Promoting Fair and Open Competitive Bidding in the E-Rate Program, 4182-4190 [2022-00684]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 87, Number 18 (Thursday, January 27, 2022)]
[Proposed Rules]
[Pages 4182-4190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-00684]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 21-455; FCC 21-124; FRS 64970]


Promoting Fair and Open Competitive Bidding in the E-Rate Program

AGENCY: Federal Communications Commission

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) proposes a change to the E-Rate program targeted at 
several goals: Streamlining program requirements for applicants and 
service providers, strengthening program integrity,

[[Page 4183]]

preventing improper payments, and decreasing the risk of fraud, waste, 
and abuse. Specifically, the Commission seeks comment on a proposal to 
implement a central document repository (i.e., bidding portal) through 
which service providers would be required to submit bids to the E-Rate 
program administrator, the Universal Service Administrative Company 
(USAC), instead of directly to applicants.

DATES: Comments are due on or before March 28, 2022, and reply comments 
are due on or before April 27, 2022.
    If you anticipate that you will be submitting comments, but find it 
difficult to do so within the period of time allowed by this document, 
you should advise the contact listed in the following as soon as 
possible.

ADDRESSES: You may submit comments, identified by WC Docket No. 21-455, 
by any of the following methods:
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: www.fcc.gov/ecfs.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. If more than one docket 
or rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by commercial overnight courier, or by first-
class or overnight U.S. Postal Service mail. All filings must be 
addressed to the Commission's Secretary, Office of the Secretary, 
Federal Communications Commission.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to Federal Communications Commission, 45 L 
Street NE, Washington, DC 20554.
     Effective March 19, 2020, and until further 
notice, the Commission no longer accepts any hand or messenger 
delivered filings. This is a temporary measure taken to help protect 
the health and safety of individuals, and to mitigate the transmission 
of COVID-19. See FCC Announces Closure of FCC Headquarters Open Window 
and Change in Hand-Delivery Policy, Public Notice, DA 20-304 (March 19, 
2020), https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy.
    People with Disabilities. To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer and Governmental Affairs Bureau at 202-418-0530.

FOR FURTHER INFORMATION CONTACT: For further information, please 
contact Cara Voth, Office of Managing Director, at [email protected] or 
202-418-0025, or Joseph Schlingbaum, Telecommunications Access Policy 
Division, Wireline Competition Bureau, at [email protected] or 
202-418-0829.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM) in WC Docket No. 21-455, adopted on 
December 14, 2021 and released on December 16, 2021. Due to the COVID-
19 pandemic, the Commission's headquarters will be closed to the 
general public until further notice. The full text of this document is 
available at the following internet address: https://www.fcc.gov/document/fcc-looks-promote-fair-open-competitive-bidding-e-rate-program-0.
    Ex Parte Presentations--Permit-But-Disclose. This proceeding shall 
be treated as a ``permit-but-disclose'' proceeding in accordance with 
the Commission's ex parte rules. Persons making ex parte presentations 
must file a copy of any written presentation or a memorandum 
summarizing any oral presentation within two business days after the 
presentation (unless a different deadline applicable to the Sunshine 
period applies). Persons making oral ex parte presentations are 
reminded that memoranda summarizing the presentation must (1) list all 
persons attending or otherwise participating in the meeting at which 
the ex parte was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda, or other 
filing in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with Sec.  1.1206(b) of the Commission's rules. In 
proceedings governed by Sec.  1.49(f) of the Commission's rules or for 
which the Commission has made available a method of electronic filing, 
written ex parte presentations and memoranda summarizing oral ex parte 
presentations, and all attachments thereto, must be filed through the 
electronic comment filing system available for that proceeding, and 
must be filed in their native format (e.g., .doc, .xml, .ppt, 
searchable.pdf). Participants in this proceeding should familiarize 
themselves with the Commission's ex parte rules.
    Comments, reply comments, and ex parte submissions will be 
available via ECFS. Documents will be available electronically in 
ASCII, Microsoft Word, and/or Adobe Acrobat. When the FCC Headquarters 
reopens to the public, these documents will also be available for 
public inspection during regular business hours in the FCC Reference 
Center, Federal Communications Commission, 45 L Street NE, Washington, 
DC 20554.

