586 Request for proposals for administrator of the Pennsylvania Universal Service Fund; RFP 172004-1

PENNSYLVANIA PUBLIC UTILITY COMMISSION

Request for Proposals for Administrator of the Pennsylvania Universal Service Fund; RFP 172004-1

[34 Pa.B. 1866]

A.  General Information for Contractors

1.  Rejection of Proposals

   The Commonwealth reserves the right to reject any and all proposals received as a result of this request or to negotiate separately with competing contractors.

2.  Incurring Costs

   The Commonwealth is not liable for any costs incurred by contractors prior to issuance of a contract.

B.  Procurement Description

   The Pennsylvania Public Utility Commission (Commission) requests written proposals to serve as the third-party administrator (Administrator) of the Pennsylvania Universal Service Fund (Fund). The Administrator is responsible for administering the Fund from January 1, 2005, through and including December 31, 2006. The Administrator is responsible for collecting pro rata contributions based on telecommunications service providers' intrastate end-user telecommunications retail revenues, at a rate set by the Commission, and depositing these revenues into the Fund. The Administrator will also distribute money from the Fund on the first of each month to approximately 32 rural telephone carriers. The role of the Administrator is described in 52 Pa. Code § 63.167 (relating to administrator's duties), as follows:

   (1)  Maintain a database to track contributing telecommunications providers.

   (2)  Develop Commission-approved forms to be used by all telecommunications service providers to report monthly contributions.

   (3)  Review the completed forms to ensure completeness and accuracy of reported revenue and Fund assessments and contact providers whose accounts contain unexplained variances in reported revenues or Fund assessments.

   (4)  Assess late-payment charges of 1.5% per month pro rata per diem on contributions that are 30 days past due.

   (5)  Send initial notices of delinquency to all delinquent contributors when a payment is 30 days past due and follow up with at least one subsequent written notice and/or phone call to the contributor to pursue collection of Fund payments that are 60 days past due.

   (6)  Maintain logs of notices of delinquent contributors and refer to the Commission for further enforcement, on a monthly basis, all accounts more than 90-days past due.

   (7)  Immediately inform the Commission if the Administrator has reason to believe that any telecommunications provider has submitted false information to the administrator with the intent of obtaining fraudulent funding, under-reporting end-user revenue or if any other irregularity occurs in the operation or administration of the Fund.

   (8)  Invest Fund moneys in interest-bearing instruments designed to minimize risk of loss while providing maximum liquidity; permitted investments shall include:

   (i)  Marketable obligations directly and fully guaranteed by the United States government.

   (ii)  Federally-insured checking, money market accounts, or certificates of deposit.

   (iii)  Other accounts as expressly approved by the Commission.

   (9)  Promptly advise the Commission if the administrator's data analysis projects a potential fund shortfall or if Fund disbursements exceed receipts in a given month.

   (10)  In January of each year, mail reporting forms to each telecommunications service provider to acquire appropriate data to compute the individual provider's aggregate intrastate end-user telecommunications retail revenue and to compute year-end access line growth percentages for development of the following year's Fund amount.

   (11)  Cooperate with the independent auditor selected by the Commission, and provide data and information reasonably required to support audit activities.

   (12)  Promptly respond to Commission requests for information pertaining to Fund administration.

   (13)  Maintain adequate principal liability insurance coverage, criminal liability coverage, and a sufficient umbrella liability policy.

   (14)  Prepare reports of fund activity for the Commission on a monthly basis detailing carrier assessments, delinquent payers, late-payment charges (if applicable), fund disbursements, interest earned, and cumulative results.

   (15)  Maintain records by contributor and by recipient.

   (16)  Provide any additional reports as requested by the Commission.

   (17)  Maintain a statement of financial condition (balance sheet) and income statement for the total fund, and a sources and uses of funds statement, which will tie to the total fund income statement.

   (18)  Deliver the balance sheet, income statement, and sources and uses of funds statement to the Fund auditor by May 1 of each year so that the auditor may prepare its report.

   (19)  Maintain a system of internal controls.

   (20)  Consider the auditor's report in preparing the annual report for submission to the Commission and include any undercollections or overcollections identified by the audit report in developing a proposed budget for the upcoming fiscal year.

   (21)  Submit the administrator's annual report by September 1 or 60 days following receipt of the audit report, whichever is later.

