deciphering the nofa: how to get broadband stimulus funding from ntia and rus for the enterprise...

Deciphering the NOFA: How to Get Broadband Stimulus Funding From NTIA and RUS

For The Enterprise Wireless Alliance

July 13, 2009

Presented by Bennett L. Ross

Overview

• NTIA and RUS have released the first of three Notices of Funds Availability (NOFAs) implementing the broadband stimulus programs under the American Recovery and Reinvestment Act (ARRA)

• The NOFA establishes two complimentary programs: the Broadband Initiatives Program (BIP) administered by RUS and the Broadband Technology Opportunities Program (BTOP) administered by NTIA

• This presentation will summarize the NOFA and explain what it means for BIP and BTOP applicants

BIP• BIP will award $2.4 billion in grants, loans, and grant/loan

combinations for broadband infrastructure in the first tranche of funding

– $1.2 billion for Last-Mile projects, divided between remote areas ($400 million) and non-remote areas ($800 million)

– $800 million for Middle-Mile projects (loans and loan/grant combinations only)

– $325 million set aside for “national reserve”

• Grants may be used only to provide broadband infrastructure in remote, unserved, rural areas, while loans and loan/grant combinations may be used to provide broadband infrastructure in non-remote and underserved rural areas

• The size of the grant portion of any loan/grant combination will be determined by the applicant, but the grant amount may not exceed the loan amount

BTOP

• NTIA will distribute $1.6 billion in the first tranche, all of which will be grants– $1.2 billion for broadband infrastructure deployment to

unserved and underserved areas

– $50 million for Public Computer Center Projects

– Up to $150 million for sustainable broadband adoption projects

– Up to $200 million for a national reserve

Relevant Timeframes• Phase 1: Applications must be submitted between 8:00

AM July 14, 2009 and 5:00 PM August 14, 2009 • Phase 2: Highest scoring applications from Phase 1 will

advance to Phase 2. Upon request, applicants will be required to produce further information. This phase will begin no earlier than September 14, 2009, and applicants’ submittals will be due October 15, 2009 or 30 days after applicant receives a request from RUS/NTIA.

• Award Dates: Expected to start on November 7, 2009. and funds should become available to awardees within 30 days thereafter

Key Definitions

• Broadband: Two-way data transmission with advertised speeds of at least 768 kbps downstream and at least 200 kbps upstream to end users, or providing sufficient capacity in a Middle Mile project to support the provision of broadband service to end users

Key Definitions: “Unserved”

• A proposed funded service area, composed of one or more contiguous census blocks, where at least 90 percent of households in the proposed funded service area lack access to facilities-based, terrestrial broadband service, either fixed or mobile, at the minimum broadband transmission speed (as set forth in the “broadband” definition).

• A household has access to broadband service if the household can readily subscribe to that service upon request.

Key Definitions: “Underserved”

• For a Middle Mile project, a proposed funded service area may qualify as underserved if one interconnection point terminates in a proposed funded service area that qualifies as unserved or underserved for Last Mile projects

Key Definitions: “Underserved” (cont.)

• For a Last Mile project, a proposed funded service area may qualify as underserved if at least one of the following factors is met:

– no more than 50 percent of the households in the proposed funded service area have access to facilities-based, terrestrial broadband service at greater than the minimum broadband transmission speed;

– no fixed or mobile broadband service provider advertises broadband transmission speeds of at least 3 mbps downstream in the proposed funded service area; or

– the rate of broadband subscribership for the proposed funded service area is 40 percent of households or less.

Key Definitions (cont.)

• Last Mile project: An infrastructure project that predominantly provides broadband service to end users or end-user devices (including households, businesses, public safety entities, and community institutions and facilities)

• Middle Mile project: A broadband infrastructure project that does not predominantly provide broadband service to end users or to end-user devices, which may include interoffice transport, backhaul, Internet connectivity, or special access

Key Definitions (cont.)

