Iowa Providers, Officials Face NTIA Pressure to Make Additional BEAD Cuts
Iowa broadband officials and providers are facing pressure from NTIA to make additional cuts to BEAD program subgrants in the state's revised final plan. An email sent to some providers that preliminarily won funding directed them to renegotiate costs for certain projects that the agency deemed to be too costly, Community Broadband Action Network (CBAN) Executive Director Curtis Dean told us.
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Dean highlighted the issue Friday in a Broadband.io post claiming that an Iowa-based provider received an email just after business hours Thursday saying that its project costs had been deemed excessive by NTIA and required "immediate corrective action within 72 hours."
The email outlined three cost tiers based on costs per passing, which is calculated by dividing the federally funded amounts by the number of locations served, according to Dean. He said Tier 1 projects, with costs between $10,000 and $17,999, require the state to provide a general justification. Applicants may also submit project-specific justifications if they fall under Tier 1, which includes the provider working with CBAN.
Tier 2 and 3 projects, however, require additional steps. Tier 2 projects, costing between $18,000 and $20,699, require applicants to renegotiate costs less than $18,000 and submit updated budgets by the deadline or risk losing awards, Dean said.
For Tier 3 projects, those with costs of $20,700 or more, Dean said applicants must submit a "best and final offer," in which all projects compete regardless of priority classification. The lowest-cost proposal would then be selected. Applicants can reduce costs by cutting expenses or increasing matching funds, according to the email. Projects that can't meet the $18,000 threshold may provide justifications for extraordinary circumstances. The email also warned that failure to respond by the deadline would result in locations being awarded to other applicants, Dean said.
Christopher Mitchell, director of the Institute for Local Self-Reliance's community broadband networks initiative, first reported rumors of price caps in a blog earlier this month (see 2509120022). NTIA hasn't released an official announcement of the tiered system. However, the agency clarified in a rebuttal memo that it would seek additional information if a project is flagged as "excessively costly" after using "tailored, state-by-state data" (see 2509110079).
States are now facing a "great deal of pressure [to] answer NTIA's changing requirements" after racing to complete the "Benefit of the Bargain" round, Dean said. Iowa was among the 36 entities to meet NTIA's Sept. 4 deadline to submit revised plans.
It's "going to be a tough task, even for the best-equipped broadband offices," to balance a new curing process and other statutory requirements, along with ongoing state funding programs, Dean said. He noted that smaller providers that fall under Tier 2 may choose to withdraw their applications instead. They "have less capital access to go after areas" because they're either locally owned or operate in rural and expensive areas.
When asked about the apparent email, Iowa’s Department of Management directed questions about "NTIA's communications" to the agency's federal program officer for the state, who referred inquiries to a spokesperson. The NTIA spokesperson declined to comment.