I. Introduction

    1. For over two decades, schools and libraries have relied on the 
Federal Communications Commission's E-Rate program to secure affordable 
telecommunications and broadband services to provide connectivity for 
schools and libraries and connections for students and library patrons. 
In recent years, the Commission has kept pace with a changing digital 
landscape and adapted the E-Rate program to meet program participants' 
growing demand for broadband and more equitable access to funding for 
Wi-Fi networks and other internal connections. And, to address the 
daunting challenges that schools and libraries have faced in enabling 
and facilitating remote learning for students and virtual library 
services for library patrons during the coronavirus (COVID-19) 
pandemic, Congress and the Commission have provided flexibility and 
funding to support remote learning.
    2. At the same time as the Commission has provided enhanced access 
to funding and flexibility in meeting evolving public needs, it has 
been mindful of the need to protect E-Rate funds, requiring them to be 
committed for eligible services and equipment provided to eligible 
entities, for eligible purposes, and in accordance with program rules. 
Inherent in maintaining good stewardship of program funds is the 
Commission's commitment to protect against waste, fraud, and abuse and 
ensure that funds are properly disbursed and used for appropriate 
purposes. Last year, an audit completed by the Government 
Accountability Office (GAO) identified opportunities to misrepresent

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compliance with competitive bidding requirements as an underlying fraud 
risk for the E-Rate program. Similarly, the Commission's Office of 
Inspector General (OIG) has recommended safeguards to protect the E-
Rate program, including establishing a central repository for the 
submission of competitive bidding documents and a holding period, so 
that bids are not released to applicants until after the closing of a 
28-day bidding window.
    3. Taking into account these recommendations, the Commission 
proposes a change to the E-Rate program targeted at several goals: 
Streamlining program requirements for applicants and service providers, 
strengthening program integrity, preventing improper payments, and 
decreasing the risk of fraud, waste, and abuse. Specifically, the 
Commission seeks comment on a proposal to implement a central document 
repository (i.e., bidding portal) through which service providers would 
be required to submit bids to the E-Rate program administrator, USAC, 
instead of directly to applicants. The Commission seeks comment on 
requiring USAC to temporarily withhold submitted bids from applicants 
for a stated minimum period of time. In addition, the Commission seeks 
comment on whether to revise its rules to require applicants to submit 
competitive bidding documentation that is not captured in the bidding 
portal. Finally, the Commission seeks comment on any potential benefits 
and burdens that the adoption and implementation of a bidding portal 
and these associated changes would have on E-Rate program participants 
and the public as well as any required rule modifications needed to 
effectuate these changes.

II. Discussion

    4. The Commission proposes changes to the competitive bidding 
process for the E-Rate program to enhance program integrity and 
administrative efficiency. Specifically, the Commission proposes 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 by submitting bids directly to applicants. 
The Commission also seeks comment on establishing timeframes on when 
applicants should be able to review the bids that service providers 
submit in the portal. Further, the Commission seeks comment on 
requiring applicants to submit bidding selection documentation, such as 
bid comparison matrices and related contract documents, at the time 
applicants request funding for eligible services. The Commission seeks 
comment on these program changes to guide and assist E-Rate program 
participants in complying with the Commission's competitive bidding 
rules, provide transparency and promote fair and open competitive 
bidding processes, and minimize potential fraud risk for the E-Rate 
program.
    5. The 2020 GAO E-Rate Report highlights that USAC does not have a 
proactive way to monitor the bidding information submitted by bidders 
