**Before the**

**Federal Communications Commission**

**Washington, DC 20554**

In the Matter of )

)

Request for Review of the )

Decision of the )

Universal Service Administrator by )

)

Northern Arizona Regional Behavioral ) File No. RHCD-10025-1

Health Authority, Flagstaff, Arizona )

)

Federal-State Joint Board on ) CC Docket No. 96-45

Universal Service )

)

Changes to the Board of Directors of the ) CC Docket No. 97-21

National Exchange Carrier Association, Inc. )

**order**

**Adopted: March 9, 2000 Released: March 10, 2000**

By the Common Carrier Bureau:

1.  The Common Carrier Bureau has under consideration a Letter of Appeal
    filed by the Northern Arizona Regional Behavioral Health Authority
    (Northern Arizona) of Flagstaff, Arizona, seeking review of a
    decision issued by the Rural Health Care Division (RHCD) of the
    Universal Service Administrative Company (USAC or
    Administrator).[^1] RHCD denied Northern Arizona's application to
    receive benefits from the universal service support mechanism for
    rural health care providers because Northern Arizona failed to
    comply with the Commission's competitive bidding requirement. For
    the reasons set forth below, we deny Northern Arizona's appeal and
    affirm RHCD's denial of Northern Arizona's application.

2.  In an effort to ensure that universal service funds support services
    that satisfy the precise needs of an institution, and that the
    services are provided at competitive rates, the Commission requires
    each rural health care provider to participate in a competitive
    bidding process. [^2] Specifically, the Commission's rules require a
    rural health care provider to submit an application to the
    Administrator[^3] that includes a description of the services for
    which the rural health care provider is seeking support. [^4] The
    Administrator must post this information on its web site, and the
    rural health care provider must wait at least 28 days from the date
    on which its information is posted before making commitments with
    the selected telecommunications carrier(s).[^5] The Commission
    concluded, however, that rural health care providers need not
    renegotiate existing contracts. Accordingly, section 54.604(a) of
    the Commission's rules states that contracts signed on or before
    July 10, 1997 are exempt from the competitive bidding requirements
    for the life of the contract; and contracts signed after July 10,
    1997, but before January 30, 1998, are exempt with respect to
    services provided between January 1, 1998 and June 30, 1999.[^6]

3.  On May 18, 1998, RHCD received Northern Arizona's initial
    application to receive telecommunications services at reduced rates
    for the first funding year. [^7] RHCD posted this application on its
    web site on June 18, 1998.[^8] On July 8, 1998, RHCD sent a letter
    to Northern Arizona notifying Northern Arizona of the posting
    date.[^9] Thereafter, Northern Arizona informed RHCD that it began
    receiving services from US WEST on July 1, 1998. [^10] Northern
    Arizona also submitted to RHCD a document entitled "Interstate
    Private Line Transport Services Pricing Plan Acknowledgement"
    (Pricing Plan Acknowledgement).[^11] Northern Arizona signed the
    Pricing Plan Acknowledgement on July 1, 1998. Based upon the
    information received from Northern Arizona, on November 11, 1999,
    RHCD sent a letter to Northern Arizona denying Northern Arizona's
    application because it improperly selected a carrier before the
    28-day waiting period had expired on July 16, 1998.[^12]

4.  Northern Arizona responded with the subject Letter of Appeal to the
    Commission, which appears to argue that the Pricing Plan
    Acknowledgement is an existing contract that is exempt from the
    Commission's competitive bidding requirement.[^13] Specifically, the
    Letter of Appeal states that Northern Arizona did not improperly
    select a carrier during the 28-day posting period because it
    selected US WEST on November 24, 1997. Northern Arizona's argument
    is based on the fact that the date of "11-24-97" appears on the
    Pricing Plan Acknowledgement as the commencement date for service, a
    line was drawn across this date, and it was replaced with
    "7-1-98."[^14] Northern Arizona also argues that its position is
    supported by the fact that the document bears a hand written note
    stating "Rate decrease Tariff change 7/1/98." [^15] Northern Arizona
    explains that the only conclusion that can be drawn from this
    information is that Northern Arizona selected US WEST in November
    1997 to provide the needed services, and US WEST simply changed the
    rates for the services on July 1, 1998. [^16]

