Rural Health Care

Step 4 Prepare for Competitive Bidding

Contract Modifications

Applicants are entitled to make modifications to a contract that was previously approved for funding without completing an additional competitive bid process, provided that state or local procurement laws consider those changes to be minor.

In cases where state or local procurement laws are silent or the proposed modification is not exempt from state or local competitive bidding requirements, if the contract modifications are deemed by USAC to include material changes, then the applicant must post a new FCC Form 461 and conduct a new competitive bidding process.

Cardinal changes are new requirements that are materially different from those originally contracted for, and are not discussed in a changes clause in the original contract. In assessing whether a change is considered to be minor or a cardinal change, USAC takes into consideration the extent of changes in the type of work, performance period, and cost terms as a result of the modification.

It is strongly recommended that the applicant discuss potential contract changes with USAC before making modifications to avoid the risk of losing funding. Although minor modifications will be exempt from the competitive bidding requirement, parties are not guaranteed support for modified services, and a commitment of funds for the originating FCC Form 462 does not guarantee funding for the modified services.

Applicants seeking to modify a contract without undertaking a competitive bidding process should file a revised funding commitment request indicating the value of the proposed contract modification. This should happen within 30 calendar days of signing or entering into the contract modification so USAC can track contract performance. The applicant also must demonstrate that the modification is within the original contract's change clause or is otherwise a minor modification that is exempt from the competitive bidding process.

The applicant's justification for exemption from the competitive bidding process will be subject to audit and will be reviewed by USAC to determine whether the applicant's request is based on a minor contract modification that is exempt from the competitive bidding process.

Adding New Members

A consortium applicant can add new members to expand its network and receive service upgrades only if the contract states such circumstances may occur within the contract. The substitution cannot cause the total amount of support under the funding commitment letter to increase. If the original bid solicitation doesn't include the possibility of adding members, the applicant must conduct a new competitive bidding process.