NTIA Updates the Broadband Equity, Access, and Deployment (BEAD) Program

Policy Notice Provides Guidance for BEAD Grant Framework

The National Telecommunications and Information Administration (NTIA) recently released a policy notice regarding the federal government’s framework for the management of Broadband Equity, Access, and Deployment (BEAD) grants.¹ The framework for the program is referred to as the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and is codified at 2 C.F.R. Part 200. NTIA released the policy notice after reviewing responses to a Request for Comment issued in 2023. The policy notice is not a substitute for the terms and conditions of specific awards and will not supersede the terms and conditions of specific awards if they differ.² The policy notice included four significant changes to BEAD grant program guidance that apply to BEAD subawards where the subaward’s major purpose is a broadband infrastructure project. Subawards are awards given to subgrantees by states and territories.

The four significant changes are as follows:

1. Expanded flexibility for program income.

BEAD subgrantees may retain program income or earned income without restriction. Program income includes income derived from the servicing and use of supported networks (such as wholesale revenues or end-user subscription revenues) and connections for profit. States and territories will not be required to track program income of subgrantees. However, proposed subgrantees may not include profit, fees or similar charges in their proposed budgets.³

2. Clarified rules surrounding fixed amount subawards.

The policy notice clarified that states and territories may issue fixed amount awards without further NTIA approval as long as the majority of the award goes to a broadband infrastructure project. Fixed amount subgrants are grant agreements that provide a specific level of support without considering the actual costs incurred of a project. Under the Uniform Guidance, fixed amount awards generally could not be used in programs requiring cost sharing or a match and could not exceed $250,000. The policy notice differs from the Uniform Guidance here, as states may issue fixed amount awards if the amount exceeds $250,000 and if there is a match. States and territories may also treat subawards that provide for a maximum payment amount based on a reasonable estimate of actual cost as fixed amount subawards. States and territories must, however, monitor the reasonableness of subgrantee costs.⁴

Procurement rules were also loosened, and the policy notice stated that subgrantees receiving fixed amount subawards are exempted from complying with the procurement standards contained in 2 C.F.R. 200.318-200.320 and 200.324-200.326.⁵

3. Updated property standards for fixed amount subawards.

Title to real property or equipment acquired or improved pursuant to a fixed amount subaward vests in the subgrantee upon acquisition. However, subgrantees must follow “their existing commercial practices for managing equipment in the normal course of business, and must use inventory controls indicating the applicable [f]ederal interest and loss prevention procedures.”⁶

Internet service providers (ISPs) may upgrade equipment in their BEAD-funded networks without first obtaining approval from NTIA. If a subgrantee replaces equipment, the subgrantee may treat the equipment as a “trade-in” even if the subgrantee retains full ownership. The subgrantee must track the value of such equipment.

4. Established a federal interest period.

BEAD-funded networks will be subject to a 10-year federal interest period after construction. The Uniform Guidance requires real property and equipment acquired or improved with a subgrant to be held in trust for the beneficiaries of the BEAD Program. The federal interest in real property or equipment acquired or improved as part of a subgrant will continue for 10 years after the project has been closed out.⁷

Further guidance will be forthcoming regarding audit requirements. Industry groups have generally had positive responses to the policy notice, some noting that the exemptions and modifications will encourage participation in the program.⁸ Additionally, the changes to the program guidance are consistent with approaches taken for broadband infrastructure projects by the U.S. Department of the Treasury.⁹

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.