OMD Approves USAC Cost Savings Proposals.
Washington, D.C. 20554
February 1, 2013
Mr. Richard Belden
Chief Operating Officer
Universal Service Administrative Company
2000 L Street, NW
Washington, DC 20036
Reductions to Rural Health Care and Schools and Libraries Operational Support Services
Dear Mr. Belden:
On March 10, 2011, the Federal Communications Commission (Commission) approved the
Universal Service Administrative Company’s (USAC) request to extend its agreement with Solix, Inc.
through June 30, 2012, with an option for an additional year, for Rural Health Care (RHC) and Schools
and Libraries (E-rate) Operational Support Services (OSS), subject to certain conditions to implement
cost savings for the extension period. The Commission instructed USAC to consult with the Commission
on an ongoing basis regarding proposed efficiencies and price reductions, including discussions on how
changes in USAC procedures could facilitate greater efficiency.1 Last year, the Commission approved
several proposed efficiencies.2 As part of that continuing effort, USAC and the Commission have
continued to discuss how to achieve greater efficiencies. At the Commission’s request, USAC has
submitted several proposals designed to reduce the annual cost of its program integrity assurance review
for the E-rate program under the USAC OSS agreement.3
Attachment A hereto details approval of a number of the cost savings proposals submitted by
USAC concerning the E-rate program performance integrity assurance process. 4 With regard to the
specific measures we approve today, we agree with USAC that those proposals will reduce administrative
1 See Letter from Dana Shaffer, Federal Communications Commission, to Richard Belden, Universal Service
Administrative Company (Mar. 10, 2011). USAC was instructed to examine opportunities for savings in response to
the Government Accountability’s Office’s finding that USAC’s expansion of the complexities and layers of review
in the program integrity assurance review process may have resulted in inefficient or ineffective methods for
addressing programmatic risks. See id; United States Government Accountability Office,
TELECOMMUNICATIONS: FCC Should Assess the Design of the E-rate Program’s Internal Control Structure
(Washington, DC 2010), GAO-10-908, pp. 21-22.
2 See Letter from Dana Shaffer, Federal Communications Commission, to Richard Belden, Universal Service
Administrative Company (Oct. 28, 2011).
3 See Letter from Richard Belden, Universal Service Administrative Company, to Steven VanRoekel, Federal
Communications Commission (Apr. 8, 2011) (USAC Cost Savings Letter); Email from Richard Belden, Universal
Service Administrative Company, to Gina Spade, Federal Communications Commission (July 12, 2012).
4 USAC requested confidential treatment for its cost-savings proposals. See USAC Cost Savings Letter. Because
the approved reductions in Attachment A are derived from information submitted by USAC subject to its request for
confidential treatment, we consider Attachment A subject to the terms of that request. These measures are also
confidential because their public release would compromise the application review process.
costs without compromising the effectiveness or the integrity of the E-rate program. Based on USAC’s
estimates of the cost savings associated with implementation of these proposals, implementation of the
approved cost savings measures should save the Universal Service Fund nearly $2 million. Please
implement these proposals as soon as practicable, but no later than March 1, 2013. In addition, USAC
should execute a contract modification with Solix to incorporate these changes within the same
Attachment A also details those proposals that are not approved; I would be glad to discuss these
further with you and/or answer any questions you may have with regard to disapproval of these proposed
We recognize and appreciate USAC’s efforts in this area to date. Implementation of the approved
cost-saving proposals is critical to reaching our common goal of further improving the administrative
efficiencies for the universal service program. If you have any questions or wish to discuss these issues
further, please do not hesitate to contact me.
Dana R. Shaffer
Deputy Managing Director
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