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PA Bulletin, Doc. No. 03-1725


Request for Proposals

[33 Pa.B. 4377]

Procurement Description

   The Pennsylvania Public Utility Commission (Commission) hereby requests written proposals to serve as the third-party administrator (Administrator) of the Pennsylvania Universal Service Fund (USF). The Administrator is responsible for administering the USF from the period of January 1, 2004, through and including December 31, 2006. The Administrator is responsible for collecting pro rata contributions based on telecommunications service providers' intrastate end-user telecommunications retail revenues, at a rate set by the Commission, and depositing these revenues into the USF. The Administrator will also distribute money from the USF on the first of each month to approximately 32 rural telephone carriers. The role of the Administrator is described under the regulations at 52 Pa. Code § 63.167, as follows:

   (1)  maintain a database to track contributing telecommunications providers;

   (2)  develop Commission-approved forms to be used by all telecommunications service providers to report monthly contributions;

   (3)  review the completed forms to ensure completeness and accuracy of reported revenue and USF assessments and contact providers whose accounts contain unexplained variances in reported revenues or USF assessments;

   (4)  assess late payment charges of 1.5% per month pro rata per diem on contributions that are 30 days past due;

   (5)  send initial notices of delinquency to all delinquent contributors when a payment is 30 days past due and follow up with at least one subsequent written notice and/or phone call to the contributor to pursue collection of USF payments that are 60 days past due;

   (6)  maintain logs of notices of delinquent contributors and refer to the Commission for further enforcement, on a monthly basis, all accounts more than 90 days past due;

   (7)  immediately inform the Commission if the Administrator has reason to believe that any telecommunications provider has submitted false information to the Administrator with the intent of obtaining fraudulent funding, under-reporting end-user revenue or if any other irregularity occurs in the operation or administration of the USF;

   (8)  invest USF moneys in interest-bearing instruments designed to minimize risk of loss while providing maximum liquidity; permitted investments shall include:

   (i)  marketable obligations directly and fully guaranteed by the United States government;

   (ii)  Federally insured checking, money market accounts or certificates of deposit;

   (iii)  other accounts as expressly approved by the Commission;

   (9)  promptly advise the Commission if the Administrator's data analysis projects a potential fund shortfall or if USF disbursements exceed receipts in a given month;

   (10)  in January of each year, mail reporting forms to each telecommunications service provider to acquire appropriate data to compute the individual provider's aggregate intrastate end-user telecommunications retail revenue and to compute year-end access line growth percentages for development of the following year's USF amount;

   (11)  Cooperate with the independent auditor selected by the Commission and provide data and information reasonably required to support audit activities;

   (12)  promptly respond to Commission requests for information pertaining to USF administration;

   (13)  maintain adequate principal liability insurance coverage, criminal liability coverage and a sufficient umbrella liability policy;

   (14)  prepare reports of USF activity for the Commission on a monthly basis detailing carrier assessments, delinquent payers, late-payment charges (if applicable), USF disbursements, interest earned and cumulative results;

   (15)  maintain records by contributor and by recipient;

   (16)  provide any additional reports as requested by the Commission;

   (17)  maintain a statement of financial condition (balance sheet) and income statement for the total fund and a sources and uses of funds statement which will tie to the total fund income statement;

   (18)  deliver the balance sheet, income statement and sources and uses of funds statement to the USF auditor by May 1 of each year so that the auditor may prepare its report;

   (19)  maintain a system of internal controls;

   (20)  consider the auditor's report in preparing the annual report for submission to the Commission and include any undercollections or overcollections identified by the audit report in developing a proposed budget for the upcoming fiscal year;

   (21)  submit the Administrator's annual report by September 1 or 60 days following receipt of the audit report, whichever is later;

   (22)  with prior Commission approval, borrow monies to cover the short-term liabilities of USF caused by undercollections;

   (23)  if short-term borrowing is necessary, the Administrator shall provide formal notice on a timely basis to the Commission which identifies the amount, the proposed lending source and the terms and conditions of the loan;