   (22)  With prior Commission approval, borrow monies to cover the short-term liabilities of the Fund caused by undercollections.

   (23)  If short-term borrowing is necessary, the administrator shall provide formal notice on a timely basis to the Commission which identifies the amount, the proposed lending source, and the terms and conditions of the loan.

   (24)  Comply with procedures and guidelines established by the Commission, but may request the Commission amend, modify or delete procedures or guidelines, (the administrator will not have the authority to develop or interpret the Commission's procedures or guidelines with respect to the Fund, and any dispute between the administrator and any contributing telecommunications provider shall be submitted to the Commission for resolution).

   (25)  Have access to the books of account of all telecommunications service providers to the limited extent necessary to verify their intrastate end-user telecommunications retail revenues and other information used by the administrator in determining assessments and disbursements for the Fund.

   (26)  Treat any competitive and financial information received as confidential and proprietary, and only release said information upon order of the Commission.

   (27)  Operate on a fiscal year which shall be the same as the calendar year.

C.  Purpose of Fund

   At this time, the Fund is currently intended to reduce and restructure access charges and intraLATA toll rates and to encourage greater toll competition while enabling carriers to continue to preserve the affordability of local service rates. Rulemaking Re Establishing Universal Service Fund Regulations at 52 Pa. Code §§ 63.161--171, Final Rulemaking Order at L-00000148 (November 29, 2000). The regulations governing administration of the Fund are in 52 Pa. Code Subchapter L (relating to universal service). They may be accessed, as well as other Orders and pertinent information regarding the Fund, at the Commission's website: www.puc.paonline.com. Click on ''Competition and Choice,'' ''Local Telephone Competition,'' ''Universal Service Fund.''

D.  The Fund and the Administrator

   Commission regulations allow for an assessment which is computed annually under 52 Pa. Code § 63.169 (relating to collection of universal service fund contributions) at a rate calculated by dividing the contributing telecommunications provider's associated total intrastate end-user telecommunications retail revenues by Statewide total intrastate end-user telecommunications revenues. End-user revenues expressly do not include revenues received from access, resale (toll or local) of unbundled network elements or other services provided which are essentially wholesale in nature. Total end-user revenues shall include all revenues received from subscribers who actually consume the final service unadjusted for any expense or any other purpose.

   Nearly 300 companies will contribute monthly to the Fund. These include 35 incumbent local exchange carriers. The remainder of participants are companies selling intrastate toll services and competitive local exchange carriers who are either offering local exchange services or are planning to do so in the near future. Wireless telecommunications carriers do not participate as either recipients or contributors in the Fund. Carriers are not allowed to pass through as a direct surcharge to their customers any contributions made to the Fund.

   The Administrator functions as the ''financial hub'' of this system. The Administrator collects the contributions from the individual companies, manages the Fund's cash flow and disburses payments to 31 small rural companies and Sprint/United Fund recipients under the regulations. The Fund assessment rate is set annually by the Commission based on data submitted in annual reports by the Administrator. The Administrator also works with the Fund Auditor.

   The Administrator may be an individual or an organization. An organizational bidder may have sufficient resources on staff. An individual bidder probably would need to develop formal or informal relationships with other organizations, such as banks. For example, an individual bidder would probably want to develop a ''lock box'' system at a bank to collect receipts and use a bank's commercial or trust operations for making short-term investments.

E.  Administrator Criteria

   Under 52 Pa. Code § 63.166 (relating to administrator criteria), the Administrator shall meet the following criteria:

   (1)  The Administrator shall be neutral, impartial and independent from telecommunications service providers operating in this Commonwealth.

   (2)  The Administrator shall not advocate specific positions before the Commission in nonuniversal service administrative proceedings related to common carrier issues.

   (3)  The Administrator shall not be an affiliate of any provider of telecommunications services.

   (4)  If the Administrator has a board of directors that includes members with direct financial interests in entities that contribute to or receive support from the Fund, no more than a third of the board members may represent any one category (for example, local exchange carriers or interexchange carriers) of contributing carriers or support recipients, and the Board's composition must reflect the broad base of contributors to and recipients of Fund assets. For purposes of this restriction, a direct financial interest exists where the Administrator or Board member:

   (a)  Is an employee of a telecommunications carrier.

