**The Rural Health Care Program**

**Initial Statistical Analysis of Data from the 2006/2007**

**Compliance Audits**

By

Office of Inspector General

Federal Communications Commission

October 3, 2007

**Background and Introduction**

This report contains a statistical analysis of disbursements analyzed in
the 2006/2007 audits of the Rural Health Care ("RHC") Program of the
Federal Communications Commission ("FCC" or "Commission"). The audits
examined funding provided during the Commission's 2005 fiscal year and
also included funds committed in Universal Service Fund ("USF") funding
years 2001-2004. The data suggest that additional oversight of the
management of the RHC Program is needed.

The primary objective of the Inspector General ("IG") in auditing the
RHC Program was to determine whether RHC payments by the Universal
Service Administrative Company ("USAC") complied with the FCC\'s rules
and opinions interpreting those rules. In addition, the audits were
intended to produce data that would permit statistical estimates of the
erroneous payment rate and the amount of erroneous payments as defined
in the Improper Payments Information Act of 2002 ("IPIA").[^1] Under the
IPIA, estimates of both the erroneous payment rate and the amount of
erroneous payments may assist the Commission in assessing risks
associated with the RHC Program. Under IPIA standards, a program is at
risk if the erroneous payment rate exceeds 2.5 percent and the amount of
erroneous payments is greater than \$10 million. To assess compliance
and risk, a simple random sample of auditees (*i.e*., funding requests
of health care providers (HCP) approved by USAC for payment)*,* was
drawn and compliance attestation audits were completed. Statistical
results from a random sample of 77 auditees suggest that the program is
not "at risk" as defined by the IPIA, but there are significant problems
in the program and an excessive rate of improper payments. The erroneous
payment rate is 20.64 percent.[^2] Put somewhat differently, one in five
funding requests approved by USAC for payment was not in compliance with
the Commission\'s rules.

Generally, there was compliance with Commission Rules and Regulations;
however, of the 77 compliance attestation examinations/audits 10 audits
(12.99 percent of the audits) are disclaimed opinions by auditors. In
these ten audits, no opinion is provided as to whether the HCP or
disbursement was in compliance with FCC Rules. The fundamental cause of
the disclaimed opinions was insufficient information or documentation to
permit the auditor to render an opinion on the HCP. When the FCC is
unable to discern whether a payment was proper as a result of
insufficient or lack of documentation, IPIA standards require that the
payment be considered in error.[^3] Therefore, because the ten audits
are disclaimed opinions, they are excluded from compliance calculations,
but total disbursements of the disclaimed opinions/audits are included
in the calculation of the erroneous payment rate.

**Description of Rural Health Care Program**

Telecommunications services and Internet access services can have an
extremely positive impact on the delivery of health care services and
patient well being, particularly in rural areas. The RHC Program makes
discounts available to eligible rural HCPs for telecommunication and
Internet services. In establishing the RHC Program, the Congress and the
Commission sought to ensure that rural HCPs pay no more for
telecommunications in the provision of health care services than their
urban counterparts.[^4] The level of support depends on the location and
the type of services chosen and is calculated individually for each HCP.
In the RHC Program, the HCP does not receive payment for eligible
telecommunications or Internet services. Instead, HCPs apply for
discounts from prices of services provided by telecommunications and
Internet service providers, and the RHC Program reimburses these service
providers for telecommunications and Internet services provided to rural
HCPs. The USAC administers the RHC Program of the USF.[^5]

**Overview of Administrative Process**

Generally, all HCPs or consortia of HCPs seeking to participate in the
RHC Program must complete a Description of Services Requested and
Certification Form (Form 465) to request bids from service providers.
Form 465 must be completed for each physical location in order to
receive support. When a Form 465 is received from a new applicant, USAC
confirms eligibility and determines the completeness of the Form 465.
Then, USAC posts the form on the USAC website,[^6] and a letter is sent
to the HCP to confirm the posting. Posting invites service providers to
bid to provide requested services, and the posting date starts the
28-day competitive bidding process.[^7] Any HCP expecting support must
complete the 28-day posting requirement before entering into an
agreement to purchase services with a service provider. After the
posting period, a HCP must consider all bids received and must select
the most cost-effective method to meet its communications
requirements.[^8] In order to be eligible to receive telecommunications
support, the HCP must select a \"common carrier."

After services and service provider(s) are selected, the HCP completes
and submits the Funding Request & Certification Form (Form 466) or an
Internet Service Funding Request & Certification Form (Form 466-A) or
both. Using these forms, the HCP specifies type(s) of service ordered,
the cost of those services, the service provider(s), the terms of any
service agreements, and certifies that the selections were the most
cost-effective offers received. USAC reviews the Form 466 and/or Form
466-A packet for accuracy. After USAC's approval, the HCP is mailed a
Funding Commitment Letter and a copy of the Receipt for Service
Confirmation Form (Form 467). A copy of the Funding Commitment Letter is
also sent to the service provider. After the service is initiated by the
service provider, the HCP submits Form 467 to USAC. Upon approval of the
form, USAC sends the HCP and its service provider(s) a health care
support schedule, upon receipt of which, the service provider can begin
crediting the bill with the monthly recurring support amount or issue a
check for the RHC discount.[^9] Once the service provider has issued a
credit or check to the HCP, the service provider invoices USAC. USAC
then credits or reimburse the carrier\'s USF account. For those
providers that do not have an active USF account, FCC Form 498 must be
filed, after which, upon USAC's approval, reimbursement is issued by
check or direct deposit.[^10]

**Compliance and IPIA Audits**

In early 2006, the IG established two objectives that each audit of the
RHC Program was to achieve. Because of the comparatively small size of
the RHC Program and of the determination[^11] that the RHC Program was
not at risk under the IPIA, given the requirement that to be at risk
required improper payments in excess of \$10 million, the primary
objective of the audits was to determine the extent to which HCPs were
in compliance with FCC rules, orders and interprative opinions. Another
objective was to provide the basis for a statistical measure of the
erroneous payment rate so as to better inform future decision making
under the IPIA. In order to determine compliance (as captured within the
general administrative process described above), a compliance
attestation audit of each service HCP on a specific FRN/WONUM[^12] was
undertaken. With compliance attestation audits, the auditee (i.e., the
management of the HCP) is required to sign an assertion letter
acknowledging its responsibility for compliance with applicable
requirements of Commission rules (*e.g.,* 47 C.F.R. §§ 54.601-54.625),
as well as applicable FCC orders, and to make specific assertions
relative to the HCP's compliance with those rules. Auditors validate or
invalidate the assertions and provide the cause or causes for the
failure of an assertion. That is, auditors determine whether the
beneficiary of the RHC Program is in compliance with FCC rules, and if
the beneficiary is not in compliance, the auditor identifies the
cause(s) of, or reason(s) for, non-compliance.

Table 1 contains the Assertion Letter that each auditee signed. Data
generated from compliance attestation audits, which were based on the
assertions set out in Table 1 below, were then analyzed statistically.

