May 17, 2023

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SLFRF and CPF Supplementary Broadband Guidance

As provided for in each SLFRF and CPF award agreement, the Uniform Guidance applies to all uses of 

funds made available under those awards unless provided otherwise by Treasury. In response to 

questions from recipients and internet service providers, Treasury is issuing the following guidance 

regarding the application of the Uniform Guidance to broadband infrastructure projects. This guidance 

applies to broadband infrastructure contracts and subawards funded by SLFRF and CPF for states, 

territories, freely associated states, and local governments, including those entered into prior to the 

release of this guidance. 

Should internet service providers (ISPs) that are selected by recipients to install broadband 

infrastructure be considered subrecipients or contractors?

Each recipient should make this determination based on the nature of the broadband program it has 

established and its relationship with ISPs. The Uniform Guidance at 2 CFR 200.331 provides guidance as 

to when to consider entities as contractors or subrecipients. Treasury has previously confirmed that CPF 

and SLFRF recipients may provide subawards or contracts to other entities for the construction of 

eligible projects. See CPF FAQs 4.4-4.10, SLFRF FAQ 13.9. 

Treasury understands that in many cases states have considered ISPs installing broadband infrastructure 

using SLFRF or CPF award funds to be subrecipients of the SLFRF or CPF award. Recipients may also 

consider ISPs to be contractors. See below for details about the Uniform Guidance provisions that apply 

depending on whether the ISP is a subrecipient or contractor. 

For purposes of this guidance, the term “ISP” includes subrecipients and contractors installing

broadband infrastructure using SLFRF and CPF funds, and is not limited to entities that provide retail 

Internet access service.

Which provisions of the Uniform Guidance apply to broadband projects?

The SLFRF and CPF award terms provide that all provisions of the Uniform Guidance apply to recipients’ 

implementation of those programs unless Treasury provides otherwise. In response to questions from 

recipients, Treasury is providing the following clarifications and additional guidance. 

If ISP treated as subrecipient: Recipients that characterize their ISPs as subrecipients must follow 

the provisions of the Uniform Guidance relating to subrecipients, subject to the following 

clarifications and additional guidance on property, program income, cost principles, 

procurement, audit, and monitoring requirements.

If ISP treated as contractor: Recipients that characterize their ISPs as contractors must follow the 

provisions of the Uniform Guidance relating to contractors, including by following procurement 

rules in the selection of contractors and the imposition of the applicable terms provided in 

Appendix II, Contract Provisions for Non-Federal Entity Contracts Under Federal Awards, of the 

Uniform Guidance. 
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Program income

The default rule of the Uniform Guidance is that program income must be deducted from the award 

amount unless the awarding agency provides otherwise. The definition for program income can be 

found in 2 CFR 200.1, and the treatment of program income is discussed in 2 CFR 200.307. Treasury is 

providing the following guidance for broadband projects.

If ISP treated as subrecipient: Income generated by ISPs from subawards will not be considered 

program income and ISPs may use such income without restriction. 

If ISP treated as contractor: Recipients may agree to permit ISPs that are characterized as 

contractors to retain income generated by the ISPs from broadband infrastructure the ISP 

installs provided that such an agreement is consistent with the state’s procurement 

requirements or, in the case of a local government, is consistent with the Uniform Guidance 

provisions on procurement and this guidance. Such income earned by contractors is not 

considered program income and thus may be used by the contractor without restriction.

Treasury clarifies that income from indefeasible rights of use (IRUs) and leases relating to broadband 

infrastructure will not be considered program income. 

Cost principles, procurement practices and fixed amount subawards

ISPs that receive fixed amount subawards and ISPs that are treated as contractors are not required to 

comply with the cost principles and procurement practices of the Uniform Guidance. 

In general, the Uniform Guidance provides that subrecipients must follow the procurement rules and 

cost principles in determining which costs incurred by subrecipients may be covered using the award. 