   (b)  Owns equity interests in bonds or equity instruments issued by any telecommunications carrier.

   (c)  Owns mutual funds that invest more than 50% of its assets in telecommunications securities.

F.  Contract for Services

   The successful bidder will negotiate with the Commission a detailed contract that is generally consistent with the standard Commonwealth contract for personal services. The contract will be for a term beginning on January 1, 2005, or as soon thereafter as can be arranged, and ending December 31, 2006. Once selected, the Administrator will be terminated during this term only for good cause.

   The contract:

   1.  Will cover 2 years.

   2.  May need to be amended later if the legislature authorizes or mandates changes.

   3.  May elaborate further on the Administrator's duties, including:

   (a)  Clarifying reporting requirements for the Administrator and in particular concerning compliance with Generally Accepted Government Auditing Standards.

   (b)  Periodic financial reporting and revenue estimating requirements.

   (c)  Cooperating with a new Administrator following termination of the contract so that there will be a smooth transition to the new administration of the Fund.

   To the extent that any changes as a result of contract negotiations affect the cost of performing the contract, adjustments from compensation described in the bid will be negotiated with the winning bidder.

G.  Proposal Submissions

   An original and five copies of the proposals should be submitted directly to the Evaluation Committee Chairperson, Frank B. Wilmarth, Deputy Chief Counsel, Pennsylvania Public Utility Commission, Law Bureau, P. O. Box 3265, Harrisburg, PA 17105-3265. Proposals should be received by 5 p.m. on June 1, 2004. No late proposals will be considered. The proposal should be broken into three separate parts, two of which should be in separate sealed envelopes marked ''price quotation'' and ''Disadvantaged Business Information,'' respectively.

Part 1--General Information

   The first part of each proposal should include a general discussion of the approach the bidder will take and explain how the bidder will meet each requirement. In addition, this part of the proposal should identify all individuals who will work on significant tasks, explain the qualifications of each and how many hours the individual will likely work on their respective tasks on a monthly basis. A single individual should be identified to serve as Fund Administrator and that individual's resume should be attached. Resumes for other identified persons with significant responsibility should also be attached.

   If the bidder wishes to associate with another organization, such as a bank, to provide the required services, the bid should include a separate statement from that organization describing its anticipated role.

   In addition, if the bidder, or any of its associates, has an affiliate or representational relationship with a Commission-regulated telecommunications carrier, the bidder must disclose that relationship and explain, in detail, the measures that will be taken to avoid any conflict of interest that may arise as a consequence of this contract. Written documentation demonstrating, as deemed appropriate by the Commission, that measures have been taken to avoid any conflict of interest is required.

Part 2--Cost Information

   The second part of the proposal document should be a price quotation, which should not be in the main text of the proposal but rather kept separate in a separate sealed envelope, marked ''price quotation.'' The price quotation should cover the period from January 1, 2005, through December 31, 2006. A cost data sheet should be submitted in this separate sealed envelope and it should include a breakdown of costs. Bidders are free to structure their price offerings in any way they choose. However, this part of the bid should specifically describe:

   1.  One-time startup costs, presumably to be paid in the first year.

   2.  Fixed annual costs for each of the contract years. This should cover most anticipated expenses, such as personnel, office costs and overhead, and may include an allowance for travel. The amount may vary for each year based upon expected inflation.

   3.  Any contingency costs. This might include functions like defense of lawsuits.

   4.  If the winning bidder actually begins work after January 1, 2005, how compensation will be proportionally adjusted.

   Failure to submit the cost data sheet in a sealed envelope kept separate and apart from the rest of the proposal will result in automatic rejection of the proposal by the Evaluation Committee (Committee).

Part 3--Disadvantaged Business Information

   The Commonwealth encourages participation by small disadvantaged businesses as prime contractors, joint ventures and subcontractors/suppliers and by socially disadvantaged businesses as prime contractors.

   Small disadvantaged businesses are small businesses that are owned or controlled by a majority of persons, not limited to members of minority groups, who have been deprived of the opportunity to develop and maintain a competitive position in the economy because of social disadvantages. The term includes: (1) Department of General Services, Bureau of Minority and Women Business Opportunities (BMWBO) certified minority business enterprises (MBEs) and women business enterprises (WBEs) that qualify as small businesses; and (2) United States Small Business Administration certified 8.a. small disadvantaged business concerns.