• Remote area: An unserved, rural area 50 miles from the limits of a non-rural area

• Rural area: Any area, as confirmed by the latest census, which is not located within:

– a city, town, or incorporated area that has a population of greater than 20,000 inhabitants; or

– an urbanized area contiguous and adjacent to a city or town that has a population of greater than 50,000 inhabitants

• For purposes of the definition of rural area, an urbanized area means a densely populated territory as defined in the latest decennial census of the U.S. Census Bureau

Who is Eligible? • Eligible entities include for-profit companies• All BIP and BTOP applicants:

– Must have a complete application– Must demonstrate the project can be substantially completed

within 2 years of receipt of the grant/loan and finished within 3 years of the date of the award

• Additional requirements for BIP and BTOP infrastructure applicants– Must propose to offer “broadband” as defined in the NOFA– If requesting over $1 million, must submit a system design

and project timeline, certified by a professional engineer– Must comply with nondiscrimination and interconnection

obligations

Nondiscrimination and Interconnection Conditions

• Infrastructure applicants must:– Adhere to the principles in the FCC’s Internet Policy

Statement;– Not favor any lawful Internet applications and content over

others;– Prominently display network management policies on its web

page and provide notice to customers of any changes to it;– Connect to the public Internet directly or indirectly such that

the project is not an entirely private closed network; and– Offer interconnection where technically feasible, without

exceeding current or reasonably anticipated capacity limitations, on reasonable rates and terms to be negotiated with requesting parties.

Nondiscrimination and Interconnection Conditions (Cont.)• Conditions apply:

– For the life of the awardee’s facilities used in the project and not to any existing network arrangements

– To contractors/subcontractors of awardees employed to deploy or operate the network facilities for the infrastructure project

• Exceptions– Needs of law enforcement– Reasonable network management techniques that are “generally

accepted” and “application neutral”• Disputes

– If parties can reach agreement on interconnection, they may “voluntarily seek an interpretation by the FCC of any FCC rules implicated in the dispute” or may notify NTIA/RUS within 90 days

– Party alleging that an awardee has failed to meet nondiscrimination condition “should first seek action at the FCC of any FCC rules implicated in the dispute.”

BIP: Additional Eligibility Factors

• BIP applicant must demonstrate that:– Its project serves at least 75% unserved or underserved rural

areas; and

– After approval of the grant/loan, all project costs can be fully funded, which requires the applicant to include evidence of all non-RUS funding necessary to support the project (e.g., bank account statements, firm letters of commitment).

• Only projects that RUS determines to be financially feasible and/or sustainable are eligible for an award.

BTOP: Additional Eligibility Factors

• BTOP applicant must:– Demonstrate its project advances at least one of the

statutory purposes for the program (set forth in section 6001(b) of the ARRA)

– Demonstrate its capacity to provide matching funds of at least 20% toward the total eligible project cost (absent a waiver)

– Provide documentation that the project would not have been implemented without federal grant assistance and that the project’s budget is appropriate

BTOP: Role of the States• For BTOP projects, all states will be able to make

recommendations concerning the allocation of funds for qualifying projects in or affecting the individual states during “Phase 2” of the application process– Each state may prioritize and provide an

explanation of why the selected proposals meet the greatest needs of the state

• States are strongly encouraged to provide mapping and planning data to support their recommendations.

• All states will have 20 calendar days from the date of notification to submit their recommendations to NTIA

Eligible Costs• Award funds must be used only to pay for eligible costs consistent

with the cost principles identified in applicable OMB circulars and the statute. Eligible costs are the following: – Construction or improvement of broadband facilities

• BIP only: This includes facilities required for providing other services over the same facilities.

– Leasing broadband facilities if lease qualifies as a GAAP capital lease (up to five years from date of award)

– Reasonable pre-application expenses incurred after the date of the NOFA (not to exceed 5% of the award)

– BTOP only: undertaking other projects and activities as the Assistant Secretary finds to be consistent with BTOP

• Ineligible costs include: operating expenses of the project; costs incurred prior to submission of application; acquisition of stock or facilities of an affiliate; acquisition of spectrum at auction or in secondary market; merger of entities; purchase or lease of vehicle not primarily used for construction of facilities.

Which Agency Will Review Which Applications?

• Broadband infrastructure projects in a proposed service area that is at least 75 % rural RUS

• Broadband infrastructure projects in a proposed service area that is at least 75 % rural, and the applicant has submitted additional information required by BTOP RUS AND NTIA– However, NTIA will only consider the application after RUS

has rejected it.