and must rely on requesting such information from applicants or service 
providers after the culmination of the bidding process. The Report 
identifies opportunities to misrepresent compliance with the 
competitive bidding rules and processes as an underlying key fraud risk 
and notes that such an opportunity exists because of the lack of 
visibility into the competitive bids that applicants receive. The GAO 
also references the OIG's previous recommendation that the Commission 
direct USAC to implement an online competitive-bidding repository. The 
OIG had asserted that ``[s]ubmission of service provider bids prior to 
bid selection . . . [would] prevent[] a service provider or applicant 
from submitting an altered bid or contract to USAC during its Program 
Integrity Assurance (PIA) review to create the appearance of compliance 
with [p]rogram rules.'' In response to these concerns, the Commission 
recognizes that a bidding portal could provide better insights for USAC 
in an effort to strengthen the integrity of the E-Rate program.
    6. The Commission proposes to require service providers to submit 
bids responsive to FCC Forms 470 through a bid portal managed by USAC, 
rather than by sending bids directly to the applicant. The Commission 
anticipates that requiring service providers to submit bids for 
requested E-Rate services and equipment through a bidding portal will 
improve USAC's and the Commission's ability to ensure that all entities 
participating in the E-Rate program conduct a fair and open competitive 
bidding process. The Commission expects that, in addition to other 
benefits, a portal that stores E-Rate service providers' bids could 
prevent certain improper payments and compliance findings related to 
applicants' failures to produce bid documentation when such 
documentation is requested by USAC in the pre-commitment and post-
commitment stages of application review. Moreover, because the bidding 
portal will track and store bids and related communications, the portal 
could save time and increase efficiencies for both applicants and USAC 
with regard to competitive bidding reviews and audits. The Commission 
seeks comment on whether a bidding portal would help to promote fair 
and open competitive bidding and reduce fraud. The Commission also 
seeks comment on how great the risk is that applicants or service 
providers may alter or ignore qualified bids to affect the bidding 
process. Would a bidding portal complement or supplement existing rules 
and procedures to reduce bid collusion and the risk of fraud in the 
competitive bidding process? Are there solutions other than a bidding 
portal or changes to the competitive bidding rules that could likewise 
reduce bid collusion and the risk of fraud? Commenters are invited to 
address the feasibility, necessity, and cost effectiveness of 
implementing a nationwide bidding portal. Are there any other benefits 
or burdens the Commission should consider, either to stakeholders or 
the broader public, in deciding whether to implement its competitive 
bidding proposal?
    7. The Commission recognizes that requiring bid responses to be 
submitted to USAC through a bidding portal would change how service 
providers submit and share bids with applicants. While these changes 
may streamline documentation submission and the competitive bidding 
procedures for applicants and service providers, as well as increase 
transparency for USAC and the Commission into the bidding process, they 
also may present obstacles for applicants and service providers. 
Therefore, the Commission seeks comment on the impact of this proposed 
requirement on E-Rate program participants, particularly smaller 
schools and libraries. Should service providers submit their bids 
directly through the bidding portal or by some other method? Would the 
requirement to use a central bidding portal discourage participation by 
applicants and service providers in the E-Rate program? Would 
applicants be more inclined to hire consultants if a bidding portal is 
imposed? How would these changes benefit or burden E-Rate program 
participants? For example, would requiring bids to be uploaded to a 
central repository managed by USAC help applicants comply with the 
Commission requirement to retain documentation demonstrating compliance 
with E-Rate program requirements? Commenters are requested to quantify 
benefits and burdens, both in terms of time and money. Do these changes 
promote any