> **TABLE 1**

+-----------------------------------------------------------------------+
|                                                                       |
+-----------------------------------------------------------------------+
| **Example Assertions Letter**                                         |
|                                                                       |
| **Report of Management on Compliance with Applicable Requirements of  |
| 47 C.F.R. Subpart G of the Federal Communications Commission's Rules, |
| Regulations and Related Orders** [^13]                                |
|                                                                       |
| Management of (name of Rural Health Care provider ) is responsible    |
| for ensuring that it is in compliance with applicable requirements of |
| 47 C.F.R. §§ 54.601 through 54.625 of the Federal Communications      |
| Commission's (FCC) Rules, Regulations and related FCC Orders for      |
| Rural Health Care Service Support.                                    |
|                                                                       |
| Management has performed an evaluation of its compliance with the     |
| applicable requirements of 47 C.F.R. §§ 54.601 through 54.625, as     |
| amended, with respect to receiving discounts on telecommunications    |
| and/or Internet Access services during the year ended September 30,   |
| 2005.                                                                 |
|                                                                       |
| **The (Name of Rural Health Care provider) makes the following        |
| assertions that it is in compliance with applicable FCC Rules,        |
| Regulations and related FCC Orders (which are identified herein with  |
| each assertion) with respect to telecommunications and/or internet    |
| access discounts received, which were paid from the Universal Service |
| Fund during the year ended September 30, 2005:**                      |
|                                                                       |
| A.  Eligibility -- the (name of Rural Health Care provider) asserts   |
|     that:                                                             |
|                                                                       |
|     1.  it is a "health care provider" defined as:                    |
|                                                                       |
|         i.  Post-secondary educational institution offering health    |
|             care instruction, including a teaching hospital or        |
|             medical school;                                           |
|                                                                       |
|         ii. Community health center or health center providing health |
|             care to migrants;                                         |
|                                                                       |
|         iii. Local health department or agency;                       |
|                                                                       |
|         iv. Community mental health center;                           |
|                                                                       |
|         v.  Not-for-profit hospital ;                                 |
|                                                                       |
|         vi. Rural health clinic (including mobile clinics); or        |
|                                                                       |
|         vii. Consortium of health care providers consisting of one or |
|              more of the entities described above (47 C.F.R. §        |
|              54.601(a)(2));                                           |
|                                                                       |
|         viii. Part-time eligible entities located in otherwise        |
|               ineligible facilities; or                               |
|                                                                       |
|         ix. Emergency departments of rural for-profit hospitals       |
|                                                                       |
| > (*In the Matter of Rural Health Care Support Mechanism,* Report and |
| > Order, Order on Reconsideration, and Further Notice of Proposed     |
| > Rulemaking, Docket No. 02-60 18 FCC Rcd 24,546, FCC 03-288 ¶¶13, 15 |
| > (2003));                                                            |
|                                                                       |
| 2.  as the entity receiving service, it is physically located in a    |
|     rural area (47 C.F.R. §§ 54.601(c)(1),(2));                       |
|                                                                       |
| 3.  certifies that the service(s) will be used solely for purposes    |
|     reasonably related to the provision of health care services or    |
|     instruction that the provider is legally authorized to provide    |
|     under the law in the state in which such health care services or  |
|     instruction are provided (47 C.F.R § 54.615(c)(4)).               |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| A.  Services -- the (name of Rural Health Care provider) asserts      |
|     that:                                                             |
|                                                                       |
|     1.  it receives telecommunications and/or Internet access         |
|         services based on a bona fide request (47 C.F.R. §§           |
|         54.601(c)(1), 54.621);                                        |
|                                                                       |
|     2.  the length of the supported service does not exceed the       |
|         distance between the provider and the point farthest from the |
|         provider on the jurisdictional boundary of the largest city   |
|         in the state (47 C.F.R. §§ 54.601(c)(1),(2), 54.625(a));      |
|                                                                       |
|     3.  Internet access and limited toll-free access to the Internet  |
|         enables the (Name of Rural Health Care provider) to post its  |
|         own data, interact with stored data, generate new data, or    |
|         communicate over the World Wide Web (47 C.F.R. §              |
|         54.601(c)(2)); and                                            |
|                                                                       |
|     4.  if it engages in eligible and ineligible activities or        |
|         co-locates with an entity that provides ineligible services,  |
|         it allocates eligible and ineligible activities in order to   |
|         receive a prorated discount for eligible activities and       |
|         chooses a method of cost allocation that is based on          |
|         objective criteria and reasonably reflects the eligible use   |
|         of the facilities (47 C.F.R. §54.601(d)).                     |
|                                                                       |
| B.  Competitive Bidding \-- the (name of Rural Health Care provider)  |
|     asserts that:                                                     |
|                                                                       |
|     1.  it submitted a properly completed FCC Form 465 to the Rural   |
|         Health Care Division, signed by the person authorized to      |
|         order telecommunication services and includes the             |
|         \[following\] required certifications under oath (47 C.F.R. § |
|         54.603(b));                                                   |
|                                                                       |
|     2.  the services were used solely for purposes reasonably related |
|         to the provision of health care services or instruction that  |
|         the health care provider is legally authorized to provide     |
|         under law in the state in which the services or instruction   |
|         is provided and (a) the service(s) were not sold, resold or   |
|         transferred in consideration of any other thing of value      |
|         and (b) if the service(s) were being purchased as part of an  |
|         aggregated purchase with other entities or individuals, the   |
|         full details of any such arrangement, including the           |
|         identities of all co-purchasers and the portion of the        |
|         service(s) being purchased by the provider were disclosed (47 |
|         C.F.R. §§ 54.603(b)(iv) through (vi));                        |
|                                                                       |
|     3.  it sought competitive bids for the service(s) and waited at   |
|         least 28 days from the date on which its FCC Form 465 was     |
|         posted on the USAC website, before making commitments with    |
|         the selected telecommunications carrier(s) (47 C.F.R. §       |
|         54.603(b)(3));                                                |
|                                                                       |
|     4.  it selected the most cost-effective method of providing the   |
|         requested service(s), where the most cost-effective method is |
|         defined as the method that costs the least after              |
|         consideration of the features, quality of transmission,       |
|         reliability and other factors deemed relevant to choosing the |
|         method of providing the service(s) (47 C.F.R. §               |
|         54.603(b)(4));                                                |
|                                                                       |
|     5.  it submitted paper copies to the USAC Administrator of the    |
|         responses or bids received in response to the requested       |
|         service(s) (47 C.F.R. § 54.603(b)(4)); and                    |
|                                                                       |
|     6.  if using a previously existing contract for service(s), the   |
|         contract is exempt from the competitive bid requirements set  |
|         forth in 47 C.F.R. § 54.603(a) consistent with the            |
|         requirements of 47 C.F.R. § 54.604*.*                         |
|                                                                       |
| C.  Audits and Recordkeeping \-- the (name of Rural Health Care       |
|     provider) asserts that:                                           |
|                                                                       |
|     1.  it maintained for its purchases of services supported under   |
|         this subpart the same kind of procurement records that it     |
|         maintained for other purchases (47 C.F.R. §                   |
|         54.619(a)(1)(effective until March 16, 2004)), or, it         |
|         maintained for its purchases of services supported,           |
|         documentation for five years from the end of the funding year |
|         sufficient to establish compliance with all rules of 47       |
|         C.F.R. § 54.601 through 54.625 (47 C.F.R. § 54.619(a)(1)(as   |
|         amended by *Rural Health Care Support Mechanism,* WC Docket   |
|         02-60, Report and Order, Order on Reconsideration, and        |
|         Further Notice of Proposed Rulemaking, 18 FCC Rcd 24546, FCC  |
|         03-288, ¶ 49 (2003)); and                                     |
|                                                                       |
|     2.  it will produce such records at the request of any auditor    |
|         appointed by USAC or any other state or federal agency with   |
|         jurisdiction (47 C.F.R. § 54.619(b)).                         |
+-----------------------------------------------------------------------+

Under the IPIA, agencies are required to review all programs and
activities they administer and to identify those that may be susceptible
to significant erroneous payments.[^14] Significant erroneous payments
are defined as annual erroneous payments in the program exceeding both
2.5 percent of program payments and \$10 million,[^15] as noted above.
While the RHC Program had been determined not to be a significant risk
or have significant erroneous payments by USAC and by FCC management,
the IG instructed USAC to provide a statistically valid estimate of the
annual amount of improper payments in the RHC Program. When validating
assertions or confirming compliance with Commission Rules, auditors were
instructed to capture data on both over and under payments of
disbursements, in order to estimate the error rate for erroneous
payments and to provide an estimate of erroneous payments for IPIA
purposes.

