[Federal Register Volume 88, Number 127 (Wednesday, July 5, 2023)]
[Notices]
[Pages 42918-42925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14114]


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DEPARTMENT OF COMMERCE

National Telecommunications and Information Administration

[Docket No.: 230622-0154]


Tailoring the Application of the Uniform Guidance to the BEAD 
Program; Request for Comments

AGENCY: National Telecommunications and Information Administration, 
U.S. Department of Commerce.

ACTION: Notice; request for comment.

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SUMMARY: The Broadband Equity, Access and Deployment (BEAD) Program was 
established in November 2021 through the Infrastructure Investment and 
Jobs Act, also known (and referred to subsequently herein) as the 
Bipartisan Infrastructure Law. Under the BEAD Program, the National 
Telecommunications and Information Administration (NTIA) is responsible 
for administering $42.45 billion in grants to the States, Territories, 
and the District of Columbia (Eligible Entities) with the principal 
focus of ensuring that every American has access to affordable, 
reliable high-speed internet service. Various stakeholders have 
requested NTIA to consider exemptions of certain provisions of OMB's 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards (Uniform Guidance) from application to 
grants and subgrants awarded under the BEAD Program. In this Notice, 
NTIA seeks public comment on the issues raised by stakeholders and 
other questions relating to the

[[Page 42919]]

relationship between the Uniform Guidance and the BEAD Program.

DATES: Submit written comments on or before 5 p.m. Eastern Standard 
Time on August 4, 2023.

ADDRESSES: You may submit public comments on this action, identified by 
Regulations.gov docket number NTIA-2023-0007, by any of the following 
means:
    1. Using the Federal e-Rulemaking Portal at http://www.regulations.gov (our preferred method). The docket established for 
this opportunity to comment can be found at www.Regulations.gov, NTIA-
2023-0007. Click the ``Comment Now!'' icon, complete the required 
fields, and enter or attach your comments.
    2. Mailing a printed submission to National Telecommunications and 
Information Administration, U.S. Department of Commerce, 1401 
Constitution Avenue NW, Room 4878, Washington, DC 20230, Attention: 
BEAD Uniform Guidance RFC.
    Please submit your comments in only one of these ways to minimize 
the receipt of duplicate submissions.

FOR FURTHER INFORMATION CONTACT: Please direct questions regarding this 
Notice to Sean Conway at [email protected], indicating ``BEAD Uniform 
Guidance Request for Comment'' in the subject line, or if by mail, 
addressed to Sean Conway, National Telecommunications and Information 
Administration, U.S. Department of Commerce, 1401 Constitution Avenue 
NW, Washington, DC 20230; or by telephone: (202) 482-1816. Please 
direct media inquiries to NTIA's Office of Public Affairs, 
[email protected] or (202) 482-7002.

SUPPLEMENTARY INFORMATION:

I. Background

    The Office of Management and Budget (OMB) released the Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards (2 CFR part 200) (Uniform Guidance) on December 26, 
2013, which consolidated eight existing Federal circulars into a single 
guidance document. The Uniform Guidance streamlined and eased 
administrative burdens across the Federal Government in the 
administration of Federal financial assistance programs, thus 
increasing the efficiency and effectiveness of Federal awards, while 
also strengthening oversight over Federal funds to prevent waste, 
fraud, and abuse. OMB may allow exceptions from the requirements of the 
Uniform Guidance, pursuant to 2 CFR 200.102.
    The Uniform Guidance generally sets out requirements for Federal 
awards to ``non-federal entities.'' \1\ While commercial entities do 
not fall within the definition of non-Federal entities, the Uniform 
Guidance provides that ``[f]ederal awarding agencies may apply subparts 
A through E'' of these rules to other types of entities, including 
``for-profit entities.'' \2\ Federal agencies administering Federal 
financial assistance programs may, and often have, adopted standard 
terms and conditions (ST&Cs) to implement the Uniform Guidance and 
provide additional guidance to subagencies and relevant stakeholders 
(e.g., applicants). Federal agencies can, for example, expand 
application of the Uniform Guidance to include commercial entities 
through (a) the operation of an agency's Federal financial assistance 
ST&Cs and/or (b) the ``pass through'' provisions of the Uniform 
Guidance when a non-Federal entity issues a subaward to a commercial 
entity.\3\
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    \1\ 2 CFR 200.102(a)(1); see also 2 CFR 200.1 (defining ``Non-
Federal entity'' to mean ``a state, local government, Indian tribe, 
institution of higher education (IHE), or nonprofit organization 
that carries out a Federal award as a recipient or subrecipient.'').
    \2\ 2 CFR 200.101(a)(2).
    \3\ 2 CFR 200.331.
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    The Department of Commerce (DOC) adopted the Uniform Guidance and 
gave it regulatory effect in December 2014.\4\ The DOC has extended its 
application of the Uniform Guidance to commercial entities in its 
Financial Assistance Standard Terms and Conditions (DOC ST&Cs), which 
governs implementation of DOC financial assistance awards.\5\ Thus, 
absent modification of the ST&Cs, the DOC ST&Cs require that DOC's 
Federal financial assistance programs apply the Uniform Guidance to 
both non-Federal entities and commercial entities.
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    \4\ See 2 CFR 1327.101; Federal Awarding Agency Regulatory 
Implementation of Office of Management and Budget's Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards, 79 FR 75867.
    \5\ Department of Commerce, Financial Assistance ST&Cs, Preface 
(11/12/20) (``[U]nless otherwise provided by the terms and 
conditions of this DOC financial assistance award, subparts A 
through E of 2 CFR part 200 and the Standard Terms are applicable to 
for-profit entities, foreign public entities and to foreign 
organizations that carry out a DOC financial assistance award.'').
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    In accordance with the DOC ST&Cs, NTIA has routinely applied the 
relevant subparts of the Uniform Guidance to non-Federal entities and 
commercial entities in its grant programs that fund last mile and 
middle mile broadband deployment, such as the Broadband Technologies 
Opportunities Program (BTOP), the Broadband Infrastructure Program, the 
Tribal Broadband Connectivity Program, and the Middle Mile Grants 
Program established by the Bipartisan Infrastructure Law. Such 
application of the Uniform Guidance occurred without significant 
opposition, or even significant discussion, from applicants or program 
participants or apparent material impact on the programs or the 
projects funded thereunder.
    Consistent with this approach, the Notice of Funding Opportunity 
(NOFO) for the BEAD Program provides that the Uniform Guidance and DOC 
ST&Cs will apply to the BEAD Program.\6\
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    \6\ NTIA, Notice of Funding Opportunity, Broadband Equity, 
Access, and Deployment Program (hereinafter ``NOFO'') at 86, section 
VII.D.1-2 (2022).
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II. Request for Comment

