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PA Bulletin, Doc. No. 03-199


Request for Proposals

[33 Pa.B. 716]

   The Pennsylvania Public Utility Commission (Commission) hereby requests written proposals to serve as a third-party auditor (auditor) of the Pennsylvania Universal Service Fund (USF). The auditor is responsible for auditing the USF from the period of August 1, 2001, through, and including, December 31, 2002. Following the audit, the Commission requires the auditor to prepare and submit a report to the Commission and the USF Administrator, the National Exchange Carrier Association, Inc. (NECA), by July 1, 2003. The audit report should make recommendations regarding the finances of the USF and should identify undercollections or overcollections experienced by the Fund during the period of August 1, 2001, through December 31, 2002. The role of the auditor is described under 52 Pa. Code § 63.168:

   § 63.168.  Auditor's duties.

(a)  An independent external auditor chosen by the Commission will audit the Fund records covering both collections and disbursements for the fiscal year. The costs for conducting audits will be included in the computation of Fund requirements. Thereafter, an audit of the Fund collections and disbursements will be done annually.
(b)  Following the audit, the Fund auditor will prepare and submit a report to the Commission and the administrator by July 1 of each year. The audit report should make recommendations regarding the finances of the Fund and should identify undercollections or overcollections experienced by the Fund in the previous year.

   The Commission is seeking to hire an auditor who will audit a 17-month period of the USF's operations. The auditor will audit the USF records covering both collections and disbursements for the period of August 1, 2001, through, and including, December 31, 2002. The Commission's Bureau of Audits audited the first 15 months of the USF's operation, from March 1, 2000, through July 31, 2001. This was the ''interim period'' of the USF before the regulations regarding the USF were promulgated and became effective in July 2001. A copy of the Bureau of Audits' report on the financial statements of the USF administered by the NECA for the period of April 1, 2000, through July 31, 2001, as well as a follow-up report and the financial statements of changes in USF balance and cash flow for the year ending December 31, 2001, are available from prospective bidders upon request to Elizabeth Barnes, (717) 772-5408.

Purpose of the USF

   At this time, the USF is currently intended to reduce and restructure intrastate 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--63.172, Final Rulemaking Order at L-00000148 (November 29, 2000).

USF and the Administrator

   Commission regulations allow for an assessment that is computed annually under 52 Pa. Code § 63.165 (relating to calculation of contributions) at a rate calculated by dividing the contributing telecommunications provider's associated total intrastate end-user telecommunications retail revenues by associated 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.

   Nearly 250 companies contribute monthly to the USF. These include approximately 32 incumbent local exchange carriers. The remainder of participants are companies selling intrastate toll services and competitive local exchange carriers who are either offering local exchange services or are planning to do so in the near future. Wireless telecommunications carriers do not participate in the USF. Carriers are not allowed to pass through as a direct charge to their customers any contributions made to the USF.

   The Administrator, NECA, 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 USF auditor according to the regulations.

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 when the contract is fully executed and ending August 1, 2003. Once selected, the auditor will be terminated during this term only for good cause.

   To the extent that 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

   Proposal submissions (an original and four copies) should be submitted to James McNulty, Secretary, Pennsylvania Public Utility Commission, 400 North Street, Harrisburg, PA 17120 regarding Docket No. M-0001337. Proposals should be received by 4:30 p.m. on February 28, 2003. Request that the proposal be kept confidential and forwarded to Commission Assistant Counsel Elizabeth Barnes, Chairperson, Evaluation Committee. Contact Elizabeth Barnes at (717) 772-5408 with questions. Questions of the NECA may be directed to Eric Seguin, Director, State USF Operations, (973) 884-8326.

   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 bid 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 auditor 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 to provide the required services, the bid should include a separate statement from that organization describing its anticipated role.

   The second part of the proposal document should be put in a sealed envelope separate from the rest of the proposal. It should include a cost data sheet including the price quotation. 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. Bidders are free to structure their price offerings in any way they choose.

   The Commission strongly encourages the submission of proposals by socially and economically restricted businesses (SERB). 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. The businesses are Bureau of Contract Administration and Business Development (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. Other small business in which owners of the graduated firm have 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 should 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 separate 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 contacting the Office of Community Development, Department of Community and Economic Development, (717) 720-7409, fax (717) 787-4088,

   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 addition 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 the SERB.

   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 the company is making commitments. Credit will not be received by 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 SERB will perform or provide.

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

   5.  The timeframe for the SERB 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.

   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 option number one receiving the greatest value and the succeeding options receiving values in accordance with the previously listed priority ranking.

SERB Contract Requirements

   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. 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. A 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 BCABD within 10 working days 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.

   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.

   No prebidding conference will be held. However, potential bidders may seek answers to questions by contacting Elizabeth Barnes, (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 the material. Contact the Commission at the same number to receive the material.

Bid Review

   A bid review will be performed by the Commission. The bids will be opened on March 4, 2003. The Commission will review bids 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 an hourly 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. Compensation paid to the auditor 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 auditor, the bidder's probable success in discharging the duties of auditor and the bidder's prior experience with auditing 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 it believes cannot be expected to perform reliably as auditor.


[Pa.B. Doc. No. 03-199. Filed for public inspection January 31, 2003, 9:00 a.m.]

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