   Small businesses are businesses in the United States that are independently owned, are not dominant in their field of operation, employ no more than 100 persons and earn less than $20 million in gross annual revenues ($25 million in gross annual revenues for businesses in the information technology sales or service business).

   Socially disadvantaged businesses are businesses in the United States that the BMWBO determines are owned or controlled by a majority of persons, not limited to members of minority groups, who are subject to racial or ethnic prejudice or cultural bias, but which do not qualify as small businesses. For a business to qualify as ''socially disadvantaged,'' the offeror must include in its proposal clear and convincing evidence to establish that the business has personally suffered racial or ethnic prejudice or cultural bias stemming from the business person's color, ethnic origin or gender.

   Questions regarding this program should be directed to the Department of General Services, Bureau of Minority and Women Business Opportunities, Room 502, North Office Building, Harrisburg, PA 17125, [phone], fax: [phone], [e-mail].

   Program information and a database of BMWBO certified minority and women owned businesses can be accessed at www.dgs.state.pa.us (DGS Keyword: MWBO). The Federal vendor database can be accessed at www.ccr.gov (choose ''Dynamic Small Business Search'' (certified companies are so indicated)).

   To receive credit for being a Small Disadvantaged Business or Socially Disadvantaged Business (collectively SDBs), entering into a joint venture agreement with a Small Disadvantaged Business or subcontracting with a Small Disadvantaged Business (including purchasing supplies and/or services through a purchase agreement), a company must include proof of Disadvantaged Business qualification in the Disadvantaged Business portion of the proposal:

   *  Small Disadvantaged Business qualifying as a result of MBE/WBE certification from the BMWBO must provide a photocopy of their BMWBO certificate.

   *  Disadvantaged Businesses qualifying as a result of 8(a) certification from the United States Small Business Administration must submit proof of Small Business Administration Certification. The owners of these businesses must also submit proof of United States citizenship.

   *  All companies claiming Small Disadvantaged Business status, whether as a result of BMWBO certification or Small Business Administration certification as an 8(a) disadvantaged business, must attest to the fact that the business has 100 or fewer employees.

   *  All companies claiming Small Disadvantaged Business status, whether as a result of BMWBO certification or Small Business Administration certification as an 8(a) disadvantaged business, must submit proof that their gross annual revenues are less than $20 million ($25 million for businesses in the information technology sales or service business). This can be accomplished by including a recent tax or audited financial statement.

   Companies claiming status as a Socially Disadvantaged Business must include in the Disadvantaged Business portion of the proposal clear and convincing evidence to establish that the business has personally suffered racial or ethnic prejudice or cultural bias stemming from the business person's color, ethnic origin or gender. The submitted evidence of prejudice or bias must:

   *  Be rooted in treatment which the business person has experienced in American society, not in other countries.

   *  Show prejudice or bias that is chronic and substantial, not fleeting or insignificant.

   *  Indicate that the businessperson's experience with the racial or ethnic prejudice or cultural bias has negatively impacted on his or her entry into and/or advancement in the business world.

   The BMWBO shall determine whether the contractor has established that a business is socially disadvantaged by clear and convincing evidence.

   In addition to these verifications, to receive credit for being a SDB this portion of the proposal must include the following information:

   (1)  The name and telephone number of the project (contact) person for SDBs.

   (2)  The company name, address and telephone number of the prime contact person for each specific SDBs included in the proposal. The contractor must specify the SDBs to which it is making commitments. The contractor will not receive credit by stating that it will find a Small Disadvantaged Business after the contract is awarded or by listing several companies and stating it will select one later.

   (3)  The specific work, goods or services the SDBs will perform or provide.

   (4)  The location where the SDBs will perform these services.

   (5)  The timeframe for the SDBs to provide or deliver the goods or services.

   (6)  The amount of capital, if any, the SDBs will be expected to provide.

   (7)  The form and amount of compensation each SDB will receive.

   (8)  The percent of the total value of services or products purchased/subcontracted under the proposal that will be provided by the SDBs.

   (9)  In the case of a joint venture agreement, a copy of the agreement, signed by all parties, must be included in the Disadvantaged Business portion of the proposal. If subcontracting, a signed subcontract or letter of intent must be included in the Disadvantaged Business portion of the proposal.