    Following publication of the NOFO, various stakeholders requested 
that NTIA clarify the extent to which the Uniform Guidance applies to 
grants and subgrants awarded under the BEAD Program, if at all, and 
identified provisions of the Uniform Guidance that they argue will 
deter the participation of internet service providers (ISPs) in the 
BEAD Program and/or increase the costs that subgrantees will incur--and 
the award amounts they will require--to participate in the program 
without concomitant benefit. These stakeholders also requested that 
NTIA address their concerns by waiving or otherwise modifying the 
application of the Uniform Guidance to the BEAD Program.
    This Request for Comment affords all interested persons an 
opportunity to provide input on any exemptions from the Uniform 
Guidance that might help facilitate the implementation of the BEAD 
Program. Given the unprecedented amount of funding Congress made 
available through the BEAD Program and the scale, scope, and character 
of the deployment challenge the Program is designed to resolve, it is 
critically important that NTIA operate this program as effectively and 
efficiently as possible, while also ensuring a high level of 
accountability to prevent waste, fraud, and abuse. This approach will 
further the goal of ensuring all Americans have access to affordable, 
reliable, high-speed internet service.
    The BEAD Program differs from prior Federal broadband funding 
programs administered by NTIA, the Federal Communications Commission 
(FCC), the United States Department of Agriculture, and other Federal 
entities in important ways. First, the BEAD

[[Page 42920]]

Program is the first broadband funding program to require that awardees 
ensure the delivery of qualifying broadband service to all unserved 
locations, and (to the extent funds are available) all underserved 
locations within their jurisdiction. Prior programs have targeted areas 
with specific demographic characteristics (e.g., rural areas) or 
particular classes of network operators (e.g., rate of return incumbent 
local exchange carriers), resulting in significant, but incomplete, 
improvements in availability. But Congress mandated that the BEAD 
Program ensure universal availability of high-speed internet access, 
including to those locations that have not been addressed by prior 
programs because they have proven to be the most difficult and 
expensive to serve. This unprecedented effort will require that each 
Eligible Entity maximize incentives for provider participation.
    To meet this challenge, the BEAD Program will provide a historic 
level of grant funding, providing significant resources to every State, 
Territory, and the District of Columbia. Each of these Eligible 
Entities will be required to conduct a ``subgrantee selection process'' 
to identify subgrantees \7\ that will build and operate networks to 
deliver qualifying broadband service to every unserved and underserved 
location in its jurisdiction. Subgrantees that receive awards from 
Eligible Entities to build broadband networks in many cases likely will 
retain ownership of those networks in perpetuity, subject to award 
conditions mandating that, for a designated period of time, the 
applicable program requirements are met and the public continues to 
benefit from this Federal investment.
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    \7\ Subgrantees may be traditional commercial broadband ISPs or 
``non-traditional broadband providers,'' meaning ``an electric 
cooperative, nonprofit organization, public-private partnership, 
public or private utility, public utility district, Tribal entity, 
or local government (including any unit, subdivision, authority, or 
consortium of local governments) that provides or will provide 
broadband services.'' BEAD NOFO at 14, section I.C.(p).
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    The relevant provisions of the Bipartisan Infrastructure Law use 
the terms ``subgrantee'' and ``subgrant''--rather than ``subrecipient'' 
or ``subaward'' as used in the Uniform Guidance.\8\ Faithfully 
implementing these statutory provisions, the NOFO uses this same 
terminology and explains that ``[a]s used herein, the terms 
`subgrantee' and `subgrant' herein are meant to have the same meaning, 
respectively, as the terms `subrecipient' and `subaward'.'' \9\ While 
some have argued that Eligible Entities should be permitted to 
structure BEAD Program subgrants as ``contracts,'' NTIA continues to 
adhere to the interpretation that awards are made as ``subgrants'' to 
``subgrantees,'' and that ``subgrantees'' are not performing BEAD 
Program projects as contractors to the Eligible Entity. They are, 
instead, subrecipients ``carrying out a portion of a Federal award.'' 
\10\ This key statutory difference notwithstanding, NTIA below requests 
comment on proposals to modify the application of certain provisions of 
the Uniform Guidance consistent with the U.S. Department of the 
Treasury's (Treasury Department) Coronavirus State and Local Fiscal 
Recovery Funds and Capital Projects Fund Supplementary Broadband 
Guidance.\11\
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    \8\ Infrastructure Investment and Jobs Act of 2021, Division F, 
Title I, Section 60104, Public Law 117-58, 135 Stat. (Nov. 15, 2021) 
(otherwise known as the Bipartisan Infrastructure Law).
    \9\ ``[A]pplicable regulations governing federal financial 
assistance generally use the term subrecipient' to refer to what the 
Infrastructure Act calls `subgrantees' and the term `subaward' to 
refer to what the Infrastructure Act calls `subgrants','' and 
concluded that ``the terms subgrantee' and `subgrant' herein are 
meant to have the same meaning, respectively, as the terms 
`subrecipient' and `subaward' in those regulations and other 
governing authorities.'' BEAD NOFO at n 15.
    \10\ 2 CFR 200.331(a).
    \11\ See SLFRF and CPF Supplementary Broadband Guidance, U.S. 
Department of the Treasury, May 17, 2023, https://home.treasury.gov/system/files/136/SLFRF-and-CPF-Supplementary-Broadband-Guidance.pdf. 
NTIA and the Treasury Department closely coordinated their 
respective approaches on this topic. While the proposals in this 
Notice are directionally aligned with the Treasury Department's 
final guidance, certain statutory and programmatic differences will 
likely warrant some variations in the application of the Uniform 
Guidance to the BEAD program, on the one hand, and the relevant 
Treasury Department programs, on the other hand.
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NTIA Seeks Public Comment on the Following Areas Relating to the 
Relationship Between the Uniform Guidance and the BEAD Program 
(Inclusive of 15 Questions)