• Broadband infrastructure in proposed service areas that are not at least 75 % rural NTIA

BIP Infrastructure Projects• Last Mile Remote: Project must predominately provide

broadband directly to the premise or end users within completely remote areas. BIP will consider applications for grants up to 100% (to receive more than 80% requires financial need)

• Last Mile Non-Remote: Projects provide broadband to the premise or end users that are not exclusively in remote areas. The proposed service area must contain 75% or more unserved or underserved rural areas to be eligible

• Middle Mile: Project must connect at least two points without predominantly providing broadband service to the premise or end users and must be capable of bringing broadband service to eligible service areas

BTOP Infrastructure Projects

• Last Mile: Projects must be for unserved or underserved areas and have predominant purpose to provide broadband service to end users or end user devices

• Middle Mile: Projects must be for unserved or underserved areas and have a predominant purpose other than providing broadband to end users, such as interoffice transport, backhaul, internet connectivity, or special access

Contents of the Application

• Application packages will be available at www.broadbandusa.gov.

• Applicants must obtain:– a Dun and Bradstreet Universal Numbering System

Number, and

– a Central Contractor Registration database number

Contents of Infrastructure Applications: Phase 1

• Identity of the applicant, general information, estimated dollar amount of request, and Congressional districts affected

• Description of the proposed funded service area including, but not limited to, a map, geographic and demographic data, whether the area is unserved or underserved, identification of census-designated communities and whether they are unserved/underserved/rural/non-rural or remote

• Description of the proposed service offerings and pricing plan, the advertised pricing plan by competitors in the same area, description of network management plans, and explanation of why affordable

Contents of Broadband Applications: Phase 1 (Cont.)

• Technological information about the project and whether it allows more than one provider to serve end-users

• Timeline including key milestones for implementation of the project, including a construction schedule

• Resumes of key management personnel and information about the organization

• Legal opinion concerning ability of applicant to enter into award documents

• Information about any partnerships with public, non-profit and private sector groups

• Itemized budget• Pro forma financial analysis related to project sustainability • Historical financial statements and CPA audits if applicable for

previous two calendar years

BIP Phase 1: Additional Requirements

• A self-scoring sheet

• Pricing to be offered to critical community facilities, if any

• Evidence that the applicant is a socially and economically disadvantaged business small business concern, if applicable

BTOP Phase 1: Additional Requirements

• An estimate of cost of the project per household• Description of how the applicant will advance the objectives of

ARRA and BTOP• Demonstration of need for grant funding, including documentation

that the project would be infeasible but for federal assistance • Description of how the applicant will enhance services for health

care delivery, education and children• Additional verification related to nondiscrimination and

interconnection conditions • Percentage of matching funds that the applicant will contribute• Whether the applicant receives federal support for non-recurring

costs in proposed area • If applicable, evidence of collaboration with socially and

economically disadvantaged small business concern

Phase 2 Requirements• Applicants that advance to Phase 2 will be required to

provide the following information:– Outstanding and contingent obligations– Detailed description of working capital requirements and

source of funds– Detailed description of proposed technology – Detailed build-out schedule– Completed environmental questionnaire– BIP applicants will also be required to describe

measurable service metrics and target service level objectives that will be provided to the customer, and a description of the approach and methodology for monitoring service delivery and quality.

Application Review by RUS and NTIA

• Incomplete applications will be summarily rejected

• Phase 1 review will identify the viable and potentially fundable applications – Applications in each program will be scored on a 100-point

scale, and the “highest scoring” applications will move on to Phase 2.

• Phase 2 review will fully validate the viable applications and identify the most qualified applications

Scoring of BIP Applications• Phase 1 evaluation will consist of scoring and ranking

BIP applications • Applications that move to Phase 2 will be asked to

provide verification and supporting materials• RUS will make final determinations on awards based on

the whole application, including the supplemental documentation

• RUS will use a 100-point scoring system, with 25 points available in each of four specified categories

Scoring of BIP Applications (Cont.)

