Signing Contracts for the E-Rate Program

If you’ve been following HWC’s E-Rate blog posts, you are aware of the process of applying for the E-Rate program. E-Rate reduces telecom expenses for schools and libraries through annual reimbursements on these types of costs. So far, we’ve walked you through the process to the point where a contract with service providers will need to be signed. 

It is critically important to remember that you not sign any contracts before the Allowable Contract Date, which follows the 28-day waiting period wherein you have collected bids following the E-Rate program’s competitive bidding rules. Once the waiting period is over, you will need to notify service providers as soon as possible that they’ve won the bid. 

It can take some service providers a couple of weeks to prepare a contract, especially when it gets close to the filing deadline. As mentioned previously, it is imperative that you meet deadlines, filing the proper forms on time. Applicants must be aware of rules and timelines for the E-Rate program. 

Except for non-contract month-to-month arrangements, applicants for the E-Rate program must have a contract with a service provider prior to completing and submitting a signed Form 471. Applicants must comply with state or local contract law, and must be able to demonstrate that they had a contract in place at the time they certified a Form 471.

Under FCC requirements and E-Rate program rules, a verbal agreement is not considered legally binding. If applicants intend to utilize a purchase order as their contract, they must check state and/or local contract laws to ensure they are meeting contract requirements for a legally binding agreement. Acceptable standards for applicant signature and date in a contract include the applicant’s handwritten signature and date, and the date the contract was awarded in the body of the contract and the opening statements. 

There are a few important things to note about contracts. First, applicants need to understand the amount owed that is their responsibility, versus what the E-Rate program will reimburse for services (your “discount percentage”).

A contract that includes voluntary extensions is a contract that expires at the end of the original term, but which may be voluntarily extended for one or more years. Not all service providers include this in their contracts, but applicants can ask that extensions be included. The decision to extend a contract with voluntary extensions must take place prior to filing the Form 471 for the funding year in which the contract would otherwise expire. Contracts for non-recurring services may be voluntarily extended so that they coincide with the deadline for the delivery and installation for such services, as long as contract rules allow for the extension in state or local contract law. 

It is important to ensure your contract matches what was listed in the Form 470 (i.e., if you didn’t include the service in the Form 470 that you’re now signing a contract for, it won’t be approved), as well as what you enter into the Form 471. For example. the expiration date, Monthly Recurring Cost, etc., in the Form 471 must match the contract. 

As discussed in our blogs concerning E-Rate program rules, it is extremely important that applicants be aware of timelines and keep excellent records that are in compliance with E-Rate requirements. If you are in need of assistance with applications for the E-Rate program, or otherwise need assistance with voice audits or telecom project management, HWC Consultants is here to help!