A. Program Income and ``Profit''

    The Uniform Guidance defines program income as earned income ``that 
is directly generated by a supported activity or earned as a result of 
the Federal award during the period of performance.'' \12\ The Uniform 
Guidance, together with the DOC ST&Cs, does not permit recipients and 
subrecipients to retain program income without restriction, but instead 
prescribes three permissible uses during the period of performance: (1) 
to offset total allowable costs (i.e., the deduction method), (2) to 
satisfy cost sharing or match requirements (i.e., the cost sharing 
method), and (3) to add to the total allowable costs for a project 
(i.e., the addition method).\13\ Relatedly, the Uniform Guidance states 
that recipients and subrecipients ``may not earn or keep any profit 
resulting from Federal financial assistance unless explicitly 
authorized by the terms and conditions of the award.'' \14\
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    \12\ See 2 CFR 200.1.
    \13\ See 2 CFR 200.307(e); DOC ST&Cs at section B.05. The 
``deduction'' method is the default rule when ``the Federal awarding 
agency does not specify in its regulations or the terms and 
conditions of the Federal award, or give prior approval for how 
program income is to be used.'' 2 CFR 200.307(e).
    \14\ 2 CFR 200.400(g).
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    In the context of broadband projects in the Capital Projects Fund 
(CPF) and State and Local Fiscal Relief Fund (SLFRF) programs, the 
Treasury Department is allowing CPF and SLFRF subrecipients to retain 
program income for use without restriction, including keeping it as 
profit.
    NTIA tentatively agrees with the Treasury Department's approach to 
program income. In creating the BEAD Program, Congress established 
competitive subrecipient selection processes as the principle means for 
disbursing BEAD subawards.\15\ The NOFO includes a number of provisions 
aimed at implementing this statutory directive, and it recognizes that 
robust competition holds ``the potential to offer consumers more 
affordable, high-quality options for broadband service.'' \16\ Further, 
the Biden-Harris Administration has made competition a priority across 
the economy, recognizing in the Executive Order on Promoting 
Competition in the American Economy that competition means ``better 
service[,] and lower prices'' for consumers.\17\
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    \15\ 47 U.S.C. 1702(e)(3)(A)(i)(IV).
    \16\ NOFO at 50, section IV.C.1.a.
    \17\ Executive Order on Promoting Competition in the American 
Economy, July 9, 2021, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.
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    As discussed above, maximizing provider participation in the BEAD 
Program is a key to ensuring its success. Broad participation 
facilitates competition, and the opportunity for providers to retain 
program income to support their business case and to avoid the 
transaction costs of tracking income generated on Program-funded 
network assets separate from other operating income will help stimulate 
participation.
    Internet service is provided by a multitude of types of entities, 
including cooperatives, nonprofit organizations, public-private 
partnerships, utilities, public utility districts, local governments, 
and, most commonly, private companies. While some of these