These requirements apply to non-federal entities as well as for-profit subrecipients. 

The Uniform Guidance permits agencies to provide an exception from the cost principles and 

procurement requirements in the case of fixed amount subawards (See 2 CFR 200.1, 200.201(b), and 

200.333). Typically, fixed amount subawards may only be issued with the prior written approval of the 

federal awarding agency and only in an amount up to the $250,000 Simplified Acquisition Threshold. 

Treasury, with the approval of the Office of Management and Budget, is providing that recipients may 

issue fixed amount subawards for broadband infrastructure projects without further Treasury approval 

regardless of whether the value of the sub-award exceeds $250,000 and that recipients are not required 

to apply the cost principles and procurement requirements of the Uniform Guidance to ISPs receiving 

such fixed amount subawards.1

 

Treasury further clarifies that a subaward that otherwise meets the requirements of 2 CFR 200.201(b) 

may be considered a fixed amount subaward even if: 1) the recipient uses its discretion to impose a 

cost-sharing or match requirement on the subrecipient; or 2) the recipient requires ISPs to submit 

evidence of costs. More specifically, subawards that provide for a maximum payment amount that is 

calculated based on a reasonable estimate of actual cost (see 2 CFR 200.201(b)(1)) will be considered 

fixed amount subawards even if the subaward agreement also provides that payments to the ISP 

subrecipient will be limited to actual costs after review of evidence of costs. 

1 Recipients wishing to use fixed amount subawards for other types of projects must still obtain prior approval 

from Treasury unless they are undertaken under the SLFRF revenue loss eligible use category. 
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Pursuant to section 200.201(b)(3) of the Uniform Guidance, the subrecipient must certify in writing to 

the recipient at the end of the federal award that the project or activity funded under the fixed amount 

subaward was completed. Accordingly, an ISP receiving a fixed amount subaward must certify to the 

recipient that the broadband project reached substantial completion by the end of the period of 

performance, December 31, 2026.2

 

Treasury further clarifies that costs incurred prior to an ISP receiving an award are reimbursable to the 

extent that they would have been allowable if incurred after the date of the federal award or subaward 

(for example, if an ISP purchased fiber or other broadband equipment in advance of being awarded a 

subaward or contract). 

Ownership of infrastructure 

The Uniform Guidance sets forth property standards for property acquired or improved under a federal 

award. Treasury is providing that the following requirements will apply to broadband infrastructure 

installed under fixed amount subawards.

Instead of applying the full Uniform Guidance provisions, Treasury is providing that the following 

requirements will apply in the case of property associated with a broadband infrastructure project 

funded with the SLFRF or CPF and substantially completed by December 31, 2026. In this case, the 

federal interest in SLFRF or CPF broadband infrastructure will last until December 31, 2034 (Federal 

Interest Period).

Title to real property or equipment acquired or improved under the award (i.e., the broadband 

infrastructure installed pursuant to the ISP’s subaward or contract with the recipient) (Project Property) 

vests in the ISP, subject to the condition that, for the duration of the Federal Interest Period, the ISP and 

any successors or transferees:

(1) must use the Project Property for the authorized purposes of the project in the same manner as 

they use comparable real property and equipment within their networks in the ordinary course 

of their business, subject to the rights to disposition provided below,

(2) must continue to provide internet service to the service areas and at the standard initially 

agreed upon by the recipient and ISP, 

(3) must participate in federal programs that provide low-income consumers with subsidies on 

broadband internet access services,

(4) must comply with the requirements of section 200.310 (Insurance), which may be satisfied by 

adequate self-insurance, 

(5) must comply with the use and management requirements for equipment in sections 

