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Step 7: Funding Requests Containing Ineligible Products and Services (The 30% Rule)

Only eligible products and services should be included in funding requests on the Services Ordered and Certification Form (Form 471).

Helpful Hint: You should have a copy of Form 471 for reference when reading this section.

Applicants should be sure that they include only eligible products and services in Form 471 Block 5 funding requests.  If services to be delivered include both eligible and ineligible components, applicants must subtract the ineligible costs using Item 23B and/or Item 23G of their Block 5 funding requests.

USAC reviews all Form 471 requests to ensure that only eligible products and services are included.  If an applicant includes ineligible products and services in a Block 5 funding request, USAC will contact the applicant to determine the exact cost associated with the ineligible items. The cost associated with the ineligible items will be removed from the funding request with the applicant’s concurrence. The applicant has two options when removing ineligible items.

1. The applicant can request to remove the ineligible items from the FRN, or
2. the applicant can split the FRN. By splitting the FRN, a new FRN will be created that will contain the ineligible product or service. This newly created FRN will then be denied as ineligible and the original FRN will be funded since it no longer contains any ineligible products or services. 

The FRN will be denied if the applicant does not respond to USAC’s request to remove the ineligible items and 30% OR MORE of the FRN is for ineligible products or services. If the applicant does not respond to USAC’s contact and LESS THEN 30% of the FRN is for ineligible products or services, that amount will be automatically removed from the funding request.

USAC developed the "30% Rule" to more efficiently process the large number of applications under the Schools and Libraries Program, especially because demand for funding generally exceeds the funding available.

For assistance in determining the eligibility of products and services, see Eligible Services Framework and the Eligible Services List.