[[Page 42921]]

provider types may not need to earn profit to justify infrastructure 
investment, a profit opportunity will improve the business case for all 
providers, and thereby create incentives for others to participate.
    Moreover, as discussed above, incentives for broad participation 
are needed to address the unique challenges for which the BEAD Program 
was created to solve. Unserved and underserved areas present 
significant barriers for service, as evidenced by the lack of existing 
high-speed internet infrastructure even after decades of the Federal 
efforts to expand broadband deployment in these areas. Indeed, the lack 
of a sustainable business case--namely a business case that generates a 
reasonable return on investment--is a core problem the BEAD Program is 
designed to address. The program income rules will in many cases 
prevent providers from earning a reasonable return on investment during 
the period of performance, and would not address the economic 
conditions that have stunted investment in these areas.
    The increased incentive for providers to participate in the BEAD 
Program and compete for grant funding may also help extend the benefits 
of the BEAD Program to more Americans. Competition for a given set of 
locations will reduce the level of grant funding required on a per 
location basis. Efficient funding levels will in turn create 
opportunities for Eligible Entities to ensure that broadband network 
facilities are deployed to all unserved and underserved locations 
within their jurisdiction, and potentially pursue eligible access-, 
adoption-, and equity-related uses.\18\
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    \18\ See NOFO at 7, section I.B.1.
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    For these reasons, the program income provisions of the Uniform 
Guidance and DOC ST&Cs may be counterproductive in this specific 
context.
    Question 1: The Uniform Guidance allows Federal awarding agencies 
to adjust requirements to a class of awards when approved by OMB.\19\ 
Pursuant to this authority, NTIA proposes to seek from OMB an exemption 
from the Uniform Guidance's requirements for recipients and 
subrecipients to retain program income without restriction, including 
retaining program income for profit.\20\ NTIA would also seek 
conforming changes to the award terms in light of Section B.05 of the 
DOC ST&Cs. NTIA seeks comment on this proposal.
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    \19\ See 2 CFR 200.102(c).
    \20\ 2 CFR 200.307(e); 2 CFR 200.400(g).
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    In responding to Question 1, commenters should take into account 
NTIA's interpretation of Section V.H.2.b. of the NOFO.\21\ Section 
V.H.2.b. states that a profit, fee, or other incremental charge above 
the actual cost incurred by a subrecipient is not an allowable 
cost.\22\ This provision prohibits subrecipients from charging profit 
as an allowable cost under its grant. In other words, the subrecipient 
should not expect that the Federal Government will pay the subrecipient 
a profit from the grant amount for the subrecipient's performance. This 
NOFO language does not prohibit program income derived from the 
servicing and use of supported networks and connections (e.g., 
wholesale revenues, end-user subscription revenues, etc.) for such 
subgrants. Program income is ordinarily encouraged in financial 
assistance awards, and the only difference presented by the proposal in 
Question 1 would be expanding the permissible use of program income. 
NTIA plans to otherwise apply the program income provisions of 2 CFR 
200.307 and Section B.05 of the DOC ST&Cs.
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    \21\ See NOFO at 82, section V.H.2.b.
    \22\ See id.
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B. Fixed Amount Subawards and Cost Principles

    The Uniform Guidance defines fixed amount subawards as those in 
which a ``pass-through entity provides a specific level of support 
without regard to actual costs incurred under the [subaward].'' \23\ 
This type of subaward reduces some of the administrative burden and 
record-keeping requirements for both subrecipients and the pass-through 
entities.\24\ Section 200.201 of the Uniform Guidance permits pass-
through entities to use fixed amount awards only if the project scope 
has measurable goals and objectives, and if adequate cost, historical, 
or unit pricing data is available to establish a fixed amount award 
based on a reasonable estimate of actual cost.\25\ The Uniform Guidance 
prohibits the use of fixed amount subawards in programs requiring 
mandatory cost sharing or match,\26\ and generally limits pass-through 
entities from providing fixed amount subawards exceeding the Simplified 
Acquisition Threshold, which is $250,000.\27\
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    \23\ 2 CFR 200.1.
    \24\ See id.
    \25\ 2 CFR 200.201(b).
    \26\ 2 CFR 200.201(b)(2).
    \27\ See 2 CFR 200.333; see also 48 CFR part 2, subpart 2.1.
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    The Federal Government's cost principle rules do not apply as 
compliance requirements to fixed amount subawards. Instead, the cost 
principles are used as a guide when budgeting for the work that will be 
performed. The Treasury Department is allowing CPF and SLFRF pass-
through entities to structure broadband infrastructure subawards as 
fixed amount subawards. The cost principle rules thus will not apply as 
compliance requirements to subrecipients of those subawards.
    NTIA tentatively agrees with the Treasury Department's approach in 
this area. Competitive subrecipient selection processes, as directed by 
Congress in the Bipartisan Infrastructure Law, are likely to result in 
fixed amount broadband infrastructure subawards that have measurable 
goals and objectives.\28\ Moreover, the NOFO's implementing provisions 
requiring that such selection processes are fair and open will help 
deliver adequate cost data necessary to establish fixed amount 
subawards that are based on a reasonable estimate of actual costs.\29\
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    \28\ See 47 U.S.C. 1702(f).
    \29\ See NOFO at 35, section IV.B.7.
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    In addition, under the BEAD NOFO, the total amount of grant funding 
requested is among the criteria that Eligible Entities must give the 
greatest weight in deciding among competitive projects covering the 
same location or locations, which gives potential subgrantees 
significant financial incentive to estimate their costs 
conservatively.\30\ We also note that NTIA is developing in 
coordination with the FCC a broadband deployment cost model to 
determine high-cost areas, a model that will provide agency staff an 
additional tool for evaluating whether a potential subgrantee's cost 
estimates are reasonable estimates of actual costs.
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    \30\ See id. at 43, section IV.B.7.b.2.i.
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    For the reasons above, we believe the structure of the BEAD program 
and certain program features justify treating BEAD subgrants as fixed 
amount subawards. We expect this classification will result in fewer 
administrative burdens on Eligible Entities and subgrantees which 
should result in the more efficient administration of the BEAD program 
and more efficient use of program funding.
    At the same time, it is important to minimize the risk of waste, 
fraud, and abuse. We therefore propose requiring Eligible Entities as a 
condition of their BEAD grants to monitor the costs of their 
subrecipients using reasonable and appropriate accounting 
methodologies. An Eligible Entity, for example, could require 
subgrantees to periodically report their expenses for grant-funded