200.313(c)(4) and 313(d), which may be satisfied by applying the ISP’s commercial practices for 

meeting such requirements in the normal course of business (e.g., commercial inventory 

controls, loss prevention procedures, etc.), provided that such inventory controls indicate the 

applicable federal interest, 

(6) must maintain records of real property that include an indication of the applicable federal 

interest,

2 As defined in previously-issued CPF guidance, substantial completion means that the project can fulfill the 

primary operations that it was designed to perform, delivering services to end-users. At substantial completion, 

service operations and management systems infrastructure must be operational.
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(7) may dispose of Project Property in the ordinary course of business when no longer needed to 

operate the network, such as in order to upgrade equipment and improve facilities, provided 

that at least the same level of service provided by the network is maintained and there is no 

material interruption to service and that such upgraded property is subject to the same 

requirements provided in this guidance as other Project Property, 

(8) may otherwise sell or transfer Project Property only after provision of notice to Treasury that 

identifies the successor or transferee and after securing the agreement of the successor or 

transferee to comply with these requirements and the acknowledgement of the successor or 

transferee of the federal property interest, and

(9) must notify the recipient and Treasury upon the filing of a petition under the Bankruptcy Code, 

whether voluntary or involuntary, with respect to the ISP or its affiliates.

Pursuant to 2 CFR 200.316 and in recognition that these broadband programs are being executed for the 

benefit of the public being served by the broadband infrastructure, for the duration of the Federal 

Interest Period, the ISP must hold Project Property in trust for the beneficiaries of the SLFRF or CPF 

broadband infrastructure project. 

ISPs may encumber Project Property if Treasury receives a shared first lien position in the Project 

Property such that, if the Project Property were foreclosed upon and liquidated, Treasury would receive 

the portion of the fair market value of the property that is equal to Treasury’s percentage contribution 

to the project costs. For example, in the case in which Treasury had contributed 50% of the project 

costs, Treasury would receive 50% of the fair market value of the Project Property when liquidated. 

Treasury will post standard forms of liens, covenants, and intercreditor agreements to implement this 

arrangement. Treasury will not otherwise require ISPs following these requirements to record liens or 

other notices of record. 

An ISP must comply with 2 CFR 200.312, to the extent any federally-owned real property or equipment 

is used by the ISP. 

An ISP not complying with the requirements provided in this guidance must request disposition 

instructions from Treasury pursuant to 2 CFR 200.311(c) or 200.313(e), as applicable. 

Except as provided above, the property standards set forth in 2 CFR 200.311 and 200.313 - 315 shall not 

apply. Recipients may impose additional conditions at their discretion but may not grant exceptions

from these requirements without the consent of Treasury.

 

In the case of a subaward that is not a fixed amount subaward, the ISP subrecipient must follow the 

property standards provided by 2 CFR 200.310-316.

Audit and monitoring requirements

For contracts: ISPs are not subject to subpart F of the Uniform Guidance with respect to the funds they 

receive for such project; however, recipients must oversee their contractors to ensure that contractors 

perform in accordance with their contracts, including with respect to the requirements outlined above. 

For subawards: Under the Uniform Guidance, all non-federal entity subrecipients are subject to the 

audit requirements in subpart F, including ISPs. Non-federal entity subrecipients are required to submit 
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single audits or program-specific audits to the Federal Audit Clearinghouse (FAC), the government-wide 

repository for audits of financial assistance programs. 

For-profit subrecipients are not subject to Subpart F but are subject to the terms and conditions in the 

award between a federal awarding agency and a recipient, and, pursuant to 2 CFR 200.501(h), recipients 

have an obligation to ensure compliance by for-profit subrecipients. Under that provision, methods to 

ensure compliance for federal awards made to for-profit subrecipients may include pre-award audits, 

monitoring during the agreement, and post-award audits. 

This provision may be satisfied by the submission of an audit or other documentation that covers 

multiple subawards and multiple federal programs. For-profit subrecipients may use the Schedule of 

Expenditures of Federal Awards (SEFA) as a framework for how to organize expenditure data across 

programs. 

Recipients may contact Treasury to discuss circumstances not addressed in this FAQ.