   (24)  comply with procedures and guidelines established by the Commission but may request the Commission amend, modify or delete procedures or guidelines (The Administrator will not have the authority to develop or interpret the Commission's procedures or guidelines with respect to the USF, and any dispute between the Administrator and any contributing telecommunications provider shall be submitted to the Commission for resolution.);

   (25)  have access to the books of account of all telecommunications service providers to the limited extent necessary to verify their intrastate end-user telecommunications retail revenues and other information used by the Administrator in determining assessments and disbursements for the USF;

   (26)  treat any competitive and financial information received as confidential and proprietary, and only release this information upon order of the Commission;

   (27) operate on a fiscal year which shall be the same as the calendar year.

Purpose of Fund

   At this time, the USF is currently intended to reduce and restructure access charges and intraLATA toll rates and to encourage greater toll competition while enabling carriers to continue to preserve the affordability of local service rates. Rulemaking Re Establishing Universal Service Fund Regulations at 52 Pa. Code §§ 63.161--171, Final Rulemaking Order at L-00000148 (November 29, 2000). The regulations governing administration of the USF are located at 52 Pa. Code §§ 63.161--63.171. They may be accessed as well as other orders and pertinent information regarding the USF at the Commission's website: Click on ''Competition,'' ''Local Telephone Competition,'' ''Universal Service Fund.''

Universal Service Fund and the Administrator

   Commission regulations allow for an assessment which is computed annually under 52 Pa. Code § 63.165 (relating to collection of universal service fund contributions) at a rate calculated by dividing the contributing telecommunications provider's associated total intrastate end-user telecommunications retail revenues by statewide total intrastate end-user telecommunications revenues. End-user revenues expressly do not include revenues received from access, resale (toll or local) of unbundled network elements or other services provided which are essentially wholesale in nature. Total end-user revenues shall include all revenues received from subscribers who actually consume the final service unadjusted for any expense or any other purpose.

   Nearly 300 companies will contribute monthly to the USF. These include 35 incumbent local exchange carriers (ILECs). The remainder of participants are companies selling intrastate toll services (IXCs) and competitive local exchange carriers (CLECs) who are either offering local exchange services or are planning to do so in the near future. Wireless telecommunications carriers do not participate as either recipients or contributors in the USF. Carriers are not allowed to pass through as a direct surcharge to their customers any contributions made to the USF.

   The Administrator functions as the ''financial hub'' of this system. The Administrator collects the contributions from the individual companies, manages the USF's cash flow and disburses payments to 31 small rural companies and Sprint/United USF recipients under the regulations. The USF assessment rate is set annually by the Commission based on data submitted in annual reports by the Administrator. The Administrator also works with the Fund Auditor.

   The Administrator may be an individual or an organization. An organizational bidder may have sufficient resources on staff. An individual bidder probably would need to develop formal or informal relationships with other organizations, such as banks. For example, an individual bidder would probably want to develop a lock box system at a bank to collect receipts and use a bank's commercial or trust operations for making short-term investments.

Administrator Criteria

   Under 52 Pa. Code § 63.166, the Administrator shall meet the following criteria:

   (1)  The Administrator shall be neutral, impartial, and independent from telecommunications service providers operating in the Commonwealth;

   (2)  The Administrator shall not advocate specific positions before the Commission in nonuniversal service administrative proceedings related to common carrier issues;

   (3)  The Administrator shall not be an affiliate of any provider of telecommunications services; and

   (4)  If the Administrator has a board of directors that includes members with direct financial interests in entities that contribute to or receive support from the USF, no more than a third of the board members may represent any one category (that is, local exchange carriers or interexchange carriers) of contributing carriers or support recipients, and the Board's composition must reflect the broad base of contributors to and recipients of USF assets. For purposes of this restriction, a direct financial interest exists where the Administrator or Board member:

   (a)  is an employee of a telecommunications carrier;

   (b)  owns equity interests in bonds or equity instruments issued by any telecommunications carrier, or

   (c)  owns mutual funds that invest more than 50% of its assets in telecommunications securities.