[[Page 42922]]

projects using the recipient's existing accounting methodology so long 
as it meets Generally Accepted Accounting Principles or other standard 
accounting practices.\31\ By imposing measures to validate that fixed 
amount awards reasonably approximate the actual cost of broadband 
infrastructure deployment or other BEAD Program projects, we will 
minimize the risk of misuse of taxpayer resources.
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    \31\ See Accounting Standards Codification, Financial Accounting 
Standards Board, FASB.org.
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    Question 2: As further addressed below, NTIA proposes to seek from 
OMB the necessary exceptions to the Uniform Guidance rules to allow 
Eligible Entities to issue fixed amount BEAD Program subawards of any 
amount for broadband infrastructure projects. Is it reasonable to 
assume that the subgrantee selection process, as specified in the 
Bipartisan Infrastructure Law and BEAD NOFO, will ensure that each 
project has ``measurable goals and objectives'' and provide ``a 
reasonable estimate of actual cost''? \32\
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    \32\ See 2 CFR 200.201(b)(1).
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    Question 3: The Uniform Guidance prohibits the use of fixed amount 
awards or subawards in programs requiring mandatory cost sharing or 
match, as is the case in the BEAD Program.\33\ NTIA thus proposes to 
seek from OMB an exemption for the class of subawards identified in 
sections 60102(f)(1), (2), and (4) of the Bipartisan Infrastructure Law 
from the prohibition on the use of fixed amount awards in programs 
requiring mandatory cost sharing or match.\34\ As previously addressed, 
the Uniform Guidance allows Federal awarding agencies to adjust 
requirements to a class of awards when approved by OMB.\35\ NTIA seeks 
comment on this proposal.
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    \33\ 2 CFR 200.201(b)(2).
    \34\ The class of subawards identified in sections 60102(f)(1), 
(2), and (4) of the Bipartisan Infrastructure Law is that which 
would be used for internet infrastructure projects. Consistent with 
the Treasury Department's approach to provide exceptions from the 
Uniform Guidance to internet infrastructure projects, NTIA is 
proposing to provide this exception to the class of subawards that 
would support internet infrastructure projects.
    \35\ See 2 CFR 200.102(c).
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    Question 4: The Uniform Guidance generally limits pass-through 
entities from providing fixed amount subawards exceeding the Simplified 
Acquisition Threshold, which is $250,000.\36\ Many BEAD subgrants 
related to broadband deployment and connections will exceed $250,000. 
NTIA thus proposes to seek from OMB an exemption of the class of 
subawards identified in Sec.  60102(f)(1), (2), and (4) of the 
Bipartisan Infrastructure Law from the rule limiting pass-through 
entities from providing subawards on fixed amounts exceeding the 
Simplified Acquisition Threshold.\37\ NTIA seeks comment on this 
proposal.
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    \36\ See 2 CFR 200.333; see also 48 CFR part 2, subpart 2.1.
    \37\ 2 CFR 200.333.
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    Question 5: In the case of fixed amount subawards, the Uniform 
Guidance provides that payments are based on meeting specific 
requirements of the subaward. It further offers some ways in which the 
subaward may be paid.\38\ Options include, but are not limited to, (1) 
in several partial payments, the amount of each agreed upon in advance, 
and the ``milestone'' or event triggering the payment also agreed upon 
in advance, and set forth in the award; (2) on a unit price basis, for 
a defined unit or units, at a defined price or prices, agreed to in 
advance of performance of the Federal award and set forth in the 
Federal award; and (3) in one payment at award completion. NTIA seeks 
comment on whether to specify through guidance or a special award 
condition the form in which fixed amount subawards by Eligible Entities 
should be paid.
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    \38\ 2 CFR 200.201(b)(1).
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    Question 6: While the Federal Government's cost principle rules do 
not apply as compliance requirements to fixed amount subawards, the 
Uniform Guidance requires fixed subaward amounts to be negotiated using 
the cost principles (or other pricing information) as a guide.\39\ As 
discussed above, the BEAD Program's competitive subaward selection 
process must, by statute, be fair and open and will help deliver 
adequate cost data necessary to establish fixed amount subawards that 
are based on a reasonable estimate of actual costs. Is the information 
that Eligible Entities will obtain from the subgrantee selection 
process sufficient ``other pricing information?'' Are there 
circumstances under which NTIA should issue a special award condition 
instructing subrecipients of fixed amount subawards to use as a guide 
the cost principles that would otherwise apply, such as the Eligible 
Entity's extremely high cost per location threshold? \40\
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    \39\ See 2 CFR 200.201(b).
    \40\ See NOFO at 13, section I.C.(k) (defining ``extremely high 
cost per location threshold''); id. at 81, section V.H.1 (applying 
the cost principles in 2 CFR part 200, including subpart E, to 
States and non-profit organizations, and the cost principles in 48 
CFR part 31 to commercial organizations).
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    Question 7: NTIA seeks comment on the nature and scope of any 
related adjustments to the requirements of the Uniform Guidance that 
may be required if broadband infrastructure subgrants are treated as 
fixed amount awards. For example, what additional steps, if any, should 
NTIA take to ensure that BEAD Program funds are used solely for the 
purposes intended? What additional steps, if any, should NTIA take to 
ensure that Eligible Entities are issuing awards at levels reasonably 
related to provider costs? What additional steps, if any, should NTIA 
take to ensure that other programmatic requirements (e.g., that a 
subgrantee provide matching funds of not less than 25 percent of 
project costs) are met by Eligible Entities and subgrantees?
    NTIA plans to otherwise apply the fixed amount award provisions of 
2 CFR 200.201(b) and the cost principle provisions of 2 CFR part 200, 
subpart E to State, Territorial, local or federally-recognized Indian 
Tribal Governments and 48 CFR part 31 to commercial organizations.