**Random Sampling**

In the efforts of the Office of Inspector General ("OIG") to facilitate
audits of Universal Service Programs/Activities for compliance with
Commission rules and for compliance with the IPIA, the OIG provided a
random sample for the RHC Program.

**Methodology: Sample Size and Variability**

The sample was designed to achieve a 95 percent confidence level that
captures the proportion of providers that are: (1) not in compliance
with Commission Rules, or (2) received incorrect payments. This sample
design is based on the conclusions of USAC and the Commission's Office
of Managing Director that the RHC Program is in compliance with the IPIA
and that bounding the proportion of RHC providers who are *not* in
compliance is critical. To this end, sample size, n, was determined.
Data were requested on a historical proportion,[^16] denoted p, of
providers that were not in compliance with FCC rules and/or received
incorrect payments. USAC provided several estimates, including 0.014,
0.04, and 0.083 (1 in 12). Because: (1) the range for the planning
proportion varied, (2) the 0.014 number related to the percentage of
erroneous payments, and (3) statistical practice requires np ≥ 5 and n(1
-- p) ≥5,[^17] an average planning proportion of 0.061 = (0.04 +
0.083)/2 was used. In addition, USAC provided for a margin of error,
denoted E, of 0.05. In other words, the estimate must be within 0.05 of
the true value in either direction.

Using the standard statistical formula for sample size associated with
proportions, the sample size is calculated as follows:

![](media/image1.wmf){width="3.9305555555555554in" height="0.5in"}

The interval estimate for a Population Proportion is

![](media/image2.wmf){width="1.2777777777777777in"
height="0.5965277777777778in"},

where ![](media/image3.wmf){width="0.3194444444444444in"
height="0.25in"} is the z value corresponding to an area of
![](media/image4.wmf){width="0.34652777777777777in" height="0.19375in"}
in the upper tail of the standard normal probability distribution.

To calculate a confidence interval for a ratio of erroneous
disbursements to total disbursements, the
estimator![](media/image5.wmf){width="1.0138888888888888in"
height="0.6388888888888888in"}, where
![](media/image6.wmf){width="0.1527777777777778in"
height="0.18055555555555555in"}and
![](media/image7.wmf){width="0.1388888888888889in"
height="0.1527777777777778in"} are variables of interest.

The confidence interval
is![](media/image8.wmf){width="1.0138888888888888in" height="0.375in"},
where the entire square root term is the estimated standard deviation of
the ratio estimator.[^18]

**Sample Selection**

The sampling used here follows Anderson, Sweeny and Williams (2004).
Given the sample size, n, and a complete listing of the universe that
USAC provided, a simple random sample was selected of n WONUMs[^19] of
HCP. To this end, random numbers were generated one for each record of
the file which contained the population. The random numbers were
generated with the function *+RAND()* of Microsoft Excel. Given that
each record was assigned a unique random number, each unique FRN was
actually assigned a unique random number. Thus, choosing
![](media/image9.wmf){width="0.1388888888888889in"
height="0.1527777777777778in"}records corresponding to the *n* smallest
random numbers as in our sample is identical to choosing
![](media/image9.wmf){width="0.1388888888888889in"
height="0.1527777777777778in"} WONUMs/FRNs (records) corresponding to
the *n* smallest random numbers as our sample. [^20]

**Substitution Errors**

Twelve observations from the RHC random sample could not be audited.
Replacements were required. USAC selected twelve replacements to be
audited; however none of the twelve replacement auditees was selected
randomly. Moreover, none of the twelve replacements was taken from the
list of extra random observations provided by the OIG for use when
substitution became necessary. The use of the twelve non-random
replacements in the sample of 89 observations would have created
non-quantifiable substitution errors.

**Estimation of Erroneous Payment Rates and Compliance Rates**

As a consequence, our primary results are based on a random sample of 77
WONUMS (FRNS), where twelve non-random substitutes are deleted from the
sample of 89 observations. The estimates from this random sample do not
contain substitution errors. For this random sample of 77 observations,
the estimated erroneous payment rate is 20.64 percent. The lower limit
of a 90 percent confidence interval is 1.94 percent, and the upper limit
of this 90 percent confidence the interval is 39.35 percent. The
magnitude of the erroneous payment rate, however, suggests significant
problems in the administration of the program.[^21]

Non-compliance was found on assertions B1, B2, B4, C3, C4, C5, C6, D1,
and D2 of Table 1. For the remaining assertions of Table 1, there was
100 percent compliance. All results from the random sample of 77 audits
of the RHC Program are contained in Tables 2 and 3, below.

> **TABLE 2**

  ------------ ------------ ----------- ---------- ------------ ------------
  Erroneous    Estimated    Estimated   Margin of  90 percent   90 percent
  Payment Rate Variance     STD         Error      Lower Limit  Upper Limit

  .2064198     0.01300768   0.114051    0.187044   0.019376     0.393464
  ------------ ------------ ----------- ---------- ------------ ------------