Contract For Services

   The successful bidder will negotiate with the Commission a detailed contract that is generally consistent with the standard Commonwealth contract for personal services. The contract will be for a term beginning on January 1, 2004, or as soon thereafter as can be arranged, and ending December 31, 2006. Once selected, the Administrator will be terminated during this term only for good cause.

   The contract:

   1.  will cover all 3 years during the period, rather than a single year;

   2.  may need to be amended later if the Commonwealth legislature ever authorizes changes; and

   3.  may elaborate further on the Administrator's duties, including:

   (a)  clarifying reporting requirements for the Administrator, and in particular concerning compliance with Generally Accepted Government Auditing Standards;

   (b)  periodic financial reporting and revenue estimating requirements; and

   (c)  cooperating with a new Administrator following termination of the contract so that there will be a smooth transition to the new administration of the USF.

   To the extent that any changes as a result of contract negotiations affect the cost of performing the contract, adjustments from compensation described in the bid will be negotiated with the winning bidder.

Proposal Submissions

   Proposals should be submitted to Elizabeth Barnes, Assistant Counsel, Pennsylvania Public Utility Commission, Law Bureau, P. O. Box 3265, Harrisburg, PA 17105-3265. Proposals should be received not later than 5 p.m., September 30, 2003. No late proposals will be considered. The proposal should be broken into three separate parts, two of which should be in separate sealed envelopes marked ''price quotation'' and ''SERB information,'' respectively.

Part 1--General Information

   The first part of each proposal should include a general discussion of the approach the bidder will take and explain how the bidder will meet each requirement. In addition, this part of the proposal should identify all individuals who will work on significant tasks and should explain the qualifications of each. A single individual should be identified to serve as USF Administrator, and that individual's resume should be attached. Resumes for other identified persons with significant responsibility should also be attached.

   If the bidder desires to associate with another organization, such as a bank, to provide the required services, the bid should include a separate statement from that organization describing its anticipated role.

Part 2--Cost Information

   The second part of the proposal document should be a price quotation, which should not be in the main text of the proposal but rather kept separate in a separate sealed envelope, marked ''price quotation.'' The price quotation should cover the period from January 1, 2004, through December 31, 2006. A cost data sheet should be submitted in this separate sealed envelope and it should include a breakdown of costs. Bidders are free to structure their price offerings in any way they choose. However, this part of the bid should specifically describe:

   1.  One-time startup costs, presumably to be paid in the first year.

   2.  Fixed annual costs for each of the 3 years. This should cover most anticipated expenses, such as personnel, office costs and overhead, and may include an allowance for travel. The amount may vary for each year based upon expected inflation.

   3.  Any contingency costs. This might include functions like defense of lawsuits.

   4.  If the winning bidder actually begins work after January 1, 2004, how compensation will be proportionally adjusted.

   Failure to submit the cost data sheet in a sealed envelope kept separate and apart from the rest of the proposal will result in automatic rejection of the proposal by the evaluation committee.

Part 3--SERB Information

   The Commission strongly encourages the submission of proposals by socially and economically restricted businesses (SERBs). Proposals submitted by individuals claiming SERB status or proposals submitted by individuals reflecting joint venture and subcontracting opportunities with SERBs must submit documentation verifying their claim. SERBs are small businesses whose economic growth and development have been restricted based on social and economic bias. Such businesses are BCABD certified minority- and women-owned businesses, other disadvantaged businesses and businesses whose development has been impeded because their primary or headquarters facilities are physically located in areas designated by the Commonwealth as being designated enterprise zones. A small business will not be considered socially/economically restricted if it has gross annual revenues exceeding $8 million ($18 million for those businesses in the information technology sales or services business) or more, is dominant in its field of operation or employs more than 100 persons.

