Purchasing Category 2 E-rate Equipment

April 4, 2019

~ Purchases can be made now ~

More than 400 PA applicants requested Category 2 equipment funding in FY 2019, and although FY 2019 E-rate funding commitment letters (FCDLS) have not yet started to be issued, schools and libraries may wish to purchase the requested equipment in advance.  E-rate rules permit applicants to purchase C2 equipment on or after April 1, 2019, BUT invoices (BEARs or vendor SPIs) cannot be submitted to USAC for reimbursement until July 1, 2019 or receipt of the FCDL – whichever is later.  Applicants wishing to make these purchases prior to the receipt of their FCDLs should be mindful that they will be paying 100% of the cost of the equipment and taking on the risk that their E-rate funding request may not be approved.

Step 1)  Create Purchase Order

The following are instructions on how to purchase the Category 2 equipment.  Note:  1a relates to creating a PO when you’re paying the vendor IN FULL.  1b (in red) relates to creating a PO when you would like to receive DISCOUNTED VENDOR INVOICES that include your E-rate discount.

            1a) PO – No E-rate Discounts:

  • General Description of Equipment (i.e. Ruckus Wireless)
  • Vendor Name
  • Funding Year 2019
  • Form 471 #
  • Funding Request #
  • Total Cost of Equipment (without E-rate discounts)

            1b) PO– With E-rate Discounts:

  • General Description of Equipment (i.e. Ruckus Wireless)
  • Vendor Name:
  • Funding Year 2019
  • Form 471 #
  • Funding Request #
  • Total Cost of Equipment (without E-rate discounts)
  • E-rate Discount %
  • E-rate Share (equipment cost * discount %)
  • District Share (equipment cost – E-rate share):  THIS WILL BE YOUR PO AMOUNT.

* Be sure to add any ineligible costs or amounts not covered by E-rate to the total PO amount.

For example, if the full cost of the equipment is $100,000, and your discount is 40%, you would list $40,000 as the E-rate Discounted Amount, and $60,000 as the District Share.  Obviously, this only applies if you want discounted billing.  If you want to pay the vendor for the full cost and then seek reimbursement from USAC, you would just list the PO amount as the total cost, not the non-discounted amount.

Step 2) Label/Update Asset Inventory

After the equipment arrives, it’s extremely important that you take the following steps to document and label your equipment because future E-rate audits will require such documentation to be provided/shown:

1)  When the equipment arrives, label each piece of equipment with “FY 2019, FRN #XXX“. This is what the auditors will look for during their site visits.

2)  Record each piece of equipment in your school’s Asset (Inventory) Register or create your own E-rate Asset Register (recommended).  The Asset Register should contain the following information:

  • Make & Model
  • Serial number (if available)
  • Physical location of equipment (building/room number)
  • Date installed
  • Funding Year 2019 and FRN #
  • Purchase Order #

A copy of a sample Asset Inventory Worksheet can be found at: https://e-ratepa.org/wp-content/uploads/2014/03/Asset-Register-Sample.xlsx.  You can see that it shows more than is required, but I think it’s very helpful to maintain such a detailed record of the payments and POs so that you can easily show this to the auditors.

Steps to Take After the FCDL Arrives

Step 3) Submit the Form 486

After the PO has been sent to the vendor, and after the FCDL arrives, the applicant should submit the Form 486 in EPC to “turn on funding” which will allow invoices to be submitted for payment.  Generally, the Service Start Date (SSD) should be the PO date, or July 1, 2019 – whichever is later.  USAC will issue a Form 486 Approval Letter within EPC within a few days after the Form 486 has been submitted; the vendor also will receive a copy of this 486 Notification in their EPC portal.  Note:  The Form 486 cannot be submitted until AFTER the FCDL arrives, but should be filed as soon as the FCDL arrives if you’ve already purchased the equipment so you can submit the BEAR to USAC (or your vendor can submit the SPI) and receive reimbursement.  Deadline to submit this form is 120 days from FCDL or Service Start Date listed on the 486, whichever is later.

Step 4) Invoice USAC

  • If you paid for the full cost of the equipment and did NOT receive discounted bills, then the SCHOOL should submit the Form 472 BEAR to USAC.  This should be done after the equipment has arrived (or installed, if installation was included in the FRN), after the Form 486 Approval Letter has been received, and after you have paid the vendor invoice.
  • In previous years, USAC has reached out to applicants to request copies of the actual vendor C2 invoices to verify the USAC invoice amounts.  This happens in most (but not all) cases, so be prepared to submit this documentation quickly upon request.
  • If you purchase some of the equipment on an FRN before you receive your FCDL and some equipment after you receive your FCDL, you must continue with the same payment method for that entire funding request.  Meaning, if you start using the BEAR reimbursement process for the FRN, you must continue paying in full and using the BEAR reimbursement process for all equipment on that FRN — you cannot use two different billing methods on a single FRN.

Other Reminders

Moving Equipment from Building to Building

Equipment MUST stay at the location indicated on the Form 471 for a period of three (3) years after the date of purchase.  After that, the equipment can be transferred to other eligible entities.  If a location closes within three years, equipment from that closed location can be transferred to another eligible entity, but USAC must be notified of such equipment transfers using the Form 500, and the Asset Inventory must be updated.  After five (5) years from the date of installation, equipment can be disposed of, sold, transferred, traded, etc. with no USAC notification required.  If equipment is sold after five years, no funding is required to be returned to USAC.

Equipment Substitutions

If you find that you need to make a change to the equipment list for which you have been approved, either due to clerical error on your Item 21, or because the vendor is now substituting a newer/different model number, you can submit what USAC refers to as a “Service Substitution Request.”  The Service Substitution must generally have the same functionality (i.e. data distribution, wireless distribution, cabling, etc.).  If the service substitution results in a change in the pre-discount price, the E-rate funding commitment will be adjusted to the lower cost (we expect there will be procedures announced to explain how to ensure that any reduction in cost can be attributed back to that school’s C2 budget).   The SS Request must include Billed Entity/Contact/471/FRN information as well as a “From-To List” that details exactly what was approved (From List), and exactly what equipment you would like to substitute (To List).  Applicants also must include the original commitment amount and the revised commitment amount, along with a specific SS certification.  Complete details and instructions for submitting a Service Substitution Request can be found at:  http://www.usac.org/sl/applicants/before-youre-done/service-substitutions.aspx.

If you have any questions, please don’t hesitate to contact me at jtschell@comcast.net.

— Julie

Julie Tritt Schell
Pennsylvania E-rate Coordinator
717-730-7133 – o
jtschell@comcast.net
www.e-ratepa.org

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