C. Procurement

    The Uniform Guidance generally imposes procurement rules on 
recipients and subrecipients that use federal assistance funds to 
obtain property or services.\41\ The underlying objective of these 
rules is to ensure that procurement processes sufficiently guard 
against waste, fraud, and abuse.
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    \41\ See 2 CFR 200.318-327.
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    The Treasury Department is allowing pass-through entities in the 
CPF and SLFRF programs to waive the procurement rules for subrecipients 
of fixed amount broadband infrastructure subawards. An awarding agency 
may provide less restrictive requirements when making fixed amount 
awards.\42\ In determining whether the procurement rules of the Uniform 
Guidance should apply to BEAD Program subgrants, it is worth noting 
that many broadband providers already utilize competitive procurement 
processes that align with the spirit, if not the specific provisions, 
of the Uniform Guidance's procurement rules. The risk of waste, fraud, 
and abuse is further diminished by the congressional directive that 
Eligible Entities ``competitively award'' such subgrants.\43\
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    \42\ See 2 CFR 200.102(c).
    \43\ See 47 U.S.C. 1702(f).
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    Question 8: If NTIA chooses to seek the exceptions necessary to 
allow Eligible Entities to issue fixed amount BEAD Program subawards, 
NTIA further proposes to issue a special award condition authorizing 
Eligible Entities to provide subrecipients an exception from the 
procurement requirements codified in 2 CFR 200.318-320 and 200.324-326 
when using fixed amount subawards. The special award condition

[[Page 42923]]

excepting procurement requirements also would require the Eligible 
Entity to obtain certifications from subrecipients that the 
subrecipient used competitive procurement processes in executing the 
project. NTIA seeks comment on this proposal.
    NTIA plans to otherwise apply the procurement provisions of 2 CFR 
200.318-327.