> **TABLE 3**

+----------------------+-------+----+--------+------+-------+-------+
|                      | Exact |    |        |      |       |       |
|                      | Confi |    |        |      |       |       |
|                      | dence |    |        |      |       |       |
|                      | Inte  |    |        |      |       |       |
|                      | rval: |    |        |      |       |       |
|                      | Bin   |    |        |      |       |       |
|                      | omial |    |        |      |       |       |
|                      | Vari  |    |        |      |       |       |
|                      | able\ |    |        |      |       |       |
|                      | *\*\* |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Random Sample Size = | 31-A  |    |        |      |       |       |
| 77                   | ug-07 |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion A1         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
+----------------------+-------+----+--------+------+-------+-------+
| (THE AUDITEE IS A    | Obs   | Sa |        |      | Limit | Limit |
| HEALTH CARE          | erved | mp |        |      |       |       |
| PROVIDER)            |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 67    | 67 |        | 100  |       |       |
|                      |       |    |        | .00% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion A2         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
+----------------------+-------+----+--------+------+-------+-------+
| (THE AUDITEE IS IN A | Obs   | Sa |        |      | Limit | Limit |
| RURAL AREA)          | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 67    | 67 |        | 100  |       |       |
|                      |       |    |        | .00% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion A3         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (THE AUDITEE USES    |       |    |        |      |       |       |
| THE SERVICES FOR     |       |    |        |      |       |       |
| HEALTH               |       |    |        |      |       |       |
| CARE/INSTRUCTION)    |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 67    | 67 |        | 100  |       |       |
|                      |       |    |        | .00% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion B1         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
+----------------------+-------+----+--------+------+-------+-------+
| (THE AUDITEE HAS     | Obs   | Sa |        |      | Limit | Limit |
| MADE A BONA FIDE     | erved | mp |        |      |       |       |
| REQUEST)             |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 64    | 67 | 5.00%  | 95   | 8     | 9     |
|                      |       |    |        | .52% | 7.47% | 9.07% |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     | 3     | 67 | 5.00%  | 4    | 0.93% | 1     |
|                      |       |    |        | .48% |       | 2.53% |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           | 2     | 67 | 5.00%  | 2    | 0.36% | 1     |
| Non-Compliance\*\*   |       |    |        | .99% |       | 0.37% |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion B2         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (DISTANCE CRITERIA   |       |    |        |      |       |       |
| SATISFIED)           |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 66    | 67 | 5.00%  | 98   | 9     | 9     |
|                      |       |    |        | .51% | 1.96% | 9.96% |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     | 1     | 67 | 5.00%  | 1    | 0.04% | 8.04% |
|                      |       |    |        | .49% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           |       |    |        |      |       |       |
| Non-Compliance\*\*   |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion B3         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (SERVICES ENABLE     |       |    |        |      |       |       |
| INTERACTION)         |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 65    | 65 | 5.00%  | 100  |       |       |
|                      |       |    |        | .00% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           |       |    |        |      |       |       |
| Non-Compliance\*\*   |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion B4         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (COSTS ALLOCATED     |       |    |        |      |       |       |
| AMONG CO-LOCATED     |       |    |        |      |       |       |
| ENTITIES)            |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 51    | 53 | 5.00%  | 96   | 8     | 9     |
|                      |       |    |        | .23% | 7.02% | 9.54% |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     | 2     | 53 | 5.00%  | 3    | 0.46% | 1     |
|                      |       |    |        | .77% |       | 2.98% |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           | 1     | 53 | 5.00%  | 1    | 0.05% | 1     |
| Non-Compliance\*\*   |       |    |        | .89% |       | 0.07% |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion C1         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (AUTHORITY TO SUBMIT |       |    |        |      |       |       |
| 465)                 |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 67    | 67 | 5.00%  | 100  |       |       |
|                      |       |    |        | .00% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           |       |    |        |      |       |       |
| Non-Compliance\*\*   |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion C2         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (SERVICES SOLELY     |       |    |        |      |       |       |
| USED FOR HEALTH      |       |    |        |      |       |       |
| CARE/ INSTRUCTION)   |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 67    | 67 | 5.00%  | 100  |       |       |
|                      |       |    |        | .00% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           |       |    |        |      |       |       |
| Non-Compliance\*\*   |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion C2A        |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (SERVICES NOT RESOLD |       |    |        |      |       |       |
| OR TRANSERRED)       |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 67    | 67 | 5.00%  | 100  |       |       |
|                      |       |    |        | .00% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           |       |    |        |      |       |       |
| Non-Compliance\*\*   |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion C2B        |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (COSTS PROPERLY      |       |    |        |      |       |       |
| ALLOCATED)           |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 53    | 53 | 5.00%  | 100  |       |       |
|                      |       |    |        | .00% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           |       |    |        |      |       |       |
| Non-Compliance\*\*   |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion C3         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (COMPETITIVE BIDS    |       |    |        |      |       |       |
| SOUGHT AT LEAST 28   |       |    |        |      |       |       |
| DAYS PRIOR TO        |       |    |        |      |       |       |
| COMMITMENT)          |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 66    | 67 | 5.00%  | 98   | 9     | 9     |
|                      |       |    |        | .51% | 1.96% | 9.96% |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     | 1     | 67 | 5.00%  | 1    | 0.04% | 8.04% |
|                      |       |    |        | .49% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           |       |    |        |      |       |       |
| Non-Compliance\*\*   |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion C4         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (MOST COST EFFECTIVE |       |    |        |      |       |       |
| METHOD)              |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 65    | 67 | 5.00%  | 97   | 8     | 9     |
|                      |       |    |        | .01% | 9.63% | 9.64% |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     | 2     | 67 | 5.00%  | 2    | 0.36% | 1     |
|                      |       |    |        | .99% |       | 0.37% |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           | 2     | 67 | 5.00%  | 2    | 0.36% | 1     |
| Non-Compliance\*\*   |       |    |        | .99% |       | 0.37% |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion C5         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (BIDS PROVIDED TO    |       |    |        |      |       |       |
| USAC)                |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 59    | 60 | 5.00%  | 98   | 9     | 9     |
|                      |       |    |        | .33% | 1.06% | 9.96% |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     | 1     | 60 | 5.00%  | 1    | 0.04% | 8.94% |
|                      |       |    |        | .67% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           | 1     | 60 | 5.00%  | 1    | 0.04% | 8.94% |
| Non-Compliance\*\*   |       |    |        | .67% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion C6         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (PRE-EXISTING        |       |    |        |      |       |       |
| CONTRACT, CONSISTENT |       |    |        |      |       |       |
| WITH 47 C.F.R. §§    |       |    |        |      |       |       |
| 54.603/4)            |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 60    | 61 | 5.00%  | 98   | 9     | 9     |
|                      |       |    |        | .36% | 1.20% | 9.96% |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     | 1     | 61 | 5.00%  | 1    | 0.04% | 8.80% |
|                      |       |    |        | .64% |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           |       |    |        |      |       |       |
| Non-Compliance\*\*   |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion D1         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (RECORDS PROPERLY    |       |    |        |      |       |       |
| RETAINED)            |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 60    | 67 | 5.00%  | 89   | 7     | 9     |
|                      |       |    |        | .55% | 9.65% | 5.70% |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     | 7     | 67 | 5.00%  | 10   | 4.30% | 2     |
|                      |       |    |        | .45% |       | 0.35% |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           | 4     | 67 | 5.00%  | 5    | 1.65% | 1     |
| Non-Compliance\*\*   |       |    |        | .97% |       | 4.59% |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Assertion D2         |       |    |        |      | Confi | Confi |
|                      |       |    |        |      | dence | dence |
| (RECORDS PRODUCED ON |       |    |        |      |       |       |
| REQUEST)             |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | Obs   | Sa |        |      | Limit | Limit |
|                      | erved | mp |        |      |       |       |
|                      |       | le |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | O     | Si | Signif | Pr   | Lower | Upper |
|                      | ccurr | ze | icance | opor |       |       |
|                      | ences |    |        | tion |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      | X     | N  | Level  | P    | P_L   | P_U   |
+----------------------+-------+----+--------+------+-------+-------+
| 0-Compliance         | 59    | 67 | 5.00%  | 88   | 7     | 9     |
|                      |       |    |        | .06% | 7.82% | 4.70% |
+----------------------+-------+----+--------+------+-------+-------+
| Non-Compliance\*     | 8     | 67 | 5.00%  | 11   | 5.30% | 2     |
|                      |       |    |        | .94% |       | 2.18% |
+----------------------+-------+----+--------+------+-------+-------+
| 1-Material           | 4     | 67 | 5.00%  | 5    | 1.65% | 1     |
| Non-Compliance\*\*   |       |    |        | .97% |       | 4.59% |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
|                      |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| \* Non-Compliance    |       |    |        |      |       |       |
| includes both        |       |    |        |      |       |       |
| Material             |       |    |        |      |       |       |
| Non-Compliance and   |       |    |        |      |       |       |
| Non-Material         |       |    |        |      |       |       |
| Non-Compliance       |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| \*\* Assumes         |       |    |        |      |       |       |
| Material             |       |    |        |      |       |       |
| Non-Compilance =1    |       |    |        |      |       |       |
| and Otherwise = 0    |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| Otherwise includes   |       |    |        |      |       |       |
| both Compliance and  |       |    |        |      |       |       |
| Non-Material         |       |    |        |      |       |       |
| Non-compliance       |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| \*\*\*We use inverse |       |    |        |      |       |       |
| beta which is the    |       |    |        |      |       |       |
| inverse of the       |       |    |        |      |       |       |
| incomplete beta      |       |    |        |      |       |       |
| function that        |       |    |        |      |       |       |
| approximates the     |       |    |        |      |       |       |
| binomial. Also see   |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+
| *CRC Handbook of     |       |    |        |      |       |       |
| Tables for           |       |    |        |      |       |       |
| Probability and      |       |    |        |      |       |       |
| Statistics 2d ed*.   |       |    |        |      |       |       |
| 1968. p. 219.        |       |    |        |      |       |       |
+----------------------+-------+----+--------+------+-------+-------+

