	NTIA and RUS Have Taken Steps to Address Scheduling, Staffing, and Data Challenges; However, Some Risks Remain

NTIA and RUS face scheduling, staffing, and data challenges in evaluating  applications and awarding funds. The agencies have taken steps to meet  these challenges, such as adopting a two-step evaluation process, utilizing  nongovernmental personnel, and publishing information on the applicant’s  proposed service area. While these steps address some challenges, the  agencies lack the needed time to apply lessons learned from the first  funding round and face a compressed schedule to review new  applications. The agencies have 18 months to establish their  respective programs, solicit and evaluate applications, and award all  funds. RUS will also use  contractors to evaluate and score applications. If this  information raises eligibility issues, RUS may send field staff to the  proposed service area to conduct a market survey. As mentioned previously, NTIA and  RUS initially proposed to utilize three separate funding rounds during the  18-month window to award the $7.2 billion. For the PSIC program, NTIA and DHS  completed application reviews in roughly 6 months. Continued lack of broadband data and plan. NTIA and RUS Face Staffing Challenges in Overseeing Funded Projects, and Despite Steps Taken, Several Risks to Project Oversight Remain

NTIA and RUS will need to oversee a far greater number of projects than  in the past, including projects with large budgets and a diversity of  purposes and locations. In doing so, the agencies face the challenge of  monitoring these projects with far fewer staff per project than were  available in similar grant and loan programs they have managed. To  address this challenge, NTIA and RUS procured contractors to assist with  oversight activities and will require funding recipients to complete  quarterly reports and, in some cases, obtain annual audits. These risks  include insufficient resources to actively monitor funded projects beyond  fiscal year 2010 and a lack of updated performance measures for NTIA and  RUS. In addition, NTIA has yet to define annual audit requirements for  commercial entities funded under BTOP. The Recovery Act requires BTOP funding  recipients to report quarterly on their use of funds and NTIA to make these  reports available to the public. Recipients of  funding for infrastructure projects must report on a number of metrics,  such as the number of households and businesses receiving new or  improved access to broadband as a result of the project, and the  advertised and averaged broadband speeds and the price of the broadband  services provided. Yet, the Recovery Act provides funding through  September 30, 2010. Our future work, which we expect to complete in November,  will provide additional information on the implementation and oversight of  the broadband programs.
Why GAO Did This Study

Access to broadband service is seen as vital to economic, social, and educational development, yet many areas of the country lack access to, or their residents do not use, broadband. To expand broadband deployment and adoption, the American Recovery and Reinvestment Act (the Recovery Act) provided $7.2 billion to the Department of Commerce's National Telecommunications and Information Administration (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS) for grants or loans to a variety of program applicants. The agencies must award all funds by September 30, 2010. This testimony provides preliminary information on the challenges NTIA and RUS face; the steps taken to address challenges; and the remaining risks in (1) evaluating applications and awarding funds and (2) overseeing funded projects. This statement is based on related ongoing work that GAO expects to complete in November. To conduct this work, GAO is reviewing relevant laws and program documents and interviewing agency officials and industry stakeholders. While this testimony does not include recommendations, GAO expects to make recommendations in its November report.

What GAO Found

Application evaluation and awards. NTIA and RUS face scheduling, staffing, and data challenges in evaluating applications and awarding funds. NTIA, through its new Broadband Technology Opportunities Program, and RUS, through its new Broadband Initiatives Program, must review more applications and award far more funds than the agencies formerly handled through their legacy telecommunications grant or loan programs. NTIA and RUS initially proposed distributing these funds in three rounds. To meet these challenges, the agencies have established a two-step application evaluation process that uses contractors or volunteers for application reviews and plan to publish information on applicants' proposed service areas to help ensure the eligibility of proposed projects. While these steps address some challenges, the upcoming deadline for awarding funds may pose risks to the thoroughness of the application evaluation process. In particular, the agencies may lack time to apply lessons learned from the first funding round and to thoroughly evaluate applications for the remaining rounds. Oversight of funded projects. NTIA and RUS will oversee a significant number of projects, including projects with large budgets and diverse purposes and locations. In doing so, the agencies face the challenge of monitoring these projects with far fewer staff per project than were available for their legacy grant and loan programs. To address this challenge, NTIA and RUS have hired contractors to assist with oversight activities and plan to require funding recipients to complete quarterly reports and, in some cases, obtain annual audits. Despite these steps, several risks remain, including a lack of funding for oversight beyond fiscal year 2010 and a lack of updated performance measures to ensure accountability for NTIA and RUS. In addition, NTIA has yet to define annual audit requirements for commercial entities funded under the Broadband Technology Opportunities Program.