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cost and resource efficiencies for E-Rate program participants because 
they provide ``automated'' assistance with USAC's efforts to seek 
competitive bidding compliance documentation during Program Integrity 
Assurance and program audit reviews? Are there any other alternatives 
the Commission should consider to ensure that applicants and service 
providers comply with competitive bidding rules?
    8. The Commission also seeks comment on whether service providers 
should be required to submit information in a manner that enables 
applicants to compare competing bids. Do applicants face difficulty in 
comparing bids because service providers have submitted their bid 
responses in a variety of formats? Are there other changes the 
Commission should consider that could reduce burdens related to 
competitive bidding for applicants and service providers in using a 
bidding portal? In some cases, applicants do not receive any bids or 
receive bids that are not responsive to their requests for service 
during the specified bidding period. The Commission proposes that the 
portal allow applicants in these situations to extend their competitive 
bidding periods as needed and seeks comment on this proposal. 
Alternatively, could the Commission treat the bidding portal as a 
repository for bids, that would permit applicants to upload bids 
received after the fact, but would not require service providers to 
submit bids through the portal? The Commission seeks comment on the 
potential benefits and drawbacks of using the bidding portal in this 
manner.
    9. Bid Holding Period. E-Rate program rules currently require 
applicants wait at least 28 days from the posting of their FCC Form 470 
before entering into an agreement with a service provider. Actual 
deadlines for bids to be submitted vary by applicant and are not set by 
Commission rules or E-Rate program requirements. Applicants are 
permitted to post FCC Forms 470 as soon as USAC releases the form. 
Currently, applicants are able to review submitted bids from service 
providers as they are received which may introduce risk into a fair and 
open competitive bidding process. In the 2017 OIG Report, the OIG 
recommended that USAC hold service provider bids in a bid repository 
for a ``28-day bidding window'' to ensure that service providers were 
competing on a ``level playing field.''
    10. The Commission seeks 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. Is 28 days an 
appropriate length of time to withhold bids? Is a shorter or longer 
period appropriate in general or for specific circumstances? Should the 
withholding period be tied to a specific event such as the posting of 
an applicant's FCC Form 470? If applicants are required to wait before 
they can access bids submitted in response to their FCC Form 470 
service requests, how would the timing variability of their 
procurements be impacted by such a proposal? Would a minimum bid 
holding period assist an applicant in complying with Sec.  54.503(c)(4) 
because it would not be able to view bids for at least four weeks and 
would presumably be prevented from entering into agreements until that 
time? If the Commission requires applicants to wait a specified amount 
of time before accessing bids, should it also preclude service 
providers from sharing bids directly with applicants during this time 
period? The Commission seeks comment on these questions.
    11. In some cases, for a variety of reasons, applicants file their 
FCC Forms 470 toward the end of E-Rate application filing window 
closing date, leaving little time remaining to wait a minimum of 28 
days, select service providers, and seek funding. If the Commission is 
to require applicants to wait a specified length of time before 
accessing bids, are there safeguards it can implement to help 
applicants better align their timelines? For example, should the 
ability to file an FCC Form 470 be closed for a certain period of time 
before the FCC Form 471 window closes to allow for both a minimum 
number of days (e.g., a 28-day waiting period) plus additional time 
(e.g., two weeks) for applicants to review bids and make service 
provider selections? Are there processes that would be disrupted by 
withholding bid responses from applicants for a minimum period of time? 
The Commission seeks comment on this or other proposals that would 
allow any waiting period it may adopt to align with applicants' need 
for time for bid analysis and provider selection. To better understand 
the potential impact on applicants, the Commission also seeks 
information on the reasons why some applicants post FCC Forms 470 to 
initiate the competitive bidding process near the end of the FCC Form 
471 filing window.
    12. The Commission seeks comment on any overall program benefits 
these proposals may offer to applicants, including the prevention of 
inadvertent errors that lead them to run afoul of the E-Rate 
competitive bidding requirements. What other compliance issues with the 
Commission's competitive bidding requirements might their proposals 
help applicants and service providers avoid? Should the Commission 
consider changes to the training and outreach that USAC offers to 
applicants and service providers to address issues relating to 
competitive bidding and document retention, as SECA suggests? Are there 
other aspects of the competitive bidding rules that are confusing, 
burdensome, or vague that may lead to inadvertent, but not necessarily 
fraudulent, competitive bidding violations? If so, what are they and 
what modifications might the Commission make to resolve any confusion 
and provide clarity around these rules?
    13. System Issues. The Commission seeks comment on how best to 
leverage the existing web-based account and application management 
portal, known as the E-Rate Productivity Center or EPC in implementing 
a bidding portal. Are there specific administrative burdens or benefits 
that the Commission should consider if the bidding portal is integrated 
with EPC? Conversely, what administrative burdens or benefits are 
associated with using a separate system for this purpose? Is there a 
risk of applicant confusion and technical difficulty if applicants are 
asked to use two systems to store documentation for the E-Rate program? 
Or does it matter to applicants, so long as the user experience is not 
compromised? Can any obstacles be overcome with user testing and 
outreach?
    14. Interaction with State and Local Procurement Rules. E-Rate 
applicants are required to comply with all applicable state and local 
procurement rules, in addition to the E-Rate competitive bidding rules. 
What are the existing state procurement laws, local procedures and best 
practices that promote fair and open competition? Would the creation of 
a bidding portal conflict with these state and local procurement 
requirements? Would adopting an E-Rate bidding portal require service 
providers submitting bids in certain jurisdictions to submit bids in 
more than one way because of existing state or local requirements? If 
so, the Commission seeks more information on the specific circumstances 
in which service providers are required to submit their bids for 
eligible services through other mechanisms. If, for example, certain 
state or local requirements mandate that service providers submit bids 
directly to applicants such as through email, or through another online 
platform that would allow applicants to view bids before they would be 
permitted to under