**Causes of Non-Compliance**

When there was non-compliance on any assertion, data were collected on
causes of non-compliance. Table 4 contains all 21 possible causes of
non-compliance. Data were collected such that, if an auditor found
multiple causes of non-compliance, all information would be presented.
The statistical analysis of cause is contained in Table 5.

  -----------------------------------------------------------------------
  **TABLE 4**

  1-Imprecise FCC Rule/s

  2-Contradictory FCC Rule/s

  3-Overly Complex FCC Rules

  4-Disregarded FCC Rule/s

  5-Followed State Rule/s (apparent conflict with FCC Rule/s)

  6-Followed USAC Procedures (apparent conflict with FCC Rule/s)

  7-Inadequate Documentation Retention

  8-Inadequate Auditee Processes and/or Polices and Procedures

  9-Inadequate Systems for Collecting, Reporting, and/or Monitoring Data

  10-Insufficient Resources/Time to Complete Task/Activity

  11-Failure to Review/Monitor Work, Material, or Data/Application
  Submitted by Consultant/Agent

  12-Applicant/Auditee Weak Internal Controls

  13-Applicant/Auditee Data Entry Error

  14-Service Provider Weak Internal Controls

  15-Service Provider Data Entry Error

  16-Service Provider Error (other)

  17-USAC Error

  18-SOLIX Error

  19-NECA Error

  20-Force Majeure (Acts of God and Nature)

  21-Other
  -----------------------------------------------------------------------

