Please ensure Javascript is enabled for purposes of website accessibility

Good Faith Funding Commitment

The FCC just released a memorandum to USAC that further clarifies when they can seek recovery of funds that have already been disbursed and both applicants and service providers can be held responsible depending on who USAC believes is at fault for the non-compliance issue.   The E-rate regulators have already audited close to 500 program beneficiaries and many more are about to get underway. USAC has already sought millions in recovery.

I’m glad to see the FCC giving USAC greater flexibility to exercise good judgment in seeking to recover funds. In cases of waste, fraud or abuse, the need to return funds is unquestionable. In many cases, though, there is no such waste, fraud or abuse. This is dangerous to the long term health of the E-rate. The potential for funds to be disbursed and then returned is having a chilling effect on the E-rate program, especially among smaller applicants and service providers. Since 2005, Funds For Learning has been promoting a "Good Faith Funding Commitment".

At what point does an applicant have a "good faith" funding commitment? At what point can an applicant proceed with a service or purchase goods without concern for a reversal of a funding decision and a request that funding be returned? What is the responsibility of USAC to stand behind its funding commitments? What accountability is there for an applicant to fully disclose all of its plans? What are the service provider’s duties related to knowing and enforcing the E-rate rules?

"Good faith" can be defined in many ways, but, in essence, it implies honesty, fairness and an expectation that both parties are working toward a commonly shared goal that is reasonable and justifiable. Neither the FCC, nor USAC, has specifically defined a Good Faith Funding Commitment. FFL offers the following suggested framework for an E-rate Good Faith Funding Commitment:

Good Faith Funding Commitment Framework by Funds For Learning (Proposed)

  1. The Good Faith Funding Commitment requires a mutual commitment from three parties: the applicant, the service provider and USAC.
  2. The applicant and service provider must fully disclose the types of goods and services that are being provided, even those that do not fall within the technical scope of work of the E-rate application.
  3. The applicant and service provider must fully disclose the intended use of the goods and services to be provided, to the extent that either party may reasonably be aware of that intent.
  4. It is not USAC’s sole responsibility to “ask the right questions.” The applicant and/or service provider must volunteer all pertinent facts that could reasonably be anticipated.
  5. If the applicant and/or service provider have offered all of the information that they would reasonably be expected to provide, then it is USAC’s responsibility to clarify or request additional information.
  6. USAC should clearly highlight any deficiencies in the information that it has been provided, and the applicant and/or service provider should be given the opportunity to address any such deficiencies.
  7. After receiving a funding commitment, the applicant and service provider must proceed in a manner that is consistent with the service descriptions and other information that was provided to USAC and resulted in the funding commitment.
  8. After issuing a funding commitment, USAC should stand behind its decision, regardless of later shifts in policies, procedures or other regulations, subject to the following criteria:
    • the information upon which the original decision was based was accurate and complete
    • there are no substantive changes between the originally specified scope of work and the actual services delivered
    • the other post-funding commitment requirements, such as filing a Form 486, have been satisfied


question icon

We’re here to help!

Our mission is to provide high-quality consulting and support services for the needs of E-rate program participants. We consult with applicants to help them understand, effectively utilize, and maintain compliance with E-rate rules and regulations. We help prepare and submit paperwork, and interact with program administrators on our clients’ behalf.

Request a Consultation