• Project Purpose → 25 points– Proportion of rural residents in unserved areas = up to 5 points– Areas that exceed 75% rural threshold = up to 5 points– Areas that are more than 50 miles from a non-rural area = up to

5 points– Previous Title II RUS borrowers = 5 points– Projects that cooperate with other economic development and

ARRA programs = up to 5 points

• Project Benefits → 25 points– Broadband speed to be provided by project = up to 10 points– Affordability of service = up to 5 points– Projects that allow more than one provider to serve end users =

5 points– 25% discount on service to critical community facilities = 5

points

Scoring of BIP Applications (Cont.)

• Project Viability → 25 points– Strength of management team = up to 12 points– Ability to start promptly = up to 10 points– Documented community support for project = up to 2

points– Disadvantaged small business = 1 point

• Project Budget/Sustainability → 25 points– Amount of outside funding = up to 10 points– Greater ratio of loan to grant = up to 10 points– Clarity and reasonableness of budget = up to 5 points

Scoring of BTOP Applications• Phase 1: Subject matter experts will conduct at least three

independent reviews of each application, and composite score will be averaged based separate scores

• Phase 2: NTIA staff will solicit supporting materials from applicants, and then review and score such materials based on how well materials support the original application– Final evaluation of BTOP applications will be made by the

Assistant Secretary of NTIA– Awards will be made on a rolling basis– NTIA may discuss specific modifications to an application

with an individual applicant to resolve differences between the application and what NTIA is willing to fund

• NTIA also will use a 100-point scoring system, with 25 points available in each of four specified categories, but, unlike RUS, NTIA does not delineate how points are awarded within each category

Scoring of BTOP Applications (Cont.)

• Project Purpose → 30 points, based upon: – Fit within the statutory purposes of the BTOP program – Collaboration with ARRA or other programs – Ability of a project to enhance broadband service for health care

delivery, education, and children – Whether the applicant contracted with a disadvantaged small

business• Project Benefits → 25 points, based upon:

– Last Mile: (1) cost-effectiveness; (2) broadband speeds in excess of the minimum speed requirement; (3) affordability of services; and (4) commitment by the applicant to exceed the minimum requirements for interconnection and nondiscrimination

– Middle Mile: (1) impact of the project on the area to be served; (2) level of need in the area; (3) capacity of the network to be installed; (4) affordability of services offered; and (5) commitment by the applicant to exceed the minimum requirements for interconnection and nondiscrimination

Scoring of BTOP Applications (Cont.)

• Project Viability → 25 points, based upon:– Technical feasibility– Organizational capacity– Community involvement in the project– Ability to start the project promptly

• Project Budget/Sustainability → 20 points, based upon:– Reasonableness of the proposed budget – Sustainability of the project– Whether the applicant has been able to leverage outside

resources to exceed the 20 percent matching requirement for the BTOP program or provide cash matches

Comments From Existing Service Providers

• NTIA and RUS will post a Public Notice of the proposed funded service areas of each Broadband Infrastructure application for a 30-day period – The Notice is designed to allow existing service providers to

submit to RUS and NTIA information about their service offerings in those proposed funded service areas

– If the information from an existing service provider shows that a proposed funded service area is not unserved as indicated in an application, RUS and NTIA may reclassify the application as underserved or reject the application

Award Administration• Administrative Requirements for BIP awardees

– RUS will not disburse funds until all other sources of funding have been obtained and all other pre-award conditions have been met

– Loan/grant advances may be made at the request of the awardee

– Contracting is to be done at the awardee’s discretion, using private contracts or RUS’s form contracts, but awardee must meet all contracting requirements, accounting, monitoring, reporting requirements, etc.

• Administrative Requirements for BTOP awardees– Awardees must comply with the administrative and national

policy requirements for BTOP funding as well as all applicable provisions in the Pre-Award Notification

Award Terms and Conditions• All awardees:

– Must comply with all applicable obligations under the award for the life of the award-funded facilities

– With limited exception, may not sell or lease any portion of BTOP funded facilities without prior approval

• All awardees are required to assist in the collection of broadband data

• All awardees must certify:– Compliance with all applicable federal, state, and local laws

and rules

– Compliance by any sub-awardees with the terms and conditions

– No kickbacks were paid

Award Terms and Conditions (Cont.)