**TABLE 5**

+---------------------+-------+-----+--------+-------+-------+-------+
| **Causality**       | Exact |     |        |       |       |       |
|                     | Confi |     |        |       |       |       |
|                     | dence |     |        |       |       |       |
|                     | Inte  |     |        |       |       |       |
|                     | rval: |     |        |       |       |       |
|                     | Bin   |     |        |       |       |       |
|                     | omial |     |        |       |       |       |
|                     | V     |     |        |       |       |       |
|                     | ariab |     |        |       |       |       |
|                     | le\*\ |     |        |       |       |       |
|                     | *\*\* |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Random Sample Size  |       |     |        |       |       |       |
| = 77                |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Assertion B1        |       |     |        |       | Confi | Confi |
|                     |       |     |        |       | dence | dence |
| (BONA FIDE REQUEST) |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Non-Compliance:     | Obs   | Sam |        |       | Limit | Limit |
| Causes\*            | erved | ple |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | Occur | S   | Signif | Propo | Lower | Upper |
|                     | ences | ize | icance | rtion |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | X     | N   | Level  | P     | P_L   | P_U   |
+---------------------+-------+-----+--------+-------+-------+-------+
| B1_8 (FAULTY        | 2     | 3   | 5.00%  | 6     | 9.43% | 9     |
| AUDITEE             |       |     |        | 6.67% |       | 9.16% |
| PROCESSES/POLICIES) |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| B1_11(WORK NOT      | 1     | 3   | 5.00%  | 3     | 0.84% | 9     |
| MONITORED)          |       |     |        | 3.33% |       | 0.57% |
+---------------------+-------+-----+--------+-------+-------+-------+
| B1_12 (WEAK AUDITEE | 1     | 3   | 5.00%  | 3     | 0.84% | 9     |
| INTERNAL CONTROLS)  |       |     |        | 3.33% |       | 0.57% |
+---------------------+-------+-----+--------+-------+-------+-------+
| B1_16 (SERVICE      | 1     | 3   | 5.00%  | 3     | 0.84% | 9     |
| PROVIDER DATA       |       |     |        | 3.33% |       | 0.57% |
| ERROR)              |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Assertion B2        |       |     |        |       | Confi | Confi |
|                     |       |     |        |       | dence | dence |
| (DISTANCE CRITERIA  |       |     |        |       |       |       |
| ESTABLISHED)        |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Non-Compliance:     | Obs   | Sam |        |       | Limit | Limit |
| Causes\*            | erved | ple |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | Occur | S   | Signif | Propo | Lower | Upper |
|                     | ences | ize | icance | rtion |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | X     | N   | Level  | P     | P_L   | P_U   |
+---------------------+-------+-----+--------+-------+-------+-------+
| B2_8 (FAULTY        | 1     | 1   | 5.00%  | 10    |       |       |
| AUDITEE             |       |     |        | 0.00% |       |       |
| PROCESSES/POLICIES) |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| B2_16 (SERVICE      | 1     | 1   | 5.00%  | 10    |       |       |
| PROVIDER DATA       |       |     |        | 0.00% |       |       |
| ERROR)              |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Assertion B4        |       |     |        |       | Confi | Confi |
|                     |       |     |        |       | dence | dence |
| (COSTS ALLOCATED    |       |     |        |       |       |       |
| E                   |       |     |        |       |       |       |
| LIGIBLE/INELIGIBLE) |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Non-Compliance:     | Obs   | Sam |        |       | Limit | Limit |
| Causes\*            | erved | ple |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | Occur | S   | Signif | Propo | Lower | Upper |
|                     | ences | ize | icance | rtion |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | X     | N   | Level  | P     | P_L   | P_U   |
+---------------------+-------+-----+--------+-------+-------+-------+
| B4_8                | 2     | 2   | 5.00%  | 10    | 1     |       |
|                     |       |     |        | 0.00% | 5.81% |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| (DATA ERROR)        |       |     |        |       |       |       |
| \[ANTHONY CONFIRM\] |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Assertion C3        |       |     |        |       | Confi | Confi |
|                     |       |     |        |       | dence | dence |
| (COMPETITIVE BIDS   |       |     |        |       |       |       |
| SOUGHT, WAITED 28   |       |     |        |       |       |       |
| DAYS)               |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Non-Compliance:     | Obs   | Sam |        |       | Limit | Limit |
| Causes\*            | erved | ple |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | Occur | S   | Signif | Propo | Lower | Upper |
|                     | ences | ize | icance | rtion |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | X     | N   | Level  | P     | P_L   | P_U   |
+---------------------+-------+-----+--------+-------+-------+-------+
| C3_13               | 1     | 1   | 5.00%  | 10    |       |       |
|                     |       |     |        | 0.00% |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| (AUDITEE DATA       |       |     |        |       |       |       |
| ERROR)              |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Assertion C4        |       |     |        |       | Confi | Confi |
|                     |       |     |        |       | dence | dence |
| (MOST COST          |       |     |        |       |       |       |
| EFFECTIVE SOLUTION) |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Non-Compliance:     | Obs   | Sam |        |       | Limit | Limit |
| Causes\*            | erved | ple |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | Occur | S   | Signif | Propo | Lower | Upper |
|                     | ences | ize | icance | rtion |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | X     | N   | Level  | P     | P_L   | P_U   |
+---------------------+-------+-----+--------+-------+-------+-------+
| C4_7 (AUDITEE       | 1     | 2   | 5.00%  | 5     | 1.26% | 9     |
| DOCUMENT RETENTION  |       |     |        | 0.00% |       | 8.74% |
| FAILURE, COULD NOT  |       |     |        |       |       |       |
| PROVE)              |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| C4_11 (WORK NOT     | 1     | 2   | 5.00%  | 5     | 1.26% | 9     |
| MONITORED, COULD    |       |     |        | 0.00% |       | 8.74% |
| NOT PROVE)          |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| C4_12 (WEAK AUDITEE | 1     | 2   | 5.00%  | 5     | 1.26% | 9     |
| INTERNAL CONTROLS,  |       |     |        | 0.00% |       | 8.74% |
| COULD NOT PROVE)    |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Assertion C5        |       |     |        |       | Confi | Confi |
|                     |       |     |        |       | dence | dence |
| (BIDS PROVIDED TO   |       |     |        |       |       |       |
| USAC)               |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Non-Compliance:     | Obs   | Sam |        |       | Limit | Limit |
| Causes\*            | erved | ple |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | Occur | S   | Signif | Propo | Lower | Upper |
|                     | ences | ize | icance | rtion |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | X     | N   | Level  | P     | P_L   | P_U   |
+---------------------+-------+-----+--------+-------+-------+-------+
| C5_11 (WORK NOT     | 1     | 1   | 5.00%  | 10    |       |       |
| MONITORED)          |       |     |        | 0.00% |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| C5_12 (WEAK AUDITEE | 1     | 1   | 5.00%  | 10    |       |       |
| INTERNAL CONTROLS)  |       |     |        | 0.00% |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Assertion C6        |       |     |        |       | Confi | Confi |
|                     |       |     |        |       | dence | dence |
| (PRE-EXISTING       |       |     |        |       |       |       |
| CONTRACT, COMPLIES  |       |     |        |       |       |       |
| WITH 54.603/4)      |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Non-Compliance:     | Obs   | Sam |        |       | Limit | Limit |
| Causes\*            | erved | ple |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | Occur | S   | Signif | Propo | Lower | Upper |
|                     | ences | ize | icance | rtion |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | X     | N   | Level  | P     | P_L   | P_U   |
+---------------------+-------+-----+--------+-------+-------+-------+
| C6_7 (AUDITEE       | 1     | 1   | 5.00%  | 10    |       |       |
| DOCUMENT RETENTION  |       |     |        | 0.00% |       |       |
| FAILURE)            |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Assertion D1        |       |     |        |       | Confi | Confi |
|                     |       |     |        |       | dence | dence |
| (AUDITEE DOCUMENT   |       |     |        |       |       |       |
| RETENTION FAILURE)  |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Non-Compliance:     | Obs   | Sam |        |       | Limit | Limit |
| Causes\*            | erved | ple |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | Occur | S   | Signif | Propo | Lower | Upper |
|                     | ences | ize | icance | rtion |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | X     | N   | Level  | P     | P_L   | P_U   |
+---------------------+-------+-----+--------+-------+-------+-------+
| D1_7 (AUDITEE       | 5     | 7   | 5.00%  | 7     | 2     | 9     |
| FAILED TO PROVIDE   |       |     |        | 1.43% | 9.04% | 6.33% |
| REQUIRED DOCS)      |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| D1_8 (INADEQUATE    | 7     | 7   | 5.00%  | 10    |       |       |
| AUDITEE             |       |     |        | 0.00% |       |       |
| PROCESSES/POLICIES) |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| D1_9 (SYSTEMS       | 5     | 7   | 5.00%  | 7     | 2     | 9     |
| FAILURE)            |       |     |        | 1.43% | 9.04% | 6.33% |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Assertion D2        |       |     |        |       | Confi | Confi |
|                     |       |     |        |       | dence | dence |
| (DOCUMENTS          |       |     |        |       |       |       |
| PRODUCED)           |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Non-Compliance:     | Obs   | Sam |        |       | Limit | Limit |
| Causes\*            | erved | ple |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | Occur | S   | Signif | Propo | Lower | Upper |
|                     | ences | ize | icance | rtion |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     | X     | N   | Level  | P     | P_L   | P_U   |
+---------------------+-------+-----+--------+-------+-------+-------+
| D2_7 (AUDITEE COULD | 6     | 8   | 5.00%  | 7     | 3     | 9     |
| NOT LOCATE/PRODUCE  |       |     |        | 5.00% | 4.91% | 6.81% |
| REQUIRED DOCUMENT)  |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| D2_8 (INADEQUATE    | 7     | 8   | 5.00%  | 8     | 4     | 9     |
| AUDITEE             |       |     |        | 7.50% | 7.35% | 9.68% |
| PROCESSES/PLOICIES) |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| D2_9 (SYSTEMS       | 5     | 8   | 5.00%  | 6     | 2     | 9     |
| FAILURE)            |       |     |        | 2.50% | 4.49% | 1.48% |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
|                     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| \* Non-Compliance   |       |     |        |       |       |       |
| includes both       |       |     |        |       |       |       |
| Material            |       |     |        |       |       |       |
| Non-Compliance and  |       |     |        |       |       |       |
| Non-Material        |       |     |        |       |       |       |
| Non-Compliance      |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| \*\*The assertion   |       |     |        |       |       |       |
| number followed by  |       |     |        |       |       |       |
| the underscore and  |       |     |        |       |       |       |
| number indicates    |       |     |        |       |       |       |
| the cause of        |       |     |        |       |       |       |
| non-compliance.     |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| For example D1_7    |       |     |        |       |       |       |
| means               |       |     |        |       |       |       |
| non-compliance on   |       |     |        |       |       |       |
| Assertion D1 and a  |       |     |        |       |       |       |
| cause was 7 which   |       |     |        |       |       |       |
| is                  |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| Inadequate          |       |     |        |       |       |       |
| Documentation       |       |     |        |       |       |       |
| Retention.          |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| \*\*\*On any        |       |     |        |       |       |       |
| assertion with      |       |     |        |       |       |       |
| non-compliance, the |       |     |        |       |       |       |
| precentages         |       |     |        |       |       |       |
| associated with     |       |     |        |       |       |       |
| causes do not sum   |       |     |        |       |       |       |
| to 100              |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| because data were   |       |     |        |       |       |       |
| collected such that |       |     |        |       |       |       |
| mulltiple causes    |       |     |        |       |       |       |
| could be found and  |       |     |        |       |       |       |
| entered by an       |       |     |        |       |       |       |
| auditor.            |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+
| \*\*\*\*We use      |       |     |        |       |       |       |
| inverse beta which  |       |     |        |       |       |       |
| is the inverse of   |       |     |        |       |       |       |
| the incomplete beta |       |     |        |       |       |       |
| function that       |       |     |        |       |       |       |
| approximates the    |       |     |        |       |       |       |
| binomial.           |       |     |        |       |       |       |
+---------------------+-------+-----+--------+-------+-------+-------+

**Analysis/Conclusion**

Beneficiaries of the RHC Program are from several categories of HCPs.
Community health centers or health centers providing care to migrants
are 19.4030 percent of beneficiaries, and local health
departments/agencies are 10.4478 percent of beneficiaries. Community
mental health centers are 2.9851 percent of RHC Program beneficiaries,
and not-for-profit hospitals are 49.2537 percent of beneficiaries.
Finally, rural health clinics (including mobile clinics) are 17.9104
percent of RHC Program beneficiaries/funding requests.

