFormal

Informal

Informal

Qualifications-based selectionNo

method

required

No metho

d requir

ed

No metho

d requir

ed

$500,000

$90,000

$30,000

$0Design Services Everything else*

* Optional: May use a request for proposal for service contracts or information technology purchases or services.

Purchase* Construction

20

28 Day Rule

• WAIT 28 DAYS after your Form 470 is posted and your RFP is issued before:– Evaluating the bids– Selecting your service provider– THEN sign a contract/legally binding

agreement– THEN file and certify your Form 471

online

28 Days• RFP handed out at walk through

– 28 day clock starts after last of the RFP issued• Clock for 28 days restarts when

– If you issue a new RFP, then your 28 days starts again (do not have to post a new 470)

– Changed services sought– Make other cardinal changes to RFP– Post new Form 470

• No bids received after 28 days, you may contact vendors to seek bids

21

Bidder communication

• Equal communication with all– Ensure that everyone knows the same thing

• Timely communication– Provide adequate notice to potential bidders

about deadlines, walk-throughs, changes, etc• Late breaking news

– Provide adequate notice to all potential bidders

22

Multi-tier Bidding Eval

• Disqualification/Qualification Round– Factors are binary (meet/does not meet)– Factors cannot be scored on range

(subjective)– Examples:

• Responded in full to RFP• Licensed, Bonded and Insured• In-state• Has a USAC Service Provider Identification

Number (SPIN)

23

Multi-tier Bidding Eval

• Qualification Factors– Can require that potential bidders meet

minimum number of qualification factors• Disqualification Factors

– Can require that potential bidders that meet any disqualification factors are not considered

• Ensure that all potential bidders have adequate notice of these items

24

Multi-tier Bidding Eval

• Bid Evaluation Round(s)– Price of the eligible goods and services must be

primary factor in each round– Then can include range of other factors (can be

subjective or not)– Examples:

• Technical solution proposed• Reputation/Prior History with the entity• Other costs of doing business with this provider• etc

25

Complex Example

• School district sets disqualification factors– 10 bidders submit proposals; 7 do not have any

disqualification factors and continue• First round

– Price 60 pts, Refs 20 pts, History with District 20 pts– District accepts all that get at least 50 points– 4 of the 7 have at least 50 points and continue

• Second round – Price 55 pts, Technical Solution 45 pts– Winning Bidder is selected

26

Sham Bidding

• “I want to stay with my incumbent”• Must respond to all legitimate inquiries

– Bidders can’t just send spam, but you have to talk to bidders, too

– Providers that are being stonewalled can contact USAC

• Cost to transfer to another provider alone is not by itself a good enough reason to stay with incumbent

27

Sham Bidding

• Avoid appearances of a “done deal”• Don’t post for something you don’t want• If plans change, have a plan to

communicate with potential bidders– Post notice on your website– Use communication paths already established

for RFP, if one was used– Keep your documentation

28

Piggyback Clauses• Clause in a contract signed between

provider and another entity allowing others to purchase off the same contract– Must be permissible under state & local regs– The contract or RFP must allow for other entities

to be added– You must still post your own Form 470, AND

conduct your own competitive bid evaluation – Follow all other FCC rules

29

Gifts

• Meals, travel, entertainment etc offered by service provider to an applicant– Gifts offered and/or received

• Know and follow your state and local rules regarding acceptance of gifts (limits, timeframes, etc)

• Know and follow your school/library gift policies

30

What you can do: Gifts

• Know the applicable regulations• Make sure that you have a policy that tells

your staff how to handle gifts, meals, travel, entertainment, etc offered by providers and potential bidders

• Train your staff: ignorance is not bliss• Follow the rules• Is the gift really worth it?

31

32

Competitive bidding

• After you close the competitive bidding process for your services (on or after the ACD):– You can evaluate the bids received– You can choose your service provider(s)– You can sign a contract– You can post a Form 471

Competitive bidding

Factor Weight

Price of the ELIGIBILE goods and services 30%

Prior experience 25%

Other cost factors (including price of ineligible goods and services, price of changing

providers, price for breaking contract, etc)

20%

Management capability 15%

Local Vendor 10%

Total 100%

Bid Evaluation Matrix (sample)

Competitive Bidding

Factor Points Available Vendor 1 Vendor 2 Vendor 3Price of the ELIGIBLE goods

and services 30 15 30 25Prior experience w/ vendor 20 20 0 20Prices for ineligible services,

products & fees 25 20 15 25Flexible Invoicing: 472 or 474 15 0 15 15

Environmental objectives 5 5 3 2Local or in state vendor 5 5 5 5

Total 100 65 68 92

CONNECTIVITY SERVICES

DurhamAlamanceAlexander

Alleghany

Anson

Ashe

Avery

Beaufort

Bertie

Bladen

Brunswick

Buncombe

Burke

Cabarrus

Caldwell

Carteret

Caswell

Catawba Chatham

CherokeeClay

Cleveland

Columbus

CravenCumberland

DareDavidsonDavie

Duplin

Edgecombe

ForsythFranklin

Gaston

Gates

Graham

Granville

Greene

GuilfordHalifax

Harnett

Haywood

Henderson

Hertford

Hoke

Hyde

Iredell

Jackson

Johnston

Jones

Lee

Lenoir

Lincoln

McDowell

Macon

Madison Martin

Mecklenburg

Mitchell

MontgomeryMoore

Nash

New Hanover

Northampton

Onslow

Orange

Pamlico

Pender

Person

Pitt

Randolph

Richmond

Robeson

Rockingham

RowanRutherford

Sampson

Scotland

Stanly

StokesSurry

Swain

Transylvania

Tyrrell

Union

Vance

Wake

Warren

Washington

Watauga

Wayne

Wilkes

Wilson

Yadkin

Yancey

Edenton-

Chowan

Perquimans

Elizabeth City/Pasquotank

Currituck

Camden

Asheville

Whiteville

Newton-Conover

Hickory

Asheboro

Clinton

Mt. Airy

Elkin

Thomasville

Lexington

Kannapolis

Mooresville

RoanokeRapids Weldon

Chapel HillCarrboro

Polk

Barry Pacebpace@dpi.state.nc.us

(828) 756-0525

Jeannene Hurleyjhurley@dpi.state.nc.us

(252) 624-9878 www.ncpublicschools.org/erate