   The Disadvantaged Business portion of the proposal must be clearly identified as Disadvantaged Business Information and sealed in an envelope separately from the remainder of the proposal. Only one copy of the Disadvantaged Business section is needed. The dollar value of the commitment to each SDB must be sealed in the same envelope with the Disadvantaged Business portion of the proposal. The selected contractor's Disadvantaged Business commitment amount, name of Disadvantaged Business and services to be provided, including timeframe for performing services, will be included as a contractual obligation when the contract is executed.

   The following options will be considered as part of the final criteria for selection:

   Priority Rank 1. Proposals submitted by Small Disadvantaged Businesses.

   Priority Rank 2. Proposals submitted from a joint venture with a Small Disadvantaged Business as a joint venture partner.

   Priority Rank 3. Proposals submitted with subcontracting commitments to Small Disadvantaged Businesses.

   Priority Rank 4. Proposals submitted by Socially Disadvantaged Businesses.

   Each proposal will be rated for its approach to enhancing the utilization of Disadvantaged Businesses. Each approach will be evaluated with option number one receiving the greatest value and the succeeding options receiving values in accordance with the previously listed priority ranking.

   To the extent that a proposal is submitted by an SDB and the SDB cannot enter into subcontract arrangements for more than 40% of the total estimated dollar amount of the contract to other contractors, the Disadvantaged Business participation scoring shall be proportionally lower for that proposal.

   Contracts containing Disadvantaged Business participation must also include a provision requiring the contractor to meet and maintain those commitments made to Disadvantaged Businesses at the time of the proposal submittal or contract negotiation, unless a change in the commitment is approved by the BMWBO. Contracts containing Disadvantaged Business participation must include a provision requiring Small Disadvantaged Business subcontractors and Small Disadvantaged Businesses in a joint venture to perform at least 50% of the subcontract or Small Disadvantaged Business portion of the joint venture.

   Commitments to Disadvantaged Businesses made at the time of the proposal submittal or contract negotiation must be maintained throughout the term of the contract. Any proposed change must be submitted to the BMWBO, which will make a recommendation as to a course of action to the contracting officer. If a contract is assigned to another contractor, the new contractor must maintain the Disadvantaged Business' participation of the original contract.

   The contractor shall complete the Prime Contractor's Quarterly Utilization Report (or similar type document containing the same information) and submit it to the contracting officer of the agency that awarded the contract and the BMWBO within 10 workdays at the end of each quarter the contract is in force. If there was no activity, the form must also be completed, stating ''No activity in this quarter.'' This information will be used to determine the actual dollar amount paid to Small Disadvantaged Business subcontractors and suppliers and Small Disadvantaged Businesses involved in joint ventures. Also, it is a record of fulfillment of the commitment your firm made and for which it received Disadvantaged Business points.

   Note: Equal employment opportunity and contract compliance statements referring to company equal employment opportunity policies or past contract compliance practices do not constitute proof of Disadvantaged Business status or entitle a proposer to receive credit for Disadvantaged Business utilization.

H.  Pre-Proposal Conference

   There will be no pre-proposal conference. However, potential bidders may seek answers to questions by submitting questions in writing to Frank B. Wilmarth, Deputy Chief Counsel, Pennsylvania Public Utility Commission, Commonwealth Keystone Building, P. O. Box 3265, Harrisburg, PA 17105, [phone], [phone], [e-mail]. If questions of general interest are presented, the Commission may communicate the question and its answer in writing to persons who have expressed an interest in receiving the material. Contact the Commission at the same number to receive this material. Questions regarding this Request for Proposals must be received before June 1, 2004.

I.  Proposal Review

1.  Evaluation Procedure

   The Committee (which consists of at least five individuals with appropriate technical and managerial experience) will perform a preliminary evaluation based upon the criteria in this Request for Proposals (RFP) and will score the technical portion of the proposals using an evaluation score sheet. Proposals that meet the RFP requirements are ranked in order of merit. A maximum point value for each criterion and a total point value for all criteria will have been established by the Committee before opening the proposals.