   A company and its affiliates have achieved success and are graduated from this State-sponsored program when its gross annual revenues are $8 million ($18 million for those businesses in the information technology sales or services business) or more. Any other small business in which an owner(s) of the graduated firm has a financial interest or control over, either directly or through family members, will not qualify for SERB status. Control is defined as the power, whether or not exercised, to direct or cause the direction of the management and policies of a firm, whether through the ownership of voting shares, by contract or otherwise, or through the making of day-to-day as well as major decisions in matters of policy, management and operations. A determination of control shall include, but shall not be limited to, the following factors: capital investment and all other financial, property, acquisition, contract negotiation and legal matters; officer-director-employee selection and comprehensive hiring, operating responsibility, cost-control matters and income and dividend matters; financial transactions; and rights of other shareholders or joint partners.

   Proposers seeking to identify socially/economically restricted businesses for joint venture and subcontracting opportunities are encouraged to contact the Department of General Services, Bureau of Contract Administration and Business Development, Room 613, North Office Building, Harrisburg, PA 17125,,

   The third part of the proposal document (SERB information) should also be put in a sealed envelope separate from the rest of the proposal and the technical and cost sections of the proposal. The dollar value designated for SERB commitments in the audit must be placed in a separate sealed envelope within the proposal. Failure to meet this requirement will result in no points being awarded to the proposer regarding the criteria for evaluation.

   To receive credit for being a SERB, entering into a joint venture agreement with a SERB or subcontracting to a SERB (including purchasing supplies and/or services through a purchase agreement), a company must include proof of SERB qualification in the SERB portion of the proposal:

   1.  SERBs qualifying as a result of MBE/WBE certification from BCABD must provide their BCABD certification number or a photocopy of their BCABD certificate.

   2.  SERBs qualifying as a result of having their headquarters located in a designated enterprise zone must provide proof of this status, including proof of the location of their headquarters (such as a lease or deed) and confirmation of the enterprise zone in which they are located (obtained from their local enterprise zone office). More information on the locations of enterprise zones can be obtained by calling the Office of Community Development, Department of Community and Economic Development (DCED), (717) 720-7409. DCED can also be reached by fax at (717) 787-4088 or

   3.  SERBs qualifying as disadvantaged businesses certified by the Small Business Administration must submit proof of Small Business Administration Certification.

   4.  Companies claiming SERB status, whether as a result of BCABD certification, Small Business Administration certification as a disadvantage business or the location of their headquarters in an enterprise zone must submit proof that their gross annual revenues are less than $8 million ($18 million for those businesses in the information technology sales or services business). This can be accomplished by including a recent tax or audited financial statement

   In additions to these verifications, the SERB portion of the proposal should include the following information.

   1.  The name and telephone number of the project (contact) person for SERBs.

   2.  The company name, address and telephone number of the prime contact person for each specific SERB business included in the proposal. Specify the SERB business to which you are making commitments. Credit will not be received by merely stating that a SERB will be found after the contract is awarded or by listing several companies and stating one will be selected later.

   3. The specific work, goods or services the SERBs will perform or provide.

   4. The location where the SERBs will perform these services.

   5. The timeframe for the SERBs to provide or deliver the goods or services.

   6. The amount of capital, if any, the SERB will be expected to provide.

   7. The form and amount of compensation each SERB will receive. In the SERB information portion of the proposal, provide the estimated dollar value of the contract to each SERB.

   8. The percent of the total value of services or products purchased/subcontracted under the proposal that will be provided by the SERB(s).

   9. In the case of a joint venture agreement, a copy of the agreement, signed by all parties, must be included in the SERB portion of the proposal. If subcontracting, a signed subcontract or letter of intent must be included in the SERB portion of the proposal.

   The SERB portion of the proposal must be identified as SERB information and bound and sealed separately from the remainder of the proposal. Only one copy of the SERB section is needed.