D. Property Standards

    The Uniform Guidance's property standards, in conjunction with the 
DOC ST&Cs, provide NTIA with a framework for holding subrecipients 
accountable and ensuring that BEAD investments deliver for the American 
people.\44\ This framework provides standards and procedures for 
ownership, title, use, management, and disposition of property acquired 
with DOC financial assistance. In applying this framework to BEAD-
funded networks, NTIA's overarching goals are to ensure that BEAD 
subawards are used for their intended purposes; to prevent the unjust 
enrichment of subrecipients; and to minimize administrative burdens 
that could materially impact the incentives of traditional and non-
traditional broadband providers to participate in the program.
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    \44\ See 2 CFR 200.310-316; DOC ST&Cs at section C.02.
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1. Useful Life of BEAD-Funded Equipment
    The Uniform Guidance requires real property and equipment acquired 
or improved with a subgrant to be held in trust for the beneficiaries 
of the BEAD Program.\45\ The DOC ST&Cs further provide that this trust 
relationship exists throughout the duration of the property's estimated 
useful life (the Federal Interest Period).\46\ Subrecipients must 
comply with all ownership, title, use, management, and disposition 
requirements as set forth in 2 CFR 200.310 through 200.316, as 
applicable, and in the terms and conditions of the Federal award 
throughout the Federal Interest Period.\47\ The duration of Federal 
Interest Period is determined by the grants officer in consultation 
with the program office.\48\
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    \45\ See 2 CFR 200.316.
    \46\ See DOC ST&Cs at section C.02.
    \47\ Id.
    \48\ Id.
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    Question 9: The Treasury Department is assigning one uniform period 
of time for all funded broadband infrastructure property in its SLFRF 
and CPF. NTIA proposes to take a similar approach in the BEAD program. 
Specifically, NTIA proposes a Federal Interest Period of 20 years, 
which is consistent with the expected useful life of fiber optic 
cable.\49\ NTIA seeks comment on this proposal. Alternatively, NTIA 
seeks comment on whether to issue a schedule defining the Federal 
Interest Period as the useful life for different categories of BEAD-
funded personal property. If commenters favor the development of such a 
schedule, what are the relevant categories, types, and estimated useful 
life of BEAD-funded equipment and property?
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    \49\ ``Planning and Flexibility Are Key to Effectively Deploying 
Broadband Conduit through Federal Highway Projects,'' Government 
Accountability Office, at 4, June 27, 2012, https://www.gao.gov/assets/gao-12-687r.pdf (``Industry documentation estimates that the 
expected useful life of fiber cables is between 20 and 25 years and 
that the expected useful life of underground conduit is between 25 
and 50 years.'').
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2. Use of Real Property and Equipment
    The Uniform Guidance establishes use requirements on real property 
and equipment acquired under a Federal award or subaward during the 
Federal Interest Period. One such requirement is that the real property 
and equipment must be used in the program or project for which it was 
acquired as long as needed, whether or not the project or program 
continues to be supported by the Federal award.\50\ Another such 
requirement is for the recipient or subrecipient to make equipment 
available for use on other projects or programs currently or previously 
supported by the Federal Government, provided that such use will not 
interfere with the work on the projects or program which it was 
originally acquired.\51\ The Uniform Guidance also provides that 
equipment may be used in other activities supported by the Federal 
awarding agency.\52\ The Treasury Department is applying a modified 
version of these use requirements to broadband infrastructure fixed 
amount subawards in its CPF and SLFRF programs.
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    \50\ 2 CFR 200.311(b); 2 CFR 200.313(c)(1).
    \51\ 2 CFR 200.313(c)(2).
    \52\ 2 CFR 200.313(c)(1).
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    Question 10: The Uniform Guidance allows Federal awarding agencies 
to apply less restrictive requirements when making fixed amount 
subawards.\53\ Should NTIA employ this authority with respect to any of 
the previously described use requirements? If so, explain why.
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    \53\ See 2 CFR 200.102(c).
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    NTIA plans to otherwise apply the real property and equipment use 
provisions of 2 CFR 200.311(b) and 2 CFR 200.313(c)(1)-(2).
3. Equipment Management Requirements
    The Uniform Guidance provides specific procedures for managing 
equipment (including replacement equipment) acquired in whole or in 
part under a Federal award or subaward.\54\ The Treasury Department 
guidance requires broadband infrastructure subrecipients in the SLFRF 
and CPF programs to comply with the requirements in section 200.313(d) 
of the Uniform Guidance, which may be satisfied by applying the ISP's 
commercial practices for meeting such requirements in the normal course 
of business (e.g., commercial inventory controls, loss prevention 
procedures, etc.), provided that such inventory controls indicate the 
applicable Federal interest.
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    \54\ See 2 CFR 200.313(d).
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    Question 11: Do existing commercial practices for managing 
equipment deployed as part of a broadband network contemplate the same 
or similar activities as those identified in section 200.313(d) of the 
Uniform Guidance (e.g., maintenance of property records, regular 
physical inventories, commercial inventory controls, maintenance 
procedures, and resale procedures)? NTIA recognizes that inventory 
controls indicating the applicable Federal interest are critical tools 
for guarding against waste, fraud, and abuse. Inventory Controls are 
also particularly important for tracking and, to the extent necessary, 
enforcing the Federal Government's reversionary interest in BEAD 
equipment. Would commercial inventory controls indicate the Federal 
interest in equipment? Commenters should provide detailed analyses 
comparing existing commercial practices to the requirements identified 
in section 200.313(d). If such commercial practices do contemplate the 
same or similar activities, should NTIA provide an exception to the 
equipment management requirements in section 200.313(d) for those 
broadband infrastructure subrecipients that certify that they use 
commercial practices for managing equipment deployed as part of a 
broadband network? Should any such exception be conditioned on the 
subrecipient's obligation to make the records available pursuant to 
those commercial practices available to the Eligible Entity and to NTIA 
for review on request?
    NTIA plans to otherwise apply the equipment management provisions 
of 2 CFR 200.313(d).

[[Page 42924]]

