Both NTIA and RUS have experience with similar broadband grant or loan  programs. 1). NTIA and RUS Have Taken Steps to Address Challenges, Including Scheduling and Staffing, Associated With Evaluating Applications and Awarding Funds; 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, including the adoption of a two-step evaluation process,  utilization of nongovernmental personnel, and publication of information  on the applicant’s proposed service area. While these steps address some  challenges, the agencies’ remaining schedule may pose risks to the review  of applications. Under the provisions of the Recovery Act, NTIA  and RUS must award all funds by September 30, 2010. 2). Technology Opportunities Program. To evaluate  applications, NTIA is using a review system, in which three unpaid,  independent expert reviewers examine and score applications. Publish applicant information. 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 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 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 goals for NTIA and RUS. In addition, NTIA has yet to  define annual audit requirements for commercial entities funded under  BTOP. In particular, the agencies have 18  months to establish their respective programs, solicit and evaluate  applications, and award funds. To reduce the risk of awarding funds to projects that may not be  sustainable or do not meet the priorities of the Recovery Act    delay the issuance of the second NOFA in order to provide time to  analyze application and evaluation processes and apply lessons  learned from the first funding round, and     provide review time in the second funding round comparable with  other broadband grant and loan programs. 2. Agency Comments and Our Evaluation

We provided a draft of this report to the departments of Commerce and  Agriculture, to OMB, and to FCC for review and comment.
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 (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 report addresses the challenges NTIA and RUS face; steps taken to address challenges; and remaining risks in (1) evaluating applications and awarding funds and (2) overseeing funded projects. The Government Accountability Office (GAO) reviewed relevant laws and program documents and interviewed agency officials and industry stakeholders.

What GAO Found

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, including NTIA's largest legacy grant program, Public Safety Interoperable Communications. NTIA and RUS initially proposed distributing these funds in three rounds, but recently adopted two rounds. To meet these challenges, the agencies have established a two-step application evaluation process that uses contractors or unpaid, independent experts 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. 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 goals 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.