ACLP Releases Analysis of NTIA’s Flawed Framework for Vetting BEAD Subgrantees

The ACLP at New York Law School has released the latest installment in its “Navigating the BEAD Weeds” series. This analysis examines the tiered approach to vetting prospective BEAD subgrantees developed by NTIA and adopted by the states. The full analysis is available here.

As an overview, the analysis:

• Details how NTIA, through its guidance and waivers, has allowed for the creation of a tiered approach to vetting prospective BEAD subgrantees. Experienced ISPs will be subject to rigorous screening, while less experienced entities with little or no track record in the broadband space will have a much lower bar to clear.
• Highlights how, in practice, this tiered approach resembles the flawed vetting procedures used during previous federal broadband funding programs.
• Offers recommendations to NTIA and the states for bolstering vetting processes for inexperienced applicants, streamlining the process for established ISPs, and otherwise amending the screening criteria to prevent another LTD debacle.

Summary

• BEAD grants are available to any entity that wishes to apply. NTIA, which oversees BEAD, has acted on several fronts to ensure that as many entities as possible, including non-traditional ISPs (municipalities, electric utilities, cooperatives, private equity-backed new entrants, etc.) participate in the program.
• NTIA’s efforts have resulted in the creation of a tiered approach to vetting prospective BEAD subgrantees. On the one hand, NTIA guidance details rigorous vetting procedures for established ISPs – i.e., those entities with established networks and track-records in leveraging grant funds for network expansion. On the other hand, NTIA has carved out numerous exceptions to this framework for smaller and inexperienced ISPs.
• NTIA has justified this tiered approach as necessary to facilitating participation in BEAD for those entities that might be discouraged by having to comply with rigorous vetting criteria. In reality, however, NTIA has enshrined a vetting framework for inexperienced ISPs that is eerily familiar to the lax standards applied to participants in previous federal funding programs.
• The ongoing fallout of the flawed RDOF program illustrates the dangers that lie ahead. The FCC’s failure to rigorously vet RDOF participants led to the two biggest winners of funding having their awards rescinded because, after looking more closely at their capabilities, it became clear that these entities were incapable of meeting their obligations. Since then, numerous other RDOF winners have defaulted on their awards, and more are seeking amnesty to do the same.
• NTIA risks leading BEAD down a similar path if it maintains its tiered approach to vetting prospective subgrantees. Fortunately, there is still time for NTIA to work with states to prevent waste, fraud, and abuse in BEAD. This analysis offers the following recommendations to avoid this fate:
  1. NTIA must level the playing field vis-à-vis vetting all participants in a similarly rigorous manner.
  2. NTIA must encourage states to assign greater weight to past performance in past federal funding programs when scoring applications.
  3. NTIA must encourage states to reward experience in the broadband sector and develop additional safeguards when reviewing applications from inexperienced ISPs.
  4. NTIA and the states must develop more robust accountability procedures and criteria for clawing back funds for under- and non-performance.
  5. NTIA and the states must do more to maximize transparency in the award and deployment of BEAD funds.

Michael Santorelli is the Director of the ACLP. Alex Karras is a Senior Fellow at the ACLP.