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When Something Bad Happens

More often than not, project implementation and invoicing moves forward with little fanfare and everyone is relatively content with the process. However, stakeholders feel the frustration when a hiccup arises in the process. This can occur where there is a delayed payment or the SLD simply denies an invoice, or worse, after the project was completely installed or the service was delivered, the SLD sends one of the parties a commitment adjustment (COMAD) letter asking for the disbursed money back due to a compliance issue of some sort.

Applicants sometimes, upon receiving a COMAD, believe that the SLD should be going after their service provider to return the disbursed funds. However, the vendor often wants their customer to pay the full amount of the service delivered and therefore believes that the applicant should be responsible for paying back the funds. USAC tries to determine fault, and may send out a COMAD letter to one or perhaps both of the parties, if they believe both are partly responsible. FFL has proposed to the FCC that, at some point, there should be some closure or finality to this process. Unless a serious compliance issue is discovered after the fact, the stakeholders should be able to reasonably expect that committed dollars will not have to ever be returned.

Unfortunately, there are times where issues tied to denials, reductions, or COMADS are not really E-rate issues that can be fixed with an appeal, but are instead contract disputes between the two parties who are ultimately responsible for payment. Case in point – an FCC appeal was filed recently in a case where USAC has asked a vendor to repay nearly $60 million for a project that was completed in FY 2002-2004, due to competitive bidding violations that were only recently discovered. The E-rate competitive bidding season will be running in full force in just a few months. All stakeholders should begin to think about their contracts and how to protect themselves when bad things occur. It is important to clearly lay out the responsibilities of both parties, as well as what happens if either party does not fulfill their obligations. In this manner, both parties can know exactly what to expect when bad things happen.

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