4. Equipment Upgrades and Network Evolution
    The Uniform Guidance and DOC ST&Cs contain specific provisions 
regarding the replacement of equipment and the disposition of equipment 
no longer needed for the original project or program.\55\ With respect 
to acquiring replacement equipment, the Uniform Guidance provides that 
subrecipients may use the equipment to be replaced as a trade-in or 
sell the property and use the proceeds to offset the cost of the 
replacement property.\56\ When equipment acquired under a Federal 
subaward is no longer needed for the original project, subrecipients 
must request disposition instructions from the Federal awarding 
agency.\57\ The Treasury Department is allowing broadband 
infrastructure subrecipients in its SLFRF and CPF programs to dispose 
of equipment in the ordinary course of business when no longer needed 
to operate the network, subject to the conditions that the subrecipient 
provide notice to the Treasury Department, the same level of service 
provided by the network is maintained, there is no material 
interruption to service, and the upgraded property is subject to the 
same property requirements are the original property.
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    \55\ See 2 CFR 200.313(c)(4), 200.313(e).
    \56\ 2 CFR 200.313(c)(4).
    \57\ 2 CFR 200.313(e).
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    The equipment replacement and disposition requirements play an 
important role in safeguarding the Federal interest in real property 
acquired or improved under a Federal award. At the same time, requiring 
subrecipients of internet infrastructure subawards to sell older 
equipment in every instance of equipment upgrades, or obtain 
instructions for every instance of equipment disposition, may prove 
impractical given the scale and duration of the BEAD Program. Moreover, 
it may unintentionally chill efforts by BEAD subrecipients to upgrade 
and evolve networks during the Federal Interest Period.
    Question 12. NTIA proposes to issue a special award condition 
providing subrecipients clarity as to the flexibilities that BEAD 
subrecipients have under the Uniform Guidance to upgrade and evolve 
BEAD-funded networks. Specifically, this special award condition would 
clarify that for purposes of the BEAD Program: ``Subrecipients 
acquiring replacement equipment under 2 CFR 200.313(c)(4) may treat the 
equipment to be replaced as `trade-in' even if the subrecipient elects 
to retain full ownership and use over equipment. As with trade-ins that 
involve a third party, the subrecipient will have to record the fair 
market value of the equipment being replaced in its Tangible Personal 
Property Status Reports to the Department of Commerce to ensure 
adequate tracking of the Federal percentage of participation in the 
cost of the project. The subrecipient also is responsible for tracking 
the value of the replacement equipment, including both the Federal and 
non-Federal share.'' NTIA seeks comment on this proposal.
    NTIA plans to otherwise apply the equipment replacement and 
disposition provision of 2 CFR 200.313(c)(4) and 200.313(e).
5. Lien Requirements
    The Uniform Guidance defers to the Federal awarding agency 
regarding whether to require the recording of liens or other notices of 
record on real property and equipment acquired or approved under a 
Federal subaward.\58\ In turn, the DOC ST&Cs permit--but do not 
require--the imposition of a lien or other notice of record requirement 
on subrecipients. Notwithstanding the recording of a lien or other 
notice of record on property, the Federal Government retains beneficial 
title to the grant-funded equipment or property to ensure it is used 
for the intended public purposes.
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    \58\ 2 CFR 200.316.
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    The Treasury Department is requiring subrecipients to record liens 
only in those instances in which the subrecipient encumbers the project 
property. These liens must reflect the Treasury Department's shared 
first lien position in the project property such that, if the project 
property were foreclosed upon and liquidated, Treasury would receive 
the portion of the fair market value of the property that is equal to 
Treasury's percentage contribution to the project costs.
    Question 13. NTIA proposes the same approach as the Treasury 
Department is requiring. Specifically, NTIA would require subrecipients 
to record such liens for any encumbered equipment and real property 
acquired or improved using the class of subgrants defined in section 
60102(f)(1), (2), and (4) of the Bipartisan Infrastructure Law. NTIA 
would not otherwise require liens for equipment and real property 
acquired or improved using this same class of subgrants. NTIA seeks 
comment on this proposal.

E. Audits

    While the NOFO establishes default audit requirements, it affords 
NTIA authority to prescribe different requirements for commercial 
entities via the terms and conditions of awards.\59\ Rather than apply 
any specific audit requirements to subrecipients in its SLFRF and CPF 
programs, the Treasury Department is allowing pass-through entities to 
determine the form and frequency of commercial subrecipient audits, so 
long as such audits can be used by pass-through entities to satisfy the 
terms and conditions of their award. This approach is consistent with 
the construct of the BEAD Program, which vests significant decision-
making authority in Eligible Entities.
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    \59\ See NOFO at 93, section VII.G.
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    Question 14. NTIA thus proposes to issue a special award condition 
vesting authority in Eligible Entities to determine the form and 
frequency of audits from commercial subrecipients. Under such an 
approach, each Eligible Entity can prescribe and enforce any such audit 
requirement it deems sufficient for its own compliance requirements as 
recipients of BEAD awards. NTIA seeks comment on this proposal.
    NTIA plans to otherwise apply the audit requirements specified in 
section VII.G of the NOFO and 2 CFR part 200, subpart F.

F. Revision of Budget

    The Uniform Guidance requires recipients to report, and request 
prior approvals from Federal awarding agencies for, budget and program 
plan revisions.\60\ While such a requirement may help to reduce the 
risk of waste, fraud, and abuse in certain award constructs, it may not 
be as critical in the context of fixed-amount BEAD subawards.
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    \60\ See 2 CFR 200.308(b).
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    Question 15. Assuming that NTIA permits Eligible Entities to 
proceed with fixed amount subaward frameworks, what flexibility, if 
any, should NTIA allow an Eligible Entity to provide to subrecipients 
of fixed-amount subawards with respect to budget revision? If NTIA does 
allow an Eligible Entity to provide flexibility with respect to budget 
revisions, how can NTIA and Eligible Entity ensure that subrecipients 
provide sufficient notice and seek approval where there is a 
significant change in project scope/objective or inability to complete 
project without additional Federal funds?

[[Page 42925]]

    NTIA plans to otherwise apply the budget revision provisions of 2 
CFR 200.308(b).

Sean Conway,
Acting Deputy Chief Counsel, National Telecommunications and 
Information Administration.
[FR Doc. 2023-14114 Filed 7-3-23; 8:45 am]
BILLING CODE 3510-60-P