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any new E-Rate requirements, how might that impact the usefulness of a 
USAC-administered portal? Other state law requirements may include a 
mini-bid process when selecting vendors from a multiple award state 
master contract. Would the bidding portal interfere with applicants who 
use a state master contract that requires a mini-bid process? In 
addition, some states may have requirements relating to public 
disclosure of bids, prequalification of bidders and treatment of 
proprietary or confidential information. How should the Commission take 
those requirements into account in establishing a bidding portal? 
Although the current E-Rate competitive bidding requirements apply in 
addition to state and local competitive bidding requirements and are 
not intended to preempt such state or local requirements, the 
Commission seeks comment on how to address any apparent conflicts with 
the goals the Commission is attempting to achieve through the proposals 
stated herein. Additionally, the Commission is aware that certain 
state, local or other requirements, as well as other factors, may 
dictate varying procurement timeframes and processes for different 
applicants in the E-Rate program. The Commission seeks comment on how 
the use of the proposed E-Rate competitive bidding portal or an imposed 
waiting period could impact procurement timing for these applicants.
    15. Other Bidding Portal Considerations. Are there potential 
obstacles the Commission should examine? For example, or pose technical 
challenges? The Commission also seeks comment on the impact of these 
proposals on applicants' bidding processes, including their timing for 
review and selection of providers.
    16. The use of the bidding portal would not be required for the 
procurement of services that have been granted a competitive bidding 
exemption per the Commission's rules. Are there any other scenarios in 
which E-Rate participants should not be required to use the bidding 
portal? Are there any functions of the bidding portal that should be 
used by applicants with exemptions to help USAC review and ascertain 
compliance with competitive bidding rules? For example, for those 
applicants using state master contracts, is there documentation that 
applicants should be required to upload into the portal to demonstrate 
compliance with the E-Rate rules? The Commission seeks comment on any 
additional considerations that may impact applicants' and service 
providers' use of the bidding portal.
    17. E-Rate program applicants and the Rural Health Care (RHC) 
program applicants currently submit different information to USAC at 
different points in their respective application processes. E-Rate 
applicants routinely submit bidding and contract documentation if 
requested by USAC or auditors as part of pre-commitment reviews (e.g., 
standard PIA questions concerning bidding or special compliance 
competitive bidding reviews); during post-commitment comprehensive 
audits; and, during payment quality assurance reviews for computing the 
percentage of improper payments that must be reported annually to 
Congress. By contrast, in the RHC program, applicants are required to 
``submit documentation to support their certifications that they have 
selected the most cost-effective option'' at the time a funding request 
is submitted to USAC. RHC program applicants must also submit contract 
documentation with their funding requests.
    18. The Commission proposes to align the competitive bidding 
documentation requirements of the E-Rate program with RHC program 
rules. Under this proposal, E-Rate applicants would similarly be 
required to submit documentation demonstrating compliance with the 
competitive bidding rules and requirements at the time they submit 
their FCC Forms 471 to seek funding in the E-Rate program. The 
Commission seeks comment on this proposal. Should applicants in the E-
Rate program be required to submit the same competitive bidding 
documentation with their funding requests as required in the RHC 
program? Is such a requirement appropriate and necessary? Is more or 
less information needed from E-Rate applicants to demonstrate program 
compliance? For example, are the bidding materials the portal would 
already capture, such as the bids and related communications, plus the 
applicant submission of its bid comparison documentation, sufficient 
for compliance review? Or, should the Commission consider requiring the 
submission of additional documentation? For example, if applicants do 
not receive any bids in response to their posted requests, should 
applicants be required to provide other documentation explaining how 
they selected their selected service provider? Would requiring 
applicants to provide contracting documents help applicants demonstrate 
compliance and help protect the program from fraud, waste and abuse? 
Are there other factors to take into consideration, such as the size of 
the applicant or the amount of their new contracts?
    19. The Commission also seeks comment on whether there could or 
should be controls in the process to prevent applicants from proceeding 
with filing their FCC Forms 471 before submitting required competitive 
bidding and contract documentation. For example, should there be a 
system-implemented control put in place and should applicants not have 
access to file FCC Forms 471 in EPC until required documents are 
uploaded into the portal? Or, would it be less burdensome on both 
applicants and USAC to direct USAC to not process FCC Forms 471 until 
the required documentation has been filed?
    20. The Commission seeks to facilitate greater transparency for 
USAC and them into the bidding process to help minimize fraud risk. The 
lack of transparency in the bidding process makes it more challenging 
for USAC and the Commission to ascertain compliance with E-Rate program 
rules. When applicants are not able to provide bidding documentation to 
show compliance with the Commission's rules upon request, USAC must 
render the request as non-compliant and deny funds, or if findings 
regarding lack of competitive bidding documentation are made pursuant 
to audit, and funds have been disbursed, these are deemed improper 
payments and funding must be returned. Similarly, when applicants 
submit bidding documentation after the fact, there is less certainty 
about the validity of the bidding process. The Commission seeks comment 
on its proposal to align E-Rate rules with RHC obligations by requiring 
applicants to submit competitive bidding documentation to demonstrate 
compliance with the Commission's rules.
    21. Section 54.516 requires applicants to retain bids and other 
documentation related to E-Rate-supported services for at least 10 
years after the later of the last day of the applicable funding year or 
the service delivery deadline, and to produce that documentation at the 
request of USAC, the Commission, or state or other federal agencies.
    22. After the competitive bidding process is complete, the 
Commission anticipates that all documentation associated with the FCC 
Form 470 Service Request (e.g., bids, bidder questions and related 
correspondence, selection documentation, contract documentation) could 
be securely stored in the bidding portal. Using the portal as a 
repository of these documents could serve to minimize the need for 
outreach and improve process efficiencies for USAC and E-Rate

