Important Updates on BEAD Program

Deadline nears for submitting Initial Proposals under the BEAD Program

Deadlines for Initial Proposals under the Broadband Equity, Access, and Deployment (BEAD) Program are approaching this fall and winter. Many Eligible Entities, including New York State, have submitted their Five-Year Action Plans to the National Telecommunications and Information Administration (NTIA).¹ Eligible Entities and NTIA will hit important BEAD milestones towards the end of the calendar year when Initial Proposals are due this winter. Below are brief descriptions of two topics that may affect potential BEAD subgrantees and an update on New York State’s status relating to the BEAD Program.

Draft Waiver of “Build America, Buy America”

The Department of Commerce recently published a proposed limited, general applicability, nonavailability waiver of the Buy America Domestic Content Procurement Preference (Buy America Preference) to recipients of funds under the BEAD Program.² Even if the waiver is approved, limitations remain on the purchase of fiber optic cable and optical transmission equipment manufactured in the People’s Republic of China.³ This restriction on Chinese equipment is subject to waivers by the Assistant Secretary of Commerce for Communications and Information, but the Assistant Secretary is not expected to issue such waivers.⁴ The draft waiver, however, proposes to waive the Buy America Preference for some categories of electronics in BEAD program projects, such as cladding surrounding fiber and electrical components, subject to certain exceptions. For the waived categories, the waiver is limited to the requirement that more than 55% of the total cost of the components of the manufactured product must be of U.S. origin. If the waiver is applicable, NTIA would provide specific guidance on the manufacturing processes that must occur in the U.S. for the waiver to be applicable. The proposed waiver is open for public comment until September 21, 2023. Comments may be submitted to BABA@ntia.gov with the subject “BEAD Program Nonavailability Waiver.”

Letter of Credit Rule

The BEAD Notice of Funding Opportunity requires that potential subgrantees submit a letter of credit from a bank that meets certain eligibility requirements.⁵ Prior to entering into a subgrantee agreement with an Eligible Entities, a prospective subgrantee must obtain an irrevocable standby letter of credit with a value of no less than 25% of the subaward amount. Eligible Entities have some flexibility in developing rules, but the 25% requirement is firm.⁶ Some in the telecommunications industry have expressed concerns about this requirement because it could require subgrantees to have a significant amount of money in a cash collateral account.⁷

BEAD Status in New York State

BEAD funding allocations were announced on June 26, 2023. Eligible Entities that received funding, including New York State, must submit an Initial Proposal within 180 days of the announcement, December 27, 2023. However, each Eligible Entities’ Initial Proposal will likely be made public before that date, if it has not been already, as each Initial Proposal must be made available for public comment, and then public feedback must be incorporated prior to the Initial Proposal’s submission to NTIA. Each Initial Proposal will contain information that includes a description of the competitive process that the Eligible Entities plans to use to select subgrantees to construct broadband projects.

New York State submitted its Five-Year Action Plan to NTIA by August 28, 2023, and plans to make it publicly available online in the coming weeks. The Five-Year Action Plan establishes New York State’s broadband goals and priorities, and functions as a comprehensive needs assessment that will inform the Initial Proposal.

Additional Assistance

For further assistance, please contact a member of our Telecommunications Practice Team or the Phillips Lytle attorney with whom you have a relationship.