	Background

NTIA and RUS have until September 30, 2010, to obligate the Recovery Act  funding for broadband projects. Table  4 compares the agencies’ first-round application review processes. NTIA and RUS Funded 150 Projects Totaling $2.2 Billion in the First Funding Round

In the first round of broadband stimulus funding, NTIA and RUS received  almost 2,200 applications and awarded 150 grants, loans, and loan/grant  combinations totaling over $2.2 billion in federal funds to a variety of  entities for projects in nearly every state and U.S. territory. This funding  includes over $1.2 billion for 82 BTOP projects and more than $1 billion  for 68 BIP projects. RUS awarded grants, loans, and loan/grant combinations to a variety of  entities. NTIA’s and RUS’s Due- Diligence Reviews Consistently Substantiated Information in the Awardees’ Applications

To substantiate information in the applications, NTIA, RUS, and their  contractors reviewed financial, technical, environmental, and other  documents and determined the feasibility and reasonableness of each  project. Based on our analysis of the files of 32 awarded applications, we found  that the agencies consistently reviewed the applications and substantiated  the information as specified in the first-round funding notice, a finding  consistent with the Department of Commerce Inspector General’s April  2010 report. In each of the files we reviewed, we observed written  documentation that the agencies and their contractors had reviewed and  verified pertinent application materials, or made notes to request  additional documentation where necessary. NTIA and RUS Face Challenges in Awarding Funds on Time and Have Taken Actions to Streamline Application Reviews

		NTIA and RUS Must Award a Significant Amount of Funds in a Short Time

During the second funding round, NTIA and RUS have more funds to  award and less time to award these funds than they had for the first round,  and although the agencies received fewer applications for the second  round, they are conducting more due-diligence reviews than they did for  the first round. However, as the Recovery Act’s  obligation deadline draws near, the agencies may face increased pressure  to approve awards. RUS is also putting into place a multifaceted oversight framework to  monitor compliance and progress for recipients of BIP funding. NTIA and RUS will need to oversee a far  greater number of projects than in the past. In addition, BTOP- and BIP-funded projects are likely  to be much larger and more diverse than projects funded under the  agencies’ prior broadband-related programs. Adding to these challenges, NTIA and RUS must ensure that the recipient  constructs the infrastructure project in the entire project area, not just the  area where it may be most profitable for the company to provide service. Both NTIA and RUS face the risk of  having insufficient staff and resources to actively monitor BTOP- and BIP- funded projects after September 30, 2010. Because of this, it is critical  that the oversight plans the agencies are developing recognize the  challenges that could arise from a possible lack of resources for program  oversight after September 30, 2010. Planning for these various contingencies can help the agencies  mitigate the effect that limited resource levels may have on postaward  oversight. Conclusion

The Recovery Act broadband stimulus programs are intended to promote  the availability and use of broadband throughout the country, as well as  create jobs and stimulate economic development. Recommendation for Executive Action

To ensure effective monitoring and oversight of the BTOP and BIP  programs, we recommend that the Secretaries of Agriculture and  Commerce incorporate into their risk-based monitoring plans, steps to  address the variability in funding levels for postaward oversight beyond  September 30, 2010. NTIA took no position on our  recommendation. Key contributors to this report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

The objectives of this report were to examine (1) the results of the first  broadband stimulus funding round; (2) the extent to which the National  Telecommunications and Information Administration’s (NTIA) and the  Rural Utilities Service’s (RUS) due-diligence review substantiated  information in the awardees’ applications; (3) the challenges, if any, facing  NTIA and RUS in awarding the remaining broadband stimulus funds; and  (4) the actions, if any, NTIA and RUS are taking to oversee grant and loan  recipients. In addition to reviewing the sample, we  interviewed agency officials and two award recipients.
Why GAO Did This Study

Access to affordable broadband service is seen as vital to economic growth and improved quality of life. To extend broadband access and adoption, the American Recovery and Reinvestment Act (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 are awarding funds in two rounds and must obligate all funds by September 30, 2010. This report addresses the results of the first broadband stimulus funding round, the extent to which NTIA's and RUS's application reviews substantiated application information, the challenges facing NTIA and RUS in awarding the remaining funds, and actions taken to oversee grant and loan recipients. GAO analyzed program documentation, reviewed a judgmentally-selected sample of applications from first round award recipients, and interviewed agency officials and industry stakeholders.

What GAO Found

In the first round of broadband stimulus funding that began in July 2009 and ended in April 2010, NTIA and RUS received over 2,200 applications and awarded 150 grants, loans, and loan/grant combinations totaling $2.2 billion to a variety of entities in nearly every state and U.S. territory. This funding includes $1.2 billion for 82 projects awarded by NTIA and more than $1 billion for 68 projects awarded by RUS. NTIA primarily awarded grants to public entities, such as states and municipalities, whereas RUS made grants, loans, and loan/grant combinations primarily to private-sector entities, such as for-profit companies and cooperatives. NTIA and RUS consistently substantiated information in first round award recipients' applications. The agencies and their contractors reviewed financial, technical, environmental, and other documents and determined the feasibility and reasonableness of each project. GAO's review of 32 award recipient applications found that the agencies consistently reviewed the applications and substantiated the information as specified in the first funding notice. In each of the files, GAO observed written documentation that the agencies and their contractors reviewed and verified pertinent application materials, and requested additional documentation where necessary. To meet the Recovery Act's September 30, 2010, deadline for obligating broadband funds, NTIA and RUS must award approximately $4.8 billion--or more than twice the amount they awarded during the first round--in less time than they had for the first round. As the end of the Recovery Act's obligation deadline draws near, the agencies may face increased pressure to approve awards. NTIA and RUS also lack detailed data on the availability of broadband service throughout the country, making it difficult to determine whether a proposed service area is unserved or underserved, as defined in the program funding notices. To address these challenges, NTIA and RUS have streamlined their application review processes by, for example, eliminating joint reviews and reducing the number of steps in the due-diligence review process, and NTIA began using Census tract data to verify the presence of service. NTIA and RUS are putting oversight plans in place to monitor compliance and progress for broadband stimulus funding recipients, but some risks remain. The agencies will need to oversee far more projects than in the past and these projects are likely to be much larger and more diverse than projects funded under the agencies' prior broadband-related programs. Additionally, NTIA and RUS must ensure that the recipients construct the infrastructure projects in the entire project area, not simply the area where it may be most profitable for the company to provide service. Both NTIA and RUS face the risk of having insufficient resources to actively monitor Recovery Act funded broadband projects. Because of this, planning for a possible lack of resources for program oversight after September 30, 2010, can help the agencies mitigate the effect of limited resources on postaward oversight. The Secretaries of Agriculture and Commerce should incorporate into their risk-based monitoring plans, steps to address variability in funding levels for postaward oversight beyond September 30, 2010. Both agencies took no position on GAO's recommendation and noted steps being taken to complete their respective programs.