Regulation - What is it Good For?

Virginia’s Proposed BEAD Grant Rules

Virginia just published its draft BEAD proposal that defines how the state plans to make BEAD grant awards. Virginia will be awarding almost $1.5 billion in BEAD grants using these rules. The plan is still a draft. Next is a public comment period on the proposed rules, and the final draft of the plan will have to be approved by the NTIA. But even as a draft, this is my first real peek into how the BEAD grants might happen. Note that each state is a distinct plan, and some of the features in the Virginia rules might not be in other state plans. This summary is from my first quick reading of the Virginia plan, so forgive me if I missed important nuances.

Following are some of the most interesting things about the Virginia plan:

  • Virginia plans to ‘deconflict’ multiple grants that ask to serve the same geographic area by requiring all grant applicants to file a pre-application that defines the areas they plan to serve. This will allow the state to determine distinct application areas before the full grants are due. The plan discusses a secondary process to find ISPs to serve areas where nobody has asked for grant funding.
  • Virginia plans to post everything filed by ISPs online. One of the biggest complaints about many past grants is that the process was done behind closed doors. It looks like Virginia is going to make everything available to the public. It will be interesting to see if they will allow for things like financial information to be kept confidential.
  • Virginia has a goal of awarding all of its BEAD money in 2024. I read this to mean that there will be only two grant steps – every applicant will file a pre-application with maps, and once the State has digested the maps, ISPs file the full application – this means one big grant round for everybody at the same time.
  • I think folks are going to be intrigued by the grant scoring. It’s different than any other grant I can recall. Virginia has two slightly different scoring plans, and here is the first one:
    • 45% for Program Outlay. This is essentially a one-round reverse auction. If more than one ISP asks to serve the same area, the ISP with the lowest cost per passing will get the full 45 points, and other applicants will get fewer points based on how much more they are requesting from the grant program. This has to be a concern for anybody who is thinking of asking for a full 75% grant.
    • 20% for Affordability. This is going to be based on the proposed price for a symmetrical gigabit of service. To get points, the price must be at or below $100. Prices are compared between applicants asking to serve the same area.
    • 10% for Fair Labor Practices. This will be based on the history and the proposed commitment to compliance with Federal labor and employment laws.
    • 5% for Speed of Deployment. Timelines for construction will be compared after accounting for delays such as complying with things like environmental studies.
    • 10% for a Local Consulting Meeting. An ISP must meet with local or tribal governments to explain its qualifications and plans for deploying BEAD.
    • 10% for Local Letter of Support. This requirement gives a lot of power to local governments. A government that only supports one ISP gives that applicant a big boost in grant scoring
  • All of the other BEAD requirements are not part of the scoring. Instead, it seems there will be a checklist of mandatory requirements. This includes a long list of BEAD requirements like environmental studies, extremely high-cost area plans, the technology being used, the letter of credit, the history and capability of the ISP, binding commitments from labor, credentialed workforce, affirmative action for vendors, climate plan, middle-class rate plan, cybersecurity, supply chain management, etc.

Since it’s hard to imagine an applicant not holding the local meetings, the rest of the scoring is a 90-point scale. Half of the grant scoring comes from the willingness to take the lowest level of grant funding. The next important is affordable rates. The local letter of recommendation takes on a high importance.

Since everything is going to be published and transparent, Virginia’s scoring plan seems to eliminate almost all discretion from the state grant office in choosing winners. I read this scoring to say that whoever gets the most points in a given grant area will win the grant.

It’s impossible to tell with these high-level rules how scoring will account for differences between ISPs. For example, how will these rules account for technologies that deliver different speeds? I assume before grants are due that the scoring will be explained in more detail.

These rules also open other big questions. Will there be a chance for a local community to prove that the FCC maps are still wrong, or will grant applicants be limited to asking for grants for areas shown as unserved and underserved on the latest FCC map?

In closing, note again that these are the proposed rules for Virginia – but no other state. Other states might use a totally different philosophy for scoring. I know there are states that are considering multiple rounds of grant applications. These rules are also a draft and could change in Virginia before they are final. But this is one view of how the BEAD grants will work – and it’s totally different than what I expected.

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