5.  We have reviewed Northern Arizona's application including the
    Pricing Plan Acknowledgement and RHCD's records relating thereto.
    Based on the record before us, we conclude that RHCD properly
    determined that Northern Arizona violated the Commission's
    competitive bidding rules. We find that there are two separate
    sections of the Pricing Plan Acknowledgement at issue: the section
    that contains the service commencement date and applicable rate, and
    that which includes the signature date. The Commission's rules
    expressly provide that the relevant fact in determining whether
    either of the exemptions from competitive bidding applies is the
    date that the contract is signed.[^17] Based upon the July 1, 1998
    signature date on the Pricing Plan Acknowledgement, we find that the
    Pricing Plan Acknowledgment is not an "existing contract" as the
    Commission defines that term. Northern Arizona does not argue that
    it signed the Pricing Plan Acknowledgement on or before July
    10, 1997. We are not persuaded, based on the record before us, that
    Northern Arizona signed the document after July 10, 1997 but before
    January 30, 1998, which would exempt services provided in 1998 from
    competitive bidding. Even accepting Northern Arizona's argument that
    it had selected US WEST in November 1997, and that US WEST lowered
    its rate in July 1998, it is apparent that the contract at issue was
    signed in July 1998. The Pricing Plan Acknowledgement clearly bears
    the signature date of July 1, 1998. We conclude, therefore, that the
    Pricing Plan Acknowledgement does not qualify for either of the
    limited exceptions for existing contracts under section 54.604(a) of
    the Commission's rules. Because Northern Arizona signed the contract
    with US WEST within the 28-day posting period, we conclude that
    Northern Arizona failed to satisfy the Commission's competitive
    bidding rules, and RHCD properly denied Northern Arizona's
    application.

6.  ACCORDINGLY, IT IS ORDERED, pursuant to authority delegated under
    sections 0.91, 0.291, and 54.722(a) of the Commission's rules, 47
    C.F.R. §§ 0.91, 0.291, and 54.722(a), that the appeal filed on
    November 24, 1999 by Northern Arizona Regional Behavioral Health
    Authority IS DENIED.

FEDERAL COMMUNICATIONS COMMISSION

Carol E. Mattey

Deputy Chief, Common Carrier Bureau

[^1]: ^?^ Letter to the Office of the Secretary, Federal Communications
    Commission, from Catherine P. Romeo-Wolff, Northern Arizona Regional
    Behavioral Health Authority, filed November 24, 1999 (Letter of
    Appeal).

[^2]: ^?^ *Federal‑State Joint Board on Universal Service, Access Charge
    Reform, Price Cap Performance Review for Local Exchange Carriers,
    Transport Rate Structure and Pricing, End User Common Line Charge*,
    CC Docket Nos. 96‑45, 96‑262, 94‑1, 91‑213, 95‑72, Fourth Order on
    Reconsideration, 13 FCC Rcd 5318, 5446 at para. 219 (1997) (*Fourth
    Reconsideration Order*).

[^3]:  ^?^ The Commission appointed USAC to administer the universal
    service support mechanism for rural health care providers. *Changes
    to the Board of Directors of the National Exchange Carrier
    Association, Inc. and Federal-State Joint Board on Universal
    Service*, CC Docket Nos. 97-21 and 96-45, Second Report and Order
    and Second Order on Reconsideration, 12 FCC Rcd 18400 (1997) (*NECA
    Order*). In the *USAC Reorganization Order* released on November 20,
    1998, the Commission directed USAC to assume responsibility for the
    schools and libraries support mechanism and the rural health care
    support mechanism effective January 1, 1999. *See Changes to the
    Board of Directors of the National Exchange Carrier Association,
    Inc., Federal-State Joint Board on Universal Service,* CC Docket
    Nos. 96-45, 97-21, Third Report and Order and Fourth Order on
    Reconsideration, and Eighth Order on Reconsideration, 13 FCC Rcd
    25058 (1998) (*USAC Reorganization Order*). The Schools and
    Libraries Corporation (SLC) and the Rural Health Care Corporation
    (RHCC) previously administered these programs, respectively, and
    have since been merged into USAC in accordance with the *USAC
    Reorganization Order*.

[^4]: ^?^ 47 C.F.R. § 54.603.

[^5]: ^?^ *Id.*

[^6]: ^?^ 47 C.F.R. § 54.604(a).

[^7]:   ^?^ For simplicity, this order uses the term "RHCD," although at
    the time the application was filed the entity was "RHCC." The first
    funding cycle for the rural health care support mechanism covered
    the period from January 1, 1998 through June 30, 1999.
    *Federal-State Joint Board on Universal Service*, CC Docket No.
    96-45, Ninth Order on Reconsideration, 14 FCC Rcd 377 (1998) (*Ninth
    Order on Reconsideration*).

[^8]: ^?^ Letter to Catherine P. Romeo-Wolff, Northern Arizona Regional
    Behavioral Health Authority, from Universal Service Administrative
    Company, Rural Health Care Division, dated November 11, 1999
    (Funding Denial Letter).

[^9]: ^?^ *Id.* at 1.

[^10]: ^?^ *Id.*

[^11]: ^?^ Letter of Appeal at 1.

[^12]: ^?^ Funding Denial Letter at 1.

[^13]: ^?^ Letter of Appeal at 1.

[^14]: ^?^ *Id.*

[^15]: ^?^ *Id.*

[^16]: ^?^ *Id.*

[^17]: ^?^ 47 C.F.R. § 54.604(a).