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program participants. The Commission seeks comment on the use of the 
portal as a repository of documents and how this might serve the public 
interest by placing fewer burdens on participants in the program. Are 
there any alternatives the Commission should consider?
    23. The Commission seeks comment on how the use of the bidding 
portal for document storage relates to the Commission's E-Rate 
recordkeeping requirements, codified at Sec.  54.516 of the 
Commission's rules. Should E-Rate participants be exempt from certain 
recordkeeping requirements if participants properly submitted the 
documents into the portal? Should applicants and service providers be 
permitted access to their stored competitive bidding documents for a 
period long enough to be able to comply with recordkeeping 
requirements? Also, 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)? The 
Commission seeks comment on whether there are any legal or other 
barriers to having E-Rate program participants comply with 
documentation and recordkeeping requirements by operation of using the 
bidding portal to store their competitive bidding records.
    24. Recognizing that E-Rate competitive bidding can be an iterative 
process, the Commission seeks comment on how it can best use the portal 
to accommodate related steps of the process. How can the portal 
replicate or enhance the typical activities that can and do occur 
during the competitive bidding process and are necessary for successful 
bidding outcomes for applicants? For example, during procurement 
periods service providers are typically able to submit questions about 
requests for service in FCC Forms 470 and Requests for Proposals (RFPs) 
and receive answers from the applicants. All potential bidders and 
service providers must have access to the same information and must be 
treated in the same manner throughout the procurement process as 
required by the Commission's rules. Likewise, applicants may have 
questions about bid responses for service providers that lead to 
clarifications about bids. The Commission seeks comment on whether 
these activities should be required to occur in the portal. If so, the 
Commission proposes that questions and answers about service requests 
and RFPs be anonymously made available and viewable to the applicants 
and all interested bidders for the requested services, and the portal 
should be used to track and store this correspondence. The Commission 
seeks comment on this proposal. Also, the Commission seeks comment on 
how the portal should handle clarifications sought by applicants about 
bids that have been submitted and made available for review.
    25. The Commission seeks comment on what other types of 
communications between service providers and applicants and procurement 
activities should be captured in the portal, and how to implement this 
in a way that is streamlined and easy to use for E-Rate program 
participants. Are there other types of functionality that should be 
considered for the bidding portal, and how should these functions be 
implemented in a way that will help support fair and open competitive 
bidding?
    26. The Commission also seeks comment on those procurement 
processes that facilitate bidding in stages, potentially including 
initial and subsequent rounds of bidding (e.g., requests for best and 
final offers). Because these are procurement steps that effectively 
extend the competitive bidding period, how should they be captured in 
the bidding portal and how would this impact the proposal in this 
document to implement a time period when bids are withheld from 
applicants? How could these processes be replicated and captured in the 
bid portal in a way that maintains anonymity and refrains from bid 
disclosure yet promotes transparency? Would the use of a bidding portal 
interfere with a multi-stage procurement process and if so, how?
    27. Implementation of a competitive bidding portal would require 
significant development and implementation resources, from the 
Commission, USAC, and E-Rate stakeholders. If adopted, the Commission 
proposes that USAC, working with the Wireline Competition Bureau 
(Bureau) and the Office of Managing Director (OMD), initiate technical 
development of a competitive bidding portal as soon as possible, with a 
goal of making it available for funding year 2024. The Commission 
further proposes E-Rate stakeholder outreach and engagement to ensure 
that the bidding portal meets the needs of applicants and service 
providers and facilitates a smooth transition. To the extent necessary, 
the Commission proposes delegating authority to the Bureau and OMD to 
address implementation details that may arise, consistent with any 
rules that are ultimately adopted. By engaging stakeholders and 
empowering the Bureau and OMD to resolve technical and logistical 
implementation issues, the Commission anticipates that a competitive 
bidding portal could be completed efficiently and effectively. The 
Commission seeks comment on these proposals, including the proposed 
implementation timeframe. Would launching the portal so that it would 
be operational for the start of the funding year 2024 competitive 
bidding period be feasible in light of the technical and logistical 
challenges involved? The Commission notes that the bidding portal would 
need to be completed and live by July 1, 2023, the first day to 
initiate competitive bidding processes for funding year 2024. Is there 
sufficient time to design, develop, and implement a bidding portal by 
July 1, 2023? If the portal opens on July 1, 2023, will this allow 
enough time for applicants and service providers to receive training on 
how to use the portal to be able to successfully submit and receive 
bids for funding year 2024? Are there any other issues that may arise 
if the Commission shifts from the current approach to a centralized 
competitive bidding portal? Commenters are invited to raise any 
operational, legal, logistical, or administrative concerns that the 
Commission has not already identified.
    28. The Commission proposes amending Sec.  54.503 of the 
Commission's rules to require service providers to submit bids 
responsive to FCC Forms 470 in a bidding portal. The Commission seeks 
comment on other related rule changes, including the proposal for USAC 
to withhold bids from applicants for a minimum period and to require 
applicants to submit competitive bidding compliance documentation at 
the time they seek E-Rate funding by submitting FCC Forms 471. The 
Commission seeks comment on this proposed rule, and whether there are 
other conforming rule changes that the Commission should consider. 
Relatedly, the Commission seeks comment on any impacts these changes, 
if adopted, would or should have on existing E-Rate program forms and 
the certifications to those forms.
    29. Finally, the Commission proposes to make an additional minor 
amendment to Sec.  54.503(b) of the Commission's rules which 
incorrectly indicated that the exemption to the E-Rate competitive 
bidding requirements is in Sec.  54.511(c) when instead it is 
referenced in Sec.  54.503(e). Are there other rule changes that may be 
needed