   The dollar value designated for SERB commitment should be placed in a separate sealed envelope and stapled to the SERB section of the proposal or included in the bound and sealed envelope. Proposals should also include the SERB value in the Cost Submittal section (Section 11-9). Applicable items in the Cost Submittal section should also be used to prepare the proposed SERB commitment value including, if applicable, fiscal year breakdown. The selected contractor's SERB commitment amount, name of SERB and services to be provided including timeframe for performing services will be included as a contractual obligation when the contract is executed.

SERB Participation

   The following options will be considered as part of the final criteria for selection:

   Priority Rank 1. Proposals submitted by SERBs.

   Priority Rank 2. Proposals submitted from a joint venture with a Commonwealth-approved SERB as a joint venture partner.

   Priority Rank 3. Proposals submitted with subcontracting commitments to SERBs.

   Each proposal will be rated for its approach to enhancing the utilization of SERBs. Each approach will be evaluated, with Rank 1 receiving the greatest value and the succeeding ranks receiving values in accordance with the listed priority ranking.

SERB Contract Requirements

   All contracts containing SERB participation must also include a provision requiring the contractor to meet and maintain those commitments made to SERBs at the time of proposal submittal or contract negotiation, unless a change in the commitment is approved by the contracting Commonwealth agency upon recommendation by the BCABD. All contracts containing SERB participation must include a provision requiring SERB contractors and SERBs in a joint venture to incur at least 50% of the cost of the subcontract or SERB portion of the joint venture, not including materials.

   Commitments to SERBs made at the time of proposal submittal or contract negotiation must be maintained throughout the term of the contract. Any proposed change must be submitted to BCABD, which will make a recommendation as to a course of action to the contracting officer.

   If a contract is assigned to another contractor, the new contractor must maintain the SERB participation of the original contract.

   The contractor shall complete the Prime Contractor's Quarterly Utilization Report (or similar type document containing the same information) and submit it to the contracting officer of the agency that awarded the contract and the Bureau of Contract Administration and Business Development within 10 workdays at the end of each quarter the contract is in force. If there was no activity, the form must also be completed, stating ''No activity in this quarter.'' This information will be used to determine the actual dollar amount paid to SERB subcontractors, suppliers and joint ventures. Also, it is a record of fulfillment of the commitment the firm made and for which it received SERB points.

   Note:  Equal employment opportunity and contract compliance statements referring to company equal employment opportunity policies or past contract compliance practices do not constitute proof of SERB status or entitle a proposer to receive credit for SERB utilization.

Prebidding Conference

   There will be no prebidding conference. However, potential bidders may seek answers to questions by telephone from Elizabeth Barnes, Assistant Counsel, Pennsylvania Public Utility Commission, (717) 772-5408. If questions of general interest are presented, the Commission may communicate the question and its answer in writing to persons who have expressed an interest in receiving such material. Contact the Commission at the same number if you wish to receive such material.

Proposal Review

   A proposal review will be performed by the Commission. Proposals will be opened on October 2, 2003. The Commission will review proposals according to four major criteria:

   1.  Price will be a principal consideration. Since bids may include one or more segments that are being bid at a monthly or otherwise variable price, bids may not be directly comparable in terms of a single dollar amount. However, the Commission will consider all of the fixed and variable prices contained in the bid in evaluating it. All compensation paid to the Administrator will be paid from the USF, and the Commission will pay no compensation.

   2.  The bidder's expected quality of performance will be the second principal consideration. Within this category, the Commission will consider the bidder's understanding of the duties of the USF Administrator, the bidder's probable success in discharging the duties of Administrator, the bidder's prior experience with administering other similar funds.

   3.  Independence from affiliated relationships with any telecommunications carriers is preferred. The Commission is seeking a neutral, independent third-party.

   4.  SERB status.

   Finalists may be interviewed. The Commission will disqualify any bidder whom the Commission believes cannot be expected to perform reliably as Administrator.


[Pa.B. Doc. No. 03-1725. Filed for public inspection August 29, 2003, 9:00 a.m.]

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