   The Committee will review proposals according to four major criteria:

*  Price

   Price will be a principal consideration. Since bids may include one or more segments that are being bid at a monthly or otherwise variable price, bids may not be directly comparable in terms of a single dollar amount. However, the Commission will consider all of the fixed and variable prices contained in the bid in evaluating it. Compensation paid to the Administrator will be paid from the Fund and the Commission will pay no compensation.

*  Quality of Performance

   The bidder's expected quality of performance will be the second principal consideration. Within this category, the Commission will consider the bidder's understanding of the duties of the Fund Administrator, the bidder's probable success in discharging the duties of Administrator and the bidder's prior experience with administering other similar funds. The Commission will also consider the quality of each person expected to work, the number of hours each person is expected to work, and on what specific tasks.

*  Independence

   The Commission is seeking a neutral, independent third-party. Independence from affiliated relationships with any telecommunications carriers is preferred. If the bidder, or any of its associates, has an affiliate or representational relationship with a Commission-regulated telecommunications carrier, the bidder must disclose that relationship and explain, in detail, the measures that will be taken to avoid any conflict of interest that may arise as a consequence of this contract.

*  Disadvantaged Business Status

2.  Best and Final Offers

   The Commission will disqualify any bidder whom the Commission believes cannot be expected to perform reliably as Administrator.

   (a)  Discussions and negotiations may be conducted with offerors for the purpose of obtaining best and final offers.

   (1)  Discussions are limited to responsible offerors. Responsible offerors are those offerors that have submitted responsive proposals and possess the capability to fully perform the contract requirements in all respects and the integrity and reliability which assure good faith performance.

   (2)  In conducting these discussions and negotiations, there shall be no disclosure of any information derived from proposals submitted by competing offerors.

   (3)  Offerors may be given the opportunity to revise their proposals.

   (4)  It is imperative that offerors must be accorded fair and equal treatment with respect to any opportunity for discussion and revision of proposals.

   (b)  Procedure. The Committee chairperson will send a letter to each offeror inviting the offerors to discuss the technical and cost changes to their proposal desired by the agency. A list of the changes will be appended to each letter. The list should be based on the suggested changes by committee members as documented during the tentative evaluation.

   (1)  The Committee chairperson or a member of the Committee designated by the chairperson will conduct the discussions and negotiations. All Committee members should be present and actively assist the negotiator. Discussions and negotiations involving Disadvantaged Business participation will be conducted by the BMWBO. The discussions/negotiations should be free, full and open. Where appropriate, the offeror should be given an explanation of the agency's reason for a requested change. This is especially true when the offeror appears reluctant to accept the change. However, it is not expected that offerors will accept the agency's position on all issues. After discussions/negotiations of each issue, the Committee chairperson or designee should state the agreement reached on that issue. The agreement need not be precisely what either the agency or the offeror are willing to accept should a contract ensue. The discussions/negotiations should be tape recorded, if convenient. If not, a Committee member or a stenographer should record the substance of the agreement.

   (2)  At the conclusion of the discussions/negotiations, the contractor will be asked to confirm the agreements reached, in writing, in the form of formal amendments to its proposal.

3.  Final Evaluation

   The Committee will rank the offerors in descending order according to the total score assigned to each based upon the final Committee scores. The Committee recommendation and all working papers will then be forwarded to the Commission's Law Bureau and the Bureau of Administrative Services to ensure compliance with the Department of General Services' Contractor Responsibility Program (Management Directive 215.9) (66 Pa.C.S. § 501 et seq).

J.  Selection

   The Commission selects for contract negotiation the offeror whose proposal is determined to be the most advantageous and notifies that contractor in writing. The Commission then notifies the selected and nonselected offerors of the selection for contract negotiation. The Commission may hold a debriefing conference if it is requested by the non-selected offerors.

K.  Negotiations with the Selected Offeror

   Postselection negotiations will be conducted by a negotiating team (consisting of individuals on the Committee or other individuals with technical, contracting, fiscal and legal expertise). The purpose of the negotiations is to ensure a clear understanding of the work statement; to reach an agreement on the inclusion of the contract provisions; to reach an agreement on the type of contract; and to determine a fair and reasonable price or reasonable cost estimate.

JAMES J. MCNULTY,   
Secretary

[Pa.B. Doc. No. 04-586. Filed for public inspection April 2, 2004, 9:00 a.m.]