Renewing an existing vendor contract can seem routine. For E-rate applicants, however, a renewal or extension should start with one basic question: Does the original competitively bid agreement give you the right to extend it?
If the answer is no, simply agreeing with your vendor to continue the contract may not preserve your original E-rate competitive bidding process.
What You Need to Know
USAC’s contracts guidance distinguishes a multi-year contract from a contract containing voluntary extensions. A contract with voluntary extensions reaches the end of its original term but permits the parties to extend it for one or more additional years pursuant to provisions already contained in the contract. USAC also says you must decide to exercise that extension before you file your FCC Form 471 for the funding year in which the contract would otherwise expire. It is important to document your decision for future use in case of an audit or review.
That makes the language in the original agreement important.
For example, a contract might have a three-year initial term plus two optional one-year extensions. If those options were part of the agreement resulting from the original competitive bidding process, exercising one may qualify as a voluntary contract extension.
By contrast, if your contract simply expires after three years and contains no applicable renewal or extension provision, don’t assume you can negotiate an extra year afterward and treat it as part of your original E-rate procurement.
Why It Matters
A renewal can create problems when everyone remembers that a contract had “renewal options,” but nobody checks exactly what the signed agreement says.
Best Practice: Before you exercise an option, pull your original contract and verify:
-
- the initial contract term;
-
- the number and length of permitted extensions;
-
- who has the authority to exercise the option;
-
- any notice deadline or other conditions;
-
- whether your local contract law allows it;
-
- whether the proposed services remain within the original agreement; and
-
- whether state or local procurement rules impose additional requirements.
Do this before you file your FCC Form 471. USAC expressly states that your decision to exercise a voluntary extension must occur before the Form 471 is filed for the funding year when the contract would otherwise expire.
One Important Distinction
There is a different type of contract involving non-recurring services. USAC explains that a non-recurring-services contract may, under specified circumstances, be extended to align with an applicable delivery and installation deadline, provided the contract terms and state or local rules permit it. If you receive an extension of your service delivery deadline, it may be possible to extend your contract, but you must notify USAC of the revised contract expiration date with an FCC Form 500.
What You Should Do
Before calling a vendor and saying, “Let’s renew for another year,” check the paperwork.
If the competitively bid contract clearly contains the option you intend to exercise, document the decision and confirm compliance with your state and local procurement requirements.
If it does not, consider whether a new FCC Form 470 and competitive bidding process is required rather than trying to add a renewal after the fact. E-rate competitive bidding is designed to provide potential service providers with an opportunity to compete for the requested services. The same question comes up with state master contracts, where whose Form 470 established the procurement determines what you still owe.
Bottom Line
When considering your options, the safest starting point is the original agreement: make sure the renewal or extension you want to exercise was actually provided for in the competitively bid contract and remains permissible under applicable procurement rules.
Not sure if your current contract actually allows the renewal you’re planning? Schedule a consultation today to learn how we can help assess your situation.
About the Author: Hunter Paige is based in Edmond, OK, and has been with Funds For Learning for three and a half years. When she isn’t running, she enjoys relaxing at home with her two cats, starting a new artistic hobby, and catching up on the latest movies and TV shows.