Another Red Flag – the BEAD Labor Requirements

The BEAD grant rules established by the NTIA are going to be a difficult hurdle for many ISPs to cross. I think most ISPs reading the NTIA’s Notice for Funding Opportunities (NOFO) will find things on the list of requirements that will be hard or difficult to meet. If you are thinking of applying to BEAD, you should read these rules carefully after reading this blog. The rules start on page 56 of the NOFO.

Without trying to sound too critical, the labor requirements sound like something written by bureaucrats who are designing a hypothetically perfect labor system instead of written by folks who have ever built a broadband network and have dealt with broadband contractors. Let’s run through some of the requirements to make this point:

Those seeking grants must demonstrate that they intend to comply with federal labor and employment laws. I think every grant I’ve ever worked with has this same requirement, which is usually satisfied by having an officer of the applicant attest that they will follow the law. However, the NOFO goes much further than that. A grant office must obtain an applicant’s record of compliance with federal laws, as well as the records of any entities that will participate in the project, including contractors and subcontractors.

This will require an ISP to specifically identify contractors and subcontractors before filing for a grant. All of these entities must prove their past compliance with federal labor laws. This is not how the industry functions. The entire industry works on a system of primary construction contractors and a host of smaller subcontractor crews. Big ISPs like Charter and Frontier can easily identify their primary contractor because they will have them under contract to handle whatever future work comes along. Smaller ISPs typically find a primary contractor after they know they have a project – like after they win a grant.

I wrote a recent blog that talked about the problems that small ISPs are having in getting projects constructed. I gave an example of a financially stable ISP that couldn’t find a contractor in today’s market to build a few small projects funded by ARPA grants. This difficulty came after the ISP already had the projects and funding in hand. I can’t imagine rural contractors that will be willing to sign on to a grant project at the application stage when they don’t even know if the ISP will win the grant. This requirement shows a total lack of understanding of how small construction contractors function. Their number one goal is to always keep crews working. They choose projects based on the timing of the work, the level of payment, and the location.

It’s inconceivable to me that the typical contractor will agree to sign onto a grant project even before the grant application – that is forcing contractors to pick ISPs they think will win grants. This NTIA rules seems to want to make sure that all work is done by quality contractors by making applicants and contractors pair off even before winning a grant. I can think of a dozen ways how this can backfire on a contractor that agrees to work for a given grant project when it can’t possibly know if and when that grant will be awarded and when construction will start.

This requirement also shows a lack of understanding about the makeup of the construction companies that build broadband infrastructure. Underneath the prime contractors are normally a host of smaller subcontractors – even for projects built by the giant ISPs. Subcontractors are often single crews who hire on to projects. These small crews come and go. I’ve never heard of any sizable broadband project that could identify the small subcontractors that would eventually work on the project. Crews regularly leave and get replaced as needed during most projects. There is no way that these small 6-technician crews will sign on to theoretical grant projects two years before the start of construction. Only in a fantasy world can a contractor promise the make-up of the subcontractor workforce over the life of a multi-year construction project.

The NOFO suggests ways around this requirement, which it knows is hard, by suggesting that ISPs directly hire the labor force. I laughed out loud at that idea in an environment where ISPs are having trouble keeping existing staff or hiring new staff. Trying to build a grant project with employees might be the riskiest strategy of all. Most ISPs I know have an ethical problem hiring crews that will be let go in three or four years at the end of grant construction – and it’s hard to envision that an ISP can attract technicians who understand that work will be temporary.

Building networks with employees will also require buying expensive construction equipment that would have no use past the term of the grant. This idea is impractical since there is still a multi-year backlog in the supply chain for specialized fiber construction equipment. Plus, do we really want to require that an ISP must buy a million dollars of boring equipment just to win a grant? Can the NTIA please invent more ways to make it even more expensive to take the BEAD funding?

The NOFO also has a strong preference for using unionized contractors and getting a labor agreement specific to the grant project. The NOFO even suggests labor peace accords where workers agree to not strike or disrupt work during the life of the grant. It seems like a big stretch to get unions to make such agreements for theoretical grant projects that may not be built for many years into the future.

The NOFO also places a huge emphasis on having an “appropriately skilled and credentialed workforce (including by the subgrantee and each of its contractors and subcontractors)”. This means using a workforce where all members of the project workforce will have appropriate credentials, e.g., appropriate and relevant pre-existing occupational training, certification, and licensure.

For projects that don’t use union labor, NTIA wants to see that every employee, including contractors and subcontractors, has safety training, certification, and/or licensure requirements (e.g. OSHA 10, OSHA 30, confined space, traffic control, or other training as relevant depending on title and work), including whether there is a robust in-house training program with established requirements tied to certifications, titles; and information on the professional certifications and/or in-house training in place to ensure that deployment is done at a high standard.