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as a result of the Commission's proposals?
    30. Digital Equity and Inclusion. Finally, the Commission, as part 
of its continuing effort to advance digital equity for all, including 
people of color, persons with disabilities, persons who live in rural 
or Tribal areas, and others who are or have been historically 
underserved, marginalized, or adversely affected by persistent poverty 
or inequality, invites comment on any equity-related considerations and 
benefits (if any) that may be associated with the proposals and issues 
discussed herein. Specifically, the Commission seeks comment on how its 
proposals may promote or inhibit advances in diversity, equity, 
inclusion, and accessibility, as well the scope of the Commission's 
relevant legal authority.

III. Procedural Matters

A. Paperwork Reduction Act

    31. This proposed rule may contain new or modified information 
collection(s) subject to the Paperwork Reduction Act (PRA) of 1995. If 
the Commission adopts any new or modified information collection 
requirements, they will be submitted to the Office of Management and 
Budget (OMB) for review under Sec.  3507(d) of the PRA. OMB, the 
general public, and other federal agencies will be invited to comment 
on the new or modified information collection requirements contained in 
this proceeding. In addition, pursuant to the Small Business Paperwork 
Relief Act of 2002, the Commission seeks specific comment on how it 
might ``further reduce the information collection burden for small 
business concerns with fewer than 25 employees.''
    32. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA) the Commission has prepared this Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities by the policies and rules 
proposed in this Modernizing the E-Rate Program for Schools and 
Libraries Program, et al, NPRM. Written comments are requested on this 
IRFA. The Commission will send a copy of the NPRM, including this IRFA, 
to the Chief Counsel for Advocacy of the Small Business Administration 
(SBA). In addition, the NPRM and IRFA (or summaries thereof) will be 
published in the Federal Register. Responsive comments must be 
identified as responses to the IRFA and must be filed on or before 30 
days from publication of this item in the Federal Register. Reply 
comments to the IRFA must be filed on or before 60 days from 
publication of this item in the Federal Register.
    33. The rules the Commission proposes in this proposed rule are 
directed at improving the competitive bidding process for the E-Rate 
program. The new requirements, if adopted, would require service 
providers to submit bids in response to requests for services into a 
bidding portal managed by USAC. The requirements, if adopted, may also 
require an applicant to wait for a period of time before it can review 
service providers' responsive bids. The proposed regulations would also 
require E-Rate applicants to submit competitive bidding documentation 
into the bidding portal to help demonstrate compliance with the rules, 
e.g., bid comparison documentation. One of the objectives of the 
proposed rule changes and implementation bidding portal is to assist 
applicants in complying with the competitive bidding requirements and 
related documentation requirements.
    34. The legal basis for this proposed rule is contained in sections 
1 through 4, 201, 254, 303(r), and 403 of the Communications Act of 
1934, as amended by the Telecommunications Act of 1996, 47 U.S.C. 151 
through 154, 201, 254, 303(r), and 403.
    35. 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 proposed regulations, if adopted. 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 that: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
Small Business Administration (SBA).
    36. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. The Commission's actions, over time, may affect small 
entities that are not easily categorized at present. The Commission 
therefore describes here, at the outset, three broad groups of small 
entities that could be directly affected herein. First, while there are 
industry specific size standards for small businesses that are used in 
the regulatory flexibility analysis, according to data from the SBA 
Office of Advocacy, 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 30.7 million businesses.
    37. Next, the type of small entity described as a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000 
or less to delineate its annual electronic filing requirements for 
small exempt organizations. Nationwide, for tax year 2018, there were 
approximately 571,709 small exempt organizations in the U.S. reporting 
revenues of $50,000 or less according to the registration and tax data 
for exempt organizations available from the IRS.
    38. Finally, the small entity described as a ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' U.S. Census 
Bureau data from the 2017 Census of Governments indicate that there 
were 90,075 local governmental jurisdictions consisting of general 
purpose governments and special purpose governments in the United 
States. Of this number, there were 36,931 general purpose governments 
(county, municipal and town or township) with populations of less than 
50,000 and 12,040 special purpose governments--independent school 
districts with enrollment populations of less than 50,000. Accordingly, 
based on the 2017 U.S. Census of Governments data, the Commission 
estimates that at least 48,971 entities fall into the category of 
``small governmental jurisdictions.''
    39. Small entities potentially affected by the proposed regulations 
herein include Schools and Libraries, Telecommunications Service 
Providers, Internet Service Providers, and Vendors of Internal 
Connections.
    40. The proposal under consideration would require service 
providers that seek to bid on requests for services in the E-Rate 
program, bid in a portal. An additional proposal would require E-Rate 
program applicants to submit bidding documentation into the bidding 
portal before they seek funding for eligible services to demonstrate 
compliance with program rules for competitive bidding. The records that 
would be requested for submission into the portal are the same records 
that program participants must retain and must produce upon request to 
the Commission, USAC, and other entities with authority over the 
participants.
    41. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has

