Vendor E-rate Update - Free Service Advisory
Message Posted March 30, 1998
SLC RELEASES ADVISORY TO VENDORS WHO ARE OFFERING POST-DISCOUNT PROMOTIONS
It has recently come to Schools and Libraries Corporation's attention that some vendors may be offering price reductions or promotional offers for services in addition to the discounts available from the Schools and Libraries Universal Service Program. We are pleased that vendors are increasing the ability of schools and libraries to acquire the services that they need to make effective use of technology. However, we want to remind applicants and vendors that the value of these price reductions/promotional offers must be applied before the vendor submits the bid for the pre-discount cost. The pre-discount cost is the basis upon which funding requests will be made by Form 471 applicants. The value of all price reductions or promotional offers must be deducted from the cost of service to the applicant to establish the applicant's pre-discount cost. In other words, the Universal Service Program "Pre-Discount Cost" that will appear in Columns 8, 9, and 10 of Items 15 and 16 on FCC Form 471 must take into account all vendor price reductions.
For example, if a vendor informs an applicant that its best regular price is $100, but that it will also offer the applicant a 20% price reduction, then the pre-discount cost to be included on the Form 471 is $80. The applicant's universal service discount will be applied to this $80 pre-discount cost. The vendor and applicant cannot use the $100 price as the pre-discount cost to be used for computing the Schools and Libraries Universal Service Program funding, and then have the vendor convey the additional 20% price reduction to the applicant's non-discounted portion of the cost. In other words, all vendor discounts must be reflected in the competitive bid price offered in response to a Form 470 posting. The SLC will be reviewing applications to assure that the FCC rules on competitive bids and lowest corresponding price are complied with fully. If the SLC determines that a request in Column 10 of Items 15 or 16 features a pre-discount cost where the value of vendor price reductions/promotional offers has not already been deducted, the SLC will deny the request for such services.
We also want to remind all Form 471 applicants that when examining their bids for eligible services, the applicant must select the most cost-effective bid. This means that the price should be the primary factor, but does not have to be the sole factor, in evaluating the bids. Other relevant factors may include: prior experience including past performance; personnel qualifications including technical excellence; management capability including schedule compliance, and environmental objectives. The value or price competitiveness of services or products that are ineligible for universal service discounts cannot be factored into the evaluation of the most cost-effective supplier of eligible services.
For example, Vendor A offers a price for eligible services of $1,000. Vendor B offers a price for the same services for $1,200 dollars, but this price also includes ineligible services valued at $300 in that price (at no additional cost to the applicant). The value of this "free" software or hardware cannot be factored into the evaluation of the most cost-effective supplier of eligible services. All other things being equal, Vendor A is offering the most cost-effective bid for services eligible for a universal service discount.
-- SLC
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Julie L. Tritt
Office of Educational Technology 717/787-5820
Pennsylvania Department of Education 717/787-7222 (fax)
333 Market Street, 10th Floor 00jtritt@psupen.psu.edu
Harrisburg, PA 17126 www.cas.psu.edu/pde.html
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