Whoever wrote the NOFO has no understanding of the construction crews who build networks. There has been only a handful of certification programs around the industry for decades, and only a small percentage of technicians who build networks have any formal certification. I think every ISP will agree with me that they want a crew made up of construction veterans with a decade or two of experience rather than a crew that has technicians with newly minted certifications.

It’s hard to know if this is intentional, but like many of the BEAD requirements suggested by NTIA, these labor requirements greatly favor large ISPs over small ones. I think most smaller ISPs will be unable to identify contractors and subcontractors ahead of time and convince contractors to provide their history of adherence to federal law, have all certified employees, and jump through a mountain of paperwork. If I was a contractor, I wouldn’t touch a BEAD grant project with a 10-foot pole – there is plenty of other work available.

I hope that State Broadband Offices push back hard on these requirements to make them realistic. That won’t be easy because some of these rules seem mandatory – but not all.  I strongly urge State Broadband Offices to sit and talk with local ISPs and construction contractors about the hurdles created by these rules – because these requirements will stop quality ISPs from pursuing the BEAD grants.

4 thoughts on “Another Red Flag – the BEAD Labor Requirements

  1. If only the requirements you mention were limited to the Broadband industry. Both State the federal government seem to have given over the writing of labor requirements on any construction projects to labor organizers.
    Many of these organizers use the phrase “Unionize Everyone”. That becomes easier if all employees are direct employees of large businesses and much harder to do with an efficient blend of smaller business working together.

  2. I’m Risheem Muhammad founder of EDS and Retrain America Veterans Initiatives in Telcom Construction and the Broadband Infrastructure Plans for Rural Areas and Underserved Communities thru CCMRs Workforce Development Initiatives associated with network.

    Recommendations for Education, Workforce, and Small Businesses Development: Alabama

    Collaboration: Our engagement in partnerships with local educational institutions, community colleges, and vocational training centers to create programs tailored to the needs of the broadband infrastructure and telecom construction industries. This can help create a skilled workforce that aligns with the state’s plan.

    Training Programs: Develop specialized training programs for individuals from rural towns and underserved communities to equip them with the necessary skills required for the broadband infrastructure projects.

    How does the State Plan to Allocate Funding to P3 model?
    Apprenticeships and Internships: Establish apprenticeship and internship opportunities with telecom construction companies. Our P3 can provide hands-on experience to individuals, increasing their chances of finding employment in the industry.

    Support for Small Businesses: Offer mentorship and support programs for small businesses, especially those led by veterans, to help them navigate the opportunities arising from the state’s infrastructure plan.
    Remapping for Rural Towns and Underserved Communities:

    Conduct Outreach: Collaborate with local community leaders and organizations to gather insights into the specific needs and challenges faced by rural towns and underserved communities. This can help tailor the infrastructure plan to address their unique concerns.

    Our mission includes CET platform for education workforce and
    Inclusivity: Ensure that the planning process involves representatives from these communities to ensure their voices are heard and their interests are taken into account.

    How can our recommendations be considered as a contractor?

    Economic Impact Assessment: Perform an economic impact assessment to understand the potential benefits that the infrastructure plan can bring to these areas and use that data to advocate for their inclusion in the project.

    Professional Services Agreement for Local Companies:

    How we recommend to
    Set Local Participation Goals: Advocate for the establishment of local participation goals within the professional services agreement to promote the involvement of local businesses.

    Subcontracting Opportunities: Encourage telecom construction companies to offer subcontracting opportunities to local businesses, including those led by veterans, thus fostering economic growth and job creation within the state.

    Addressing Labor Shortage within the State:

    Skills Development: Invest in workforce training programs and collaborate with educational institutions to bridge the skills gap in the labor market.
    Retention Strategies: Implement retention strategies to keep skilled workers in the state, such as competitive compensation packages, career advancement opportunities, and a positive work environment.
    Opportunities for Veterans Initiatives:

    Advocate for Inclusion: As the founder of EDS Retrain America Veterans Initiatives, you can actively advocate for the inclusion of veteran-led initiatives as a committee member or advocate for telecom construction projects.

    Network and Collaboration: Strengthen connections with telecom construction companies and government agencies involved in the state’s broadband infrastructure plan. Highlight the unique value that veteran initiatives can bring to the projects.

    Remember, the success of our recommendations will depend on effective communication, collaboration, and proactive engagement with all relevant stakeholders, including government entities, local businesses, educational institutions, and community organizations.

    • Hi Risheem, I wonder at what cost your services are to the industry. I have run OSP construction crews for many years. Everyone I have ever hired is new, working from the bottom up, using on the job training to gain skills. Or is a veteran of the industry that was trained the same way. Your training is not free right? Who is going to want to pay for training in a traditional educational environment at high cost, just to learn things they can get paid to learn while working their way up? On the job training is the way it has been done for the last 50+ years. ARPA and BEAD is a broken dream.

Leave a Reply