There was general compliance with FCC Rules and Regulations. Why are
both the erroneous payment rate high and compliance rates high? Of the
77 compliance attestation examinations/audits 10 audits, or 12.99
percent of the audits, are disclaimed opinions by auditors. In these ten
audits, no opinion is provided on whether the HCP is in compliance with
FCC Rules. The fundamental cause of the disclaimed opinions was
insufficient information/documentation to render an opinion on the HCP.
When the FCC is unable to discern whether a payment was proper as a
result of insufficient information or lack of documentation, IPIA
standards require that the payment be considered in error.[^22]
Therefore, because 12.99 percent of the audits are disclaimed opinions,
the disclaimed opinions/audits are excluded from compliance
calculations, but total disbursements of the disclaimed opinions/audits
are included in the calculation of the erroneous payment rate and the
erroneous payment amount. This explains the high compliance rates and
the high erroneous payment rates. In summary, given the large number of
disclaimed audits and the lack of appropriate documentation in the
sample study, non-compliance may be more widespread than the results
suggest. Our results suggest that for 12.99 percent of the universe of
RHC providers/FRNs opinions cannot be rendered on compliance with FCC
Rules and Regulations.

Where auditors could render opinions on compliance/non-compliance with
FCC rules observed causes of non-compliance are: Inadequate
Documentation Retention; Inadequate Auditee Processes and/or Polices and
Procedures; Inadequate Systems for Collecting, Reporting, and/or
Monitoring Data; Failure to Review/Monitor Work, Material, or
Data/Application Submitted by Consultant/Agent; Applicant/Auditee Weak
Internal Controls; Applicant/Auditee Data Entry Error; and Service
Provider Error (other). For both assertions dealing with the lack of
required documentation, inadequate auditee processes and/or polices and
procedures are present in10.45 percent of the population. Under the
IPIA, estimates of both the erroneous payment rate and amount of
erroneous payment are intended to guide the Commission in assessing risk
that is associated with the RHC Program. To assess compliance and risk,
a simple random sample of auditees, (in this case, funding requests of
HCPs), was drawn and compliance attestation examinations/audits were
completed. The statistical results from a simple random sample of 77
auditees suggest that the program is not at IPIA risk, but, with an
estimated erroneous payment rate of 20.64 percent, there are significant
problems in the program.

> **APPENDIX 1**

This appendix contains the statistical analysis of the sample of 89
audits which includes 12 non-random substitutes. The estimation results
are contained in TABLE A-1 and TABLE A-2. Again, the estimates of this
analysis contain substitution errors as a result of USAC's inappropriate
substitutions during the audit process. All substitution errors are
non-quantifiable.

> **TABLE A-1**

  ------------ ------------- ----------- ---------- ----------- ------------
  Erroneous    Estimated     Estimated   Margin of  90 percent  90 percent
  Payment Rate Variance      STD         Error      Lower Limit Upper Limit

  0.185677     0.010006971   0.100035    0.164057   0.02162     0.349735
  ------------ ------------- ----------- ---------- ----------- ------------

The estimated erroneous payment rate under this incorrectly constructed
sample is 18.57 percent.

Compliance Results are presented in TABLE A-2. Again, disclaimed
opinions are excluded from the calculations in TABLE A-2, because
insufficient information or data did not permit auditors to complete ten
compliance attestation examinations, i.e., auditors could not provide
opinions on the compliance of ten HCPs' compliance with FCC Rules and
Regulations.