• BTOP awardees:– Must allow NTIA to access and inspect broadband system

(and other property funded by the grant) and all records of the parties to a grant, including their subsidiaries

• BIP awardees:– Must comply with all reasonable RUS requests to support

ongoing monitoring efforts, including giving access to RUS to inspect the broadband system and any or all records belonging to or in the possession of the awardee or in any way pertaining to its property or business

• BTOP and BIP awardees are subject to award audits and personnel interviews

General Reporting Requirements

• Awardees must submit reports to the relevant agency 10 days after the end of the quarter in which the award was issued, and each quarter thereafter until a final report is made at the end of 3 years

• Quarterly reports must include:– Total amount of funds received;– Amount of funds received that were expended or obligated to

projects or activities; – Detailed list of all projects for which funds were expended,

including description of the project, evaluation of its completion status, and estimate of the number of jobs created and retained by the project; and

– Detailed information on any subcontracts or sub-grants

BIP Reporting Requirements• BIP awardees must submit:

– Audited financial statements on an annual basis prepared by RUS-approved auditor; a report on compliance and internal control over financial reporting; and a management letter pursuant to 7 C.F.R. § 1773;

– Balance sheets, income statements, statements of cash flow, rate package summaries, and the number of customers taking broadband service on a per community basis using RUS’s Broadband Collection and Analysis System, within 30 calendar days after the end of each calendar year quarter; and

– Annually on January 31 (starting the first January 31 after project completion), the number of households/businesses subscribing to broadband service, the number of households/businesses subscribing to broadband service that receive improved access, and the number of educational/library/health care/public safety providers receiving new or improved access to broadband

BTOP Reporting Requirements• BTOP Broadband Infrastructure

awardees must report quarterly:– Progress in achieving the project goals,

objectives, and milestones; – Expenditure of funds and how much of

the award remains; – How much non-federal investment is

being added to complete the project; – Whether the awardee is on schedule to

substantially complete its projects within the 2 and 3 year benchmarks

– The number and type of entities receiving new or improved access to broadband

– Terms of interconnection agreements– Traffic exchange relationships and terms– Broadband equipment purchases;– Total and peak utilization of access links

– Total and peak utilization on interconnection links to other networks;

– Internet protocol address utilization and IPv6 implementation;

– Any changes/updates to network management practices;

– Average end-user and middle mile megabit per second increase;

– Availability of broadband offering;

– Total number of households and businesses subscribing to broadband, subscribing to new broadband service, and receiving improved access;

– Advertised and average broadband speeds;

– Price of the broadband services.

Compliance

• BIP/BTOP awardees will be expected to comply with all applicable Federal and State laws– Broadband Infrastructure awardees must comply with

all mandates in the Communications Act and CALEA

– All awardees spending $500,000 or more of federal funds in a year must prepare an organization-wide audit each fiscal year

Buy American

• Certain aspects of BIP/BTOP projects will have to comply with Buy American requirements– Iron, steel, and manufactured goods used in the

construction, alteration, maintenance, and repair of a public building or public work must be produced in the U.S.

– NTIA and RUS have issued a limited waiver of Buy American requirements for some broadband equipment

– Other case-by-case waivers will be considered

Other Federal Laws and Regulations With Which Awardee Must Comply

• Davis-Bacon wage rules for laborers and mechanics

• Title VI of the Civil Rights Act

• Section 504 of the Rehabilitation Act

• Age Discrimination Act of 1975

• Executive Order 11375 (EEO)

• Architectural Barriers Act of 1968

• Regulations concerning Uniform Federal Accessibility Standards

• Regulations related to implementation of the National Environmental Policy Act

Other Information

• Applicants may seek a waiver by NTIA of discretionary portions of the NOFA related to BTOP – Waiver requests can be submitted with the application or

separately.

• NTIA and RUS must create an Internet site that lists who applied for grants, descriptions of the applications, the status of the applications, the name of any entity receiving funds, the purpose for which the funds were given, each quarterly report, and other information

Questions?

Bennett L. Ross

[email protected]

202.719.7524

deciphering the nofa: how to get broadband stimulus funding from ntia and rus for the enterprise...

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