[[Page 4189]]

considered in reaching its proposed approach, which may include the 
following four alternatives (among others): (1) The establishment of 
differing compliance or reporting requirements or timetables that take 
into account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.
    42. In this proposed rule, the Commission seeks comment on a reform 
to the E-Rate program. The Commission seeks to update program rules and 
administration for applicants and service providers that participate in 
the E-Rate program and therefore must follow the E-Rate competitive 
bidding requirements. The Commission recognizes that its proposed 
regulations would impact small entities. The rules the Commission 
proposes may decrease recordkeeping burdens on small entities and may 
increase reporting burdens on small entities.
    43. Service providers required to submit bids on services in 
bidding portal. By requiring bidding to take place in the portal, the 
portal would capture and save the bids, as well as any related 
applicant and service provider correspondence. While this may not 
eliminate recordkeeping requirements, it should serve to make 
compliance with these requirements less burdensome.
    44. Compliance burdens. Service providers currently bid to provide 
services in the E-Rate program in a variety of ways, and the bidding 
portal requirement may be in addition to bidding requirements that may 
exist outside of universal service program rules. Implementing the 
Commission's proposed regulations may also impose some burden on small 
applicant entities by requiring them to submit competitive bidding 
compliance documentation in the portal before seeking funding for 
requested services.

B. Ordering Clauses

    45. Accordingly, it is ordered, that, pursuant to the authority 
found in sections 1 through 4, 201, 254, 303(r) and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151 through 154, 201, 
254, 303(r), and 403, this Notice of Proposed Rulemaking is adopted.
    46. It is further ordered that, pursuant to applicable procedures 
set forth in Sec. Sec.  1.415 and 1.419 of the Commission's rules, 47 
CFR 1.415, 1.419, interested parties may file comments on the NPRM on 
or before 60 days from publication of this document in the Federal 
Register, and reply comments on or before 90 days from publication of 
this document in the Federal Register.

List of Subjects in 47 CFR Part 54

    Communications common carriers, Infants and children, Internet, 
Libraries, Reporting and recordkeeping requirements, Schools, 
Telecommunications,.

Federal Communications Commission.
Katura Jackson,
Federal Register Liaison Officer, Office of the Secretary.

Proposed Regulations

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 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, and 1601-1609, unless otherwise 
noted.

0
2. 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 Bidding 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 requesting entity shall 
then wait at least 28 days 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).
    (5) Service providers shall respond to requests for services 
through a secured website portal (``bidding portal'' or ``bid portal'') 
managed by the Administrator, by uploading bids into the portal. 
Service providers will not have access to the bids of other service 
providers. Service providers may anonymously submit questions or other 
inquiries to applicants through the bidding portal, to which applicants 
must respond during the competitive bidding process. No communication 
between service providers and applicants related to the competitive bid 
or the competitive bidding process is permitted outside of the bidding 
portal during the competitive bidding process. All potential program 
bidders and service providers must have access to the same information 
and must be treated in the same manner throughout the procurement 
process.
    (6) After making commitments with the selected providers of 
services, and prior to submitting an FCC Form 471 seeking to receive 
discounts on eligible services, eligible schools, libraries, or 
consortia shall upload the following to the bidding portal:
    (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 prior to and during the competitive bidding, evaluation, and 
award phase of the process.
    (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

[[Page 4190]]

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 (ACD) 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.

[FR Doc. 2022-00684 Filed 1-26-22; 8:45 am]
BILLING CODE 6712-01-P