TABLE A-2

+---------------------+--------+-----+--------+------+-------+-------+
|                     | Exact  |     |        |      |       |       |
|                     | Conf   |     |        |      |       |       |
|                     | idence |     |        |      |       |       |
|                     | Int    |     |        |      |       |       |
|                     | erval: |     |        |      |       |       |
|                     | Bi     |     |        |      |       |       |
|                     | nomial |     |        |      |       |       |
|                     | Va     |     |        |      |       |       |
|                     | riable |     |        |      |       |       |
|                     | \*\*\* |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion A1        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (HEALTH CARE        |        |     |        |      |       |       |
| PROVIDER)           |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 79     | 79  |        | 100  |       |       |
|                     |        |     |        | .00% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion A2        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (IN RURAL AREA)     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 79     | 79  |        | 100  |       |       |
|                     |        |     |        | .00% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion A3        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (HEALTH             |        |     |        |      |       |       |
| CARE/INSTRUCTION)   |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 79     | 79  |        | 100  |       |       |
|                     |        |     |        | .00% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion B1        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (BONA FIDE REQUEST) |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 76     | 79  | 5.00%  | 96   | 8     | 9     |
|                     |        |     |        | .20% | 9.30% | 9.21% |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    | 3      | 79  | 5.00%  | 3    | 0.79% | 1     |
|                     |        |     |        | .80% |       | 0.70% |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          | 2      | 79  | 5.00%  | 2    | 0.31% | 8.85% |
| Non-Compliance\*\*  |        |     |        | .53% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion B2        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (DISTANCE CRITERIA) |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 78     | 79  | 5.00%  | 98   | 9     | 9     |
|                     |        |     |        | .73% | 3.15% | 9.97% |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    | 1      | 79  | 5.00%  | 1    | 0.03% | 6.85% |
|                     |        |     |        | .27% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          |        |     |        |      |       |       |
| Non-Compliance\*\*  |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion B3        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (SERVICES ENABLING) |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 77     | 77  | 5.00%  | 100  |       |       |
|                     |        |     |        | .00% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          |        |     |        |      |       |       |
| Non-Compliance\*\*  |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion B4        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (COSTS PROPERLY     |        |     |        |      |       |       |
| ALLOCATED)          |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 63     | 65  | 5.00%  | 96   | 8     | 9     |
|                     |        |     |        | .92% | 9.32% | 9.63% |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    | 2      | 65  | 5.00%  | 3    | 0.37% | 1     |
|                     |        |     |        | .08% |       | 0.68% |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          | 1      | 65  | 5.00%  | 1    | 0.04% | 8.28% |
| Non-Compliance\*\*  |        |     |        | .54% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion C1        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (AUTHORITY)         |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 79     | 79  | 5.00%  | 100  |       |       |
|                     |        |     |        | .00% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          |        |     |        |      |       |       |
| Non-Compliance\*\*  |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion C2        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (SOLELY FOR HEALTH  |        |     |        |      |       |       |
| CARE/INSTRUCTION)   |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 79     | 79  | 5.00%  | 100  |       |       |
|                     |        |     |        | .00% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          |        |     |        |      |       |       |
| Non-Compliance\*\*  |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion C2A       |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (NOT RESOLD OR      |        |     |        |      |       |       |
| TRANSFERRED)        |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 79     | 79  | 5.00%  | 100  |       |       |
|                     |        |     |        | .00% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          |        |     |        |      |       |       |
| Non-Compliance\*\*  |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion C2B       |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (COSTS PROPERLY     |        |     |        |      |       |       |
| ALLOCATED)          |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 65     | 65  | 5.00%  | 100  |       |       |
|                     |        |     |        | .00% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          |        |     |        |      |       |       |
| Non-Compliance\*\*  |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion C3        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (COMPETITIVE BIDS   |        |     |        |      |       |       |
| SOUGHT WAITED 28    |        |     |        |      |       |       |
| DAYS)               |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 78     | 79  | 5.00%  | 98   | 9     | 9     |
|                     |        |     |        | .73% | 3.15% | 9.97% |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    | 1      | 79  | 5.00%  | 1    | 0.03% | 6.85% |
|                     |        |     |        | .27% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          |        |     |        |      |       |       |
| Non-Compliance\*\*  |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion C4        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (MOST COST          |        |     |        |      |       |       |
| EFFECTIVE)          |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 77     | 79  | 5.00%  | 97   | 9     | 9     |
|                     |        |     |        | .47% | 1.15% | 9.69% |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    | 2      | 79  | 5.00%  | 2    | 0.31% | 8.85% |
|                     |        |     |        | .53% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          | 2      | 79  | 5.00%  | 2    | 0.31% | 8.85% |
| Non-Compliance\*\*  |        |     |        | .53% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion C5        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (BIDS TO USAC)      |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 71     | 72  | 5.00%  | 98   | 9     | 9     |
|                     |        |     |        | .61% | 2.50% | 9.96% |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    | 1      | 72  | 5.00%  | 1    | 0.04% | 7.50% |
|                     |        |     |        | .39% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          | 1      | 72  | 5.00%  | 1    | 0.04% | 7.50% |
| Non-Compliance\*\*  |        |     |        | .39% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion C6        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (PRE-EXISTING       |        |     |        |      |       |       |
| CONTRACT)           |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 72     | 73  | 5.00%  | 98   | 9     | 9     |
|                     |        |     |        | .63% | 2.60% | 9.97% |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    | 1      | 73  | 5.00%  | 1    | 0.03% | 7.40% |
|                     |        |     |        | .37% |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          |        |     |        |      |       |       |
| Non-Compliance\*\*  |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion D1        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (DOCUMENTS          |        |     |        |      |       |       |
| MAINTAINED)         |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 72     | 79  | 5.00%  | 91   | 8     | 9     |
|                     |        |     |        | .14% | 2.59% | 6.36% |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    | 7      | 79  | 5.00%  | 8    | 3.64% | 1     |
|                     |        |     |        | .86% |       | 7.41% |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          | 4      | 79  | 5.00%  | 5    | 1.40% | 1     |
| Non-Compliance\*\*  |        |     |        | .06% |       | 2.46% |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Assertion D2        |        |     |        |      | Confi | Confi |
|                     |        |     |        |      | dence | dence |
| (DCUMENTS PRODUCED) |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Ob     | Sam |        |      | Limit | Limit |
|                     | served | ple |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | Occur  | S   | Signif | Pr   | Lower | Upper |
|                     | rences | ize | icance | opor |       |       |
|                     |        |     |        | tion |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     | X      | N   | Level  | P    | P_L   | P_U   |
+---------------------+--------+-----+--------+------+-------+-------+
| 0-Compliance        | 71     | 79  | 5.00%  | 89   | 8     | 9     |
|                     |        |     |        | .87% | 1.02% | 5.53% |
+---------------------+--------+-----+--------+------+-------+-------+
| Non-Compliance\*    | 8      | 79  | 5.00%  | 10   | 4.47% | 1     |
|                     |        |     |        | .13% |       | 8.98% |
+---------------------+--------+-----+--------+------+-------+-------+
| 1-Material          | 4      | 79  | 5.00%  | 5    | 1.40% | 1     |
| Non-Compliance\*\*  |        |     |        | .06% |       | 2.46% |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
|                     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| \* Non-Compliance   |        |     |        |      |       |       |
| includes both       |        |     |        |      |       |       |
| Material            |        |     |        |      |       |       |
| Non-Compliance and  |        |     |        |      |       |       |
| Non-Material        |        |     |        |      |       |       |
| Non-Compliance      |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| \*\* Assumes        |        |     |        |      |       |       |
| Material            |        |     |        |      |       |       |
| Non-Compilance =1   |        |     |        |      |       |       |
| and Otherwise = 0   |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| Otherwise includes  |        |     |        |      |       |       |
| both Compliance and |        |     |        |      |       |       |
| Non-Material        |        |     |        |      |       |       |
| Non-compliance.     |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+
| \*\*\*We use        |        |     |        |      |       |       |
| inverse beta which  |        |     |        |      |       |       |
| is the inverse of   |        |     |        |      |       |       |
| the incomplete beta |        |     |        |      |       |       |
| function that       |        |     |        |      |       |       |
| approximates the    |        |     |        |      |       |       |
| binomial.           |        |     |        |      |       |       |
+---------------------+--------+-----+--------+------+-------+-------+

[^1]: Pub. L. 107-300, 116 Stat. 2350.

[^2]: Statistical analysis of the 89 observation which includes
    non-random substitutes is set out in Appendix 1.

[^3]: Memorandum For Heads of Executive Departments and Agencies --
    Issuance of Appendix C to OMB Circular A-123. Executive Office of
    the President, Office of Managemant and Budget (August 10 2006),
    Appendix C at 2.

[^4]: *See* 47 U.S.C. § 254(h)(1) and (2).

[^5]: *See* 47 C.F.R. §§ 54.701-705. *See generally* USAC Website:
    www.usac.org/rhc.

[^6]: 54 C.F.R. § 54.603(b).

[^7]: 54 C.F.R. § 54.603(a).

[^8]: 54 C.F.R. § 54.603(b)(4).

[^9]: The issuance of a check for the discount means that the health
    care provider paid full price for the telecommunications or internet
    access and receives the discount in the form of a check.

[^10]: USAC Website: www.usac.org.

[^11]: *See* FCC Report to Congress on Improper Payments, March 31,
    2004.

[^12]: A FRN is the Funding Request Number assigned to the project for
    which USF support is requested. WONUM is the acronym for a work
    order number that is associated with a funding request.

[^13]: Each assertion notes the applicable section of 47 C.F.R. Subpart
    G and the Subpart is provided as a separate enclosure.

[^14]: Memorandum For Heads of Executive Departments and Agencies --
    Issuance of Appendix C to OMB Circular A-123. Executive Office of
    the President, Office of Managemant and Budget. August 10 2006, p 3.

[^15]: Ibid., p 4.

[^16]: Expert judgment was provided as well as data.

[^17]: David R. Anderson, Dennis J. Sweeny, and Thomas A. Williams.
    *Essentials of Modern Business Statistics.* Mason, Ohio:
    South-Western, 2004 at pp. 340-347.

[^18]: All statistical formulas can be found in any standard general
    statistics textbook. For example, see William G. Cochran. *Sampling
    Techniques.* New York: John Wiley & Sons, Inc., 1963.

[^19]: A WONUM (Work Order Number) in the Rural Health Care program is
    analogous to a Funding Request Number in the Schools and Libraries
    program.

[^20]: David R. Anderson, Dennis J. Sweeny, and Thomas A. Williams.
    *Essentials of Modern Business Statistics.* Mason, Ohio:
    South-Western, 2004 at pp. 276-277.

[^21]: Post-audit total disbursements in the RHC universe were
    \$21,562,585.88 during the funding years 2001 through 2004.

[^22]: Memorandum For Heads of Executive Departments and Agencies --
    Issuance of Appendix C to OMB Circular A-123. Executive Office of
    the President, Office of Management and Budget. August 10 2006, p 2.