NOTICES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Invitation for Bids
[31 Pa.B. 56] Procurement Description
The Pennsylvania Public Utility Commission (Commission) hereby requests bids to serve as the Commonwealth's telecommunications third-party administrator (Administrator) of the Pennsylvania Universal Service Fund (USF). The initial contract will run from March 1, 2001 until December 31, 2003. 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. The role of the Administrator is described under our 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 Fund 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 Fund,
(8) invest Fund 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 Fund administration,
(13) maintain adequate principal liability insurance coverage, criminal liability coverage, and a sufficient umbrella liability policy,
(14) prepare reports of fund activity for the Commission on a monthly basis detailing carrier assessments, delinquent payers, late-payment charges (if applicable), fund 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 FUND 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 the Fund 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 Fund, 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 said 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--63.172, Final Rulemaking Order at L-00000148 (November 29, 2000).
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 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 or any other purpose.
Nearly 500 companies will contribute monthly to the USF. These include approximately 32 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 in the USF. Carriers are not allowed to pass through as a charge 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 Fund's cash flow, and disburses payments to 30 small rural companies and Sprint/United, Fund recipients under the regulations. The USF assessment rate is set annually by the Public Utility 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:
(a) The Administrator shall be neutral, impartial and independent from telecommunications service providers operating in the Commonwealth of Pennsylvania;
(b) The Administrator shall not advocate specific positions before the Commission in non-universal service administrative proceedings related to common carrier issues;
(c) The Administrator shall not be an affiliate of any provider of telecommunications services; and
(d) 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 Fund, no more than a third of the board members may represent any one category (for example, 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 Fund assets. For purposes of this restriction, a direct financial interest exists where the Administrator or Board member:
(1) is an employee of a telecommunications carrier,
(2) owns equity interests in bonds or equity instruments issued by any telecommunications carrier, or
(3) 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 of Pennsylvania contract for personal services. The contract will be for a term beginning on March 1, 2001, or as soon thereafter as can be arranged, and ending December 31, 2003. 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 Pennsylvania 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.
Bid Submissions
Bids should be submitted to James J. McNulty, Commission Secretary, Pennsylvania Public Utility Commission, P. O. Box 3265, Harrisburg, PA 17105-3265. Bids should be received not later than 5 p.m., January 31, 2001.
The first part of each bid 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 Fund 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 to provide the required services, such as a bank, the bid should include a separate statement from that organization describing its anticipated role.
The second part of the bid document should be a price quotation. The price quotation should cover the period from March 1, 2001 through December 31, 2003. A cost data sheet should be sent in a separate sealed envelope. 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 March 1, 2001, how compensation will be proportionally adjusted.
No pre-bidding conference will be held. 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. Please contact the Public Utility Commission, at the same number if you wish to receive such material.
Bid Review
A bid review will be performed by the Pennsylvania Public Utility Commission. The Commission will review bids according to three 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. All compensation paid to the Administrator will be paid from the Universal Service Fund and the Pennsylvania Public Utility 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 Administrator, the bidder's probable success in discharging the duties of Administrator, the bidder's prior experience with finances, and the bidder's knowledge of the telecommunications industry.
3. Independence from affiliated relationships with any telecommunications carriers is preferred. The Commission is seeking a neutral, independent third-party because part of the Administrator's duties includes verifying the accuracy of companies' contributions and withdrawals from the fund. If the Administrator will be using a bank, or other similar institution to hold the funds, independence and neutrality of that bank with any telecommunications carrier is preferred.
Finalists may be interviewed. The Commission will disqualify any bidder whom it believes cannot be expected to perform reliably as Administrator.
JAMES J. MCNULTY,
Secretary
[Pa.B. Doc. No. 01-17. Filed for public inspection January 